When you're setting up a compliant cannabis retail storefront in California, there are several things to consider.
In this article, we'll review three of the most common dispensary store models (plus, the benefits of adding Express Pick-Up), including the pros and cons of each model and how it relates to security, staffing, sales, dispensary inventory management workflows, compliance, your store design, and the customer experience. Because the cannabis retail space is so highly regulated, it's essential to consider how compliance and inventory management will affect the way customers shop with you.
We talk about retail stores in terms of:
1. FRONT OF HOUSE: This refers to everything from your parking lot, outside the store, the reception/check in area, and your sales area.
2. BACK OF HOUSE: This refers to your back entrance (if you have one), your inventory reception, inventory backstock, inventory staging areas, and back offices.
1. Traditional Counter Service
This is the most common dispensary store model. In a traditional counter service setup, dispensaries are set up for customers to flow through in this way:
INTAKE: Customers enter into a secure reception area with security present. Their ID's are checked; once they are cleared, they are allowed onto the sales floor.
SALES AREA: Once on the sales floor, customers go to counters and are helped by budtenders at display cases, with registers on the counters. This is an important thing to note: Each salesperson is responsible for their customer transactions, which makes it easier to hold your team accountable if you find mistakes or want to reward top-selling employees.
INVENTORY: Live/Real inventory is kept in the display cases or behind the counter. Once the customer chooses their products, each salesperson gathers the items, bags them in compliant bags, and rings them up on the POS system.
PROS AND CONS OF THE TRADITIONAL COUNTER SERVICE LAYOUT FOR CANNABIS DISPENSARIES
PROS: There are a lot of reasons why this is the most common dispensary store model. It offers a high amount of security controls because all products are kept in dedicated areas in the display cases or behind in the counter in a drawer storage system, and customers only touch products with the help of a budtender. Don't forget: As of right now, retail cannabis is still primarily a cash business; with counter service, there is a very strict customer store flow with usually only one entrance and exit to the sales floor which is good for security purposes.
CONS: Customer has limited interaction with products and is very reliant on sales staff to pull and explain products, which are typically locked away behind the glass; dispensaries need very knowledgeable sales staff who can thoroughly explain products and upsell, or sales can suffer.
2. Floating Sales Staff, Open Floor Dispensary Model
Now, let's talk about floating sales staff or the open floor model. Sometimes this is called the "Apple Store" model. Its very open and inviting to customers. Here's the store flow:
INTAKE: Customer enters directly into the store sales area with no fixed reception.
SALES AREA: Customers browse display cases which are located througout the store (sometimes on the walls, sometimes in the center of the store). Orders can be placed with floating sales staff who carry iPads, and then orders are fulfilled and paid for with the cashier at the counter.
INVENTORY: This is really similar to any retail clothing store at a mall. In this store model, some live inventory is kept on the sales floor and some is kept behind the cashier station.
PROS AND CONS OF THE FLOATING SALES STAFF, OPEN FLOOR DISPENSARY MODEL
PROS: The pros of this kind of store is that it has a really great, engaging customer experience with lots of opportunities to connect with your customers with a 1-to-1 guided experience. This dispensary model creates an opportunity for your budtenders to connect with customers personally and help change the stigma of cannabis.
CONS: This is not as security friendly as the Traditional Counter Service model, especially if there is live inventory on the floor; products are within arms reach of customers instead of kept behind glass in cases. There is also no clear customer flow in store, which means it is not as volume-friendly if you are in a high-traffic location.
3. Fulfillment Pharmacy Flow
A favorite dispensary layout for many shops is the fulfillment or a pharmacy-style floor layout which is kind of like a hybrid of the Traditional Counter Service and Open Floor layouts, but is much more volume-oriented.
INTAKE: In this retail model, customers usually enter into a dedicated secure reception area where ID's are checked before they are admitted to the sales floor.
SALES FLOOR: In the sales area, customers can browse products in display cases but there is no live product on the floor. Customers step to a dedicated checkout counter or window to place and fulfill order.
INVENTORY: All inventory is kept back of house.
What's great about this dispensary model is you can still have a salesperson on the sales floor guiding the customer experience, but products are not within arms reach, so you're maintaining security controls, and making it easier to conduct cycle counts and internal audits.
Sale are packed and completed at a window or a counter.
PROS AND CONS OF THE FULFILLMENT PHARMACY FLOW
PROS: Volume oriented, very secure (can be window service), Clear customer flow, easy & efficient back of house workflows for your staff. This setup is great because it's volume oriented, meaning you can really move people along and reduce counter time. There's a very clear customer flow and with all the inventory in the back, there's a very easy and efficient back of house workflows for your staff.
CONS: This model can be really sterile, sometimes with little to no customer interaction unless you have dedicated staff available on the sales floor; customers often are just coming up to a window without getting personal guidance from budtenders.
4. EXPRESS PICKUP
Because of the COVID-19 pandemic, the express pickup dispensary model became a very popular option to minimize contact between people. Many cannabis consumers now expect Express Pick-Up to be an optional retail flow, and it's easy to add it to any of the above dispensary storefront models.
INTAKE: Customers place orders online or via the phone, then show ID at either the designated window (or curbside) when they arrive at your location.
SALES AREA: Customers receive pre-ordered products at the to-go window (or at the cars in a designated parking location in front of the store or in a parking spot).
INVENTORY: All inventory is kept in the back of the house and is packed upon receipt of the order at a dedicated staging area.
PROS AND CONS OF THE EXPRESS PICKUP DISPENSARY MODEL
PROS: Volume oriented, very secure (can be window service), clear and convenient customer flow, easy & efficient back of house workflows for your staff. This is a really complementary addition to any store.
CONS: Customers may only order products they are already familiar with and may not be as willing to try new products without having the budtender interactions and personalized experience.
Read more about setting up your Cannabis Retail operation.