Interviews

Data Is King: A Talk With Greg Shoenfeld, VP Of Operations At BDS Analytics

We sat down with BDS Analytics to talk all things data

BDS Analytics has been in cannabis since 2015 and provides some of the best intelligence based insights into the cannabis industry that you can find anywhere. Greg Shoenfeld, BDS Analytics VP of Operations, is no rookie to the data industry. Having started out at BDS Analytics as the Director of Dispensary & Retail Relations, he has spent the last 3+ years understanding the relationship between cannabis retail and big data and how that relationship correlates into actionable profits. We sat down with Greg to talk intelligent data and how you can use it properly.

 

MRR:                        Can you tell us a little bit about BDS Analytics?

Greg Shoenfeld:                       BDS Analytics has been in cannabis since 2015. The founding members of the organization came from a background where they worked with data and/or provided market intelligence to other industries such as the sporting goods industries and the natural food spaces. So myself, one of the co-founders and a couple members of the tech team, we worked with a predecessor called NPD Group and Leisure Trends Groups. Leisure Trends was acquired by NPD and so we were the source of retail sales trend and tracking information for the outdoor cycling and ski industries. So after the acquisition of our company we thought it was good to bring our knowledge base to cannabis.

We originally started off providing point of sale, retail sales tracking, so the aggregation of point of sale data from dispensaries that is then extrapolated or projected up to the total size of market. And that provides a measure of the size of market, the size of category, trends in the market, and then the ability to track brand shares and look at the sales of specific products, and the pricing of those products, which is all essential information for manufacturers to help determine where they’re going to invest their product development dollars and how to market and position products accordingly.

Then for dispensaries, it helped them with their merchandise mix and their category planning and so forth. Since that time, we’ve also expanded to add in additional capabilities to look at the market more holistically. So we also developed a consumer research division that conducts studies on both the cannabis consumer, the potential acceptors and future consumers of cannabis and the rejectors. So looking at both the U.S. and Canadian consumers holistically to understand all of those dynamics as to why and what people consume or don’t consume.



MRR:                       In your opinion, what are some of the fastest-growing segments of the industry? 

Greg Shoenfeld:                      I mean, there’s so much attention that has been placed on vape products. Generally we’re looking at categories that offer discreet consumption, tend to really be picking up a lot of the action, a lot of the market share. And so the easy portability, the nice packaging and branding, a lot of the vape products make it a very appealing category. So I think that there’s both a supply and demand element to it where there’s a ton of investment, a ton of supply. As there’s more and more vape products showing up on shelves, that’s also resulting in a lot of additional sales.

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We are also certainly are seeing a lot of growth in CBD although that is not limited specifically to the cannabis industry per se, or sales through dispensaries, but there are a fair amount of sales that are taking place outside of the dispensary channel with more hemp-based CBD products, which is something that we’re looking into, tracking more closely as well.

Then it really gets into individual markets, and what we see is more localized trends. So in some markets, it might be certain types of edibles that are growing rapidly, although I look at that as kind of like a third wave. Edibles have rarely enjoyed the same type of growth that vape has, but overall they are picking up more market share. Flower sales are growing but generally speaking the price is coming down so quickly that it’s outpacing the growth in volume, and so while flower grows, it still loses share.

 

MRR:                     Can you talk a little bit about what is the best way to implement actionable data into a retail strategy for a dispensary owner?

Greg Shoenfeld:                     Now you’re definitely stepping into my wheelhouse, as that’s what I used to train retailers in other industries to do with data, is to become better merchants. So there’s a couple of things that are going on here. One, data helps with managing our category mix and our merchandise mix. Especially in the early days when there were fewer dispensaries in each market and less competition, basically whatever dispensaries were able to get stock in on their shelves would sell. But these days, it’s a lot more competitive. And so to ensure that they have the depth of inventory in the fast-moving categories, and are less burdened with slow-moving inventory in other categories is essential.

So it’s one thing to use one’s own data coming out of their point of sale system, that tells you something, but it doesn’t tell you how you relate to the broader market. So rather than going and shopping around at your competitive stores, the data that we provide through Greenedge is a significant tool to help people understand where they over-performing or underperforming the market at a category level, and how might they alter their mix to lift some of those underperforming parts of their business?

Then, a part that I find really helpful is that when it comes to purchasing products from a retail-buying perspective, it’s hard in an industry like this where there’s so much passion, to not also have bias. And bias doesn’t help us in a consumer environment where our dispensary buyer does not necessarily represent the average consumer or patient that’s stepping into the dispensary. They might have decided years ago that they don’t like a particular vendor, and yet that vendor could be one of the top performers in the market now. And so the ability to look at sales data at a market level and to understand who are some of those top vendors that I might not be doing business with, helps open the eyes to what a larger segment of the consumer population might want and that might really help boost repeat traffic to the business.

