Pricing Compression: Canada's Landscape

This topic has come up in almost every meeting or industry hangout over the last few months. How are we supposed to combat price compression?

EXAMPLE: We dug into the data to analyze how the drop in 3.5-gram flower pricing has impacted Canadian retailers in the past 90 days vs. the same period in 2021.

 

The average product has dropped by $2.69 at retail.

Drop-in Price Per Unit 
Pricing of: 

• Hybrid= $3.77
• Indica= $2.14
• Sativia = $2.18

Over the last two years, we see the EQ price (the average product price, normalized for the package size) of the category of flower drop over $3. And as an industry, we know this does not serve us, and only serves a segment of our customers.

So let's talk about it. Every Tuesday, I am going to explore how the Quality of Sale, Inventory, People, and Marketing, can or are impacted by Price Compression in Cannabis Retail.

Having accessible products is important, but driving the price down is not the only way to reach customers. 

The thing with cannabis retail is at any given point there are several inputs and factors that could be impacting the performance of differently priced products.

• What’s the wholesale cost?
• How much inventory is available?
• What is the awareness level of the product?
• How easy is it to discuss the features and benefits of the product?
• Where can we communicate about the product?

At Vetrina Group, we use what happens on the ground level in retail stores to support retail performance and product sales. Our clients are probably tired of hearing it, but we use:

• Quality of Sale
• Inventory
• People
• Marketing....as assessment points to look for patterns.

Sinking prices are not the only sustainable way to grow the industry. So let’s look at the things that are causing, influencing, and resulting in compression. Our goal is to provide action that supports the industry in a profitable way.