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Then, a part that I find really helpful is that when it comes to purchasing products from a retail-buying perspective, it’s hard in an industry like this where there’s so much passion, to not also have bias. And bias doesn’t help us in a consumer environment where our dispensary buyer does not necessarily represent the average consumer or patient that’s stepping into the dispensary. They might have decided years ago that they don’t like a particular vendor, and yet that vendor could be one of the top performers in the market now. And so the ability to look at sales data at a market level and to understand who are some of those top vendors that I might not be doing business with, helps open the eyes to what a larger segment of the consumer population might want and that might really help boost repeat traffic to the business.

 

MRR:                      Now, if you’re a brand new retailer just coming online, obviously there’s been a rush of licensees and new entrepreneurs in the space, and you don’t have a sensory idea of what to expect, what is some good best practice concepts that you should implement in your strategy when first starting out, in terms of picking potentially what to stock your shelves with, or like you mentioned, having a buyer that maybe doesn’t match what your demographics are, how should you position your business to get the right purchaser to match the demographics that you’re trying to get into your store?

Greg Shoenfeld:                      I have trouble answering this without plugging myself in here, but the Greenedge data is a phenomenal tool for this because especially when a business is new, unless it’s extremely well-capitalized, cash flow is tight. They might have spent the bulk of their reserves just getting to the starting line, and now they’re going to need to keep those shelves stocked. There’s a risk for some less mature businesses or new startups to stock so many different products and what they inevitably find is that some sell and some don’t.

Those non-sellers wind up taking up valuable space and they tie up cash flow that otherwise could be reinvested in more profitable products. And so the ability to find that … what are some of those top-selling products in each product category, and what proportion of your merchandise mix should be proportioned to those different products, is a really beneficial tool.

Also, how should you price those products? One could definitely go to a Weedmaps or Leafly and look at online menus and try and get a sense of where to price them accordingly, but that’s another area where we can help. I think that being data-driven from the get-go is a very solid practice to help people. So don’t get too caught up in the concept that you have to have a bit of everything for every potential customer that comes in the door.

But if you can understand the demographics of the area in which you’ve opened your business, which hopefully you’ve done that homework ahead of time. And then you can look at what products are really selling well, then you can have a much more curated mix of products. And that’s going to be easier for the budtenders to really develop their expertise on that more tightly controlled inventory mix.

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MRR:                      Can you talk a little bit about the importance of securing your data, especially as a dispensary owner?  

Greg Shoenfeld:                      Well, you know, your customers come and go, your sales come and go, but your data is something that you’re going to have to call on throughout the history of your business. We’ve seen a number of dispensaries that have lost all of their sales data and the panic that ensues when an audit inevitably arises. So increasingly, we are a data-driven society. I don’t think we’re going to see any turn away from that, and so absolutely data security is of paramount importance. I can’t speak to all the best techniques of how a dispensary should secure that information, but I do have a background in healthcare informatics as well.

So yes, the future of the industry is moving more toward adult use rather than towards medical, but the medical component is still significant in a lot of markets and so HIPAA compliance is a pretty significant thing. A breach of HIPAA compliance could be extremely costly, even if one was able to show that they’re applying best practices, even a lawsuit can be so disruptive and costly for a business that it’s best to not encounter those situations in the first place.

In the future, if we see a federal deregulation or rescheduling of cannabis and it became federally legal, that also would probably open the doors for credit card processing. So then we’re going to get into PCI compliance and all of those ensuing regulatory mandates. So the best thing that dispensaries can do is to embrace best practices from day one, rather than run into a brick wall and then figure out how to improve their security measures after the fact.

 

Marijuana Retail Report:                      What’s next for you guys? Are there any markets that you’re looking to get into currently? 

Greg Shoenfeld:                      Much like the market, we’re moving in a lot of directions at the same time because we’ve really grown as an organization to meet the needs of the industry. I’d say in our early days, we were very much a data company but these days we’re really transforming or pivoting to meet the needs of a more mature market. And so, as the consumers of data and information are becoming more sophisticated, we’re becoming much more of an insights company because data alone is great for some people, but there’s a lot of other people that need some assistance or would like our perspective on how to ingest that information.

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So our ability to tie point of sale data, consumer information, industry intelligence information such as we provide in partnership with our key market research, that holistic view of the market really provides insights that lead to wisdom. That’s really the journey that we want to take our clients on. Beyond that, we are expanding into additional markets, so we’ll be building out Nevada, Michigan, and New England, or markets on the Eastern Seaboard this coming year … in 2019, as well as expanding into Canada.

 

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