A celebration of deep discounts and doorbuster sales, Green Wednesday has become a cornerstone event for cannabis retailers, as consumers flock to dispensaries to stock up for a cannabis-filled “Danksgiving.”
Fueled by a blend of traditional consumer shopping habits during Thanksgiving weekend and the growing interest in using and gifting cannabis for the holidays, Green Wednesday has evolved into the biggest cannabis sales event outside of 420. In an attempt to match the demand and enthusiasm, cannabis brands and retailers find themselves in an unwinnable race to the bottom, engaging in severe discounting that mirrors the strategies of big-box retailers during Black Friday.
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However, despite all of the excitement that retailers and consumers share for Green Wednesday sales, the deep discounts and exclusive sales offered may not yield the long-term benefits that cannabis retailers anticipate. The “doorbuster” sales, while driving a misleading spike in sales volume, show a decline in gross margins from an average of 49 percent the week before Thanksgiving down to an average of 41-44 percent during Green Wednesday and Black Friday.
Christine Smith, Founder and CEO of Grön, a multi-state edible brand says, “Working with retailers on Green Wednesday promotions certainly increases footfall, yet this doesn’t necessarily translate into increased revenue or recurring business.” Based on the data, the impact of high discounts on gross margins prompts a reevaluation of the economic value of these sales events for the cannabis industry.
Does Green Wednesday help the cannabis market?
Our 2022 Green Wednesday and Black Friday data analysis reveals eye-opening trends in consumer behavior that the cannabis industry should consider. The discounts are certainly being used and the product is moving, but despite the surge in customer visits and transactions on Green Wednesday and Black Friday, the data indicates that sales throughout Thanksgiving week are relatively consistent with an average week.
What this indicates is that customers are stocking up before the busy holiday weekend since the biggest impact is on the shifting consumer behavior. Whether customers are stocking up for themselves, buying holiday gifts, or looking to avoid the weekend traffic, what the data suggest is that customers are adjusting their shopping patterns to accommodate the long holiday weekend with the majority of shopping taking place on Wednesday and Friday.
Despite comparable transaction volumes, units sold, an average order value of $75, and an average discount percentage of 27 percent on Green Wednesday and Black Friday, the data indicates that the overall impact on the Thanksgiving week is minimal. The deep discounting tactics employed during this holiday week may inadvertently commoditize products, diluting brand values and encouraging consumers to prioritize price over brand loyalty. The data reveals a tendency for customers to stockpile products at their lowest cost, without necessarily returning to purchase the same brands or products later.
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Christine Smith adds, that “Green Wednesday holiday discounts don’t necessarily align with our goals for sustainable growth and building lasting customer loyalty. At Grön, our focus is on delivering unmatched quality and authenticity. We aspire to set the quality standard, not to be just another edible choice. It’s all about adding real value while keeping our brand’s soul intact.”
Instead of offering unprecedented discounts, reminiscent of retail giants selling flat-screen TVs at cost, cannabis retailers should prioritize offering discounts on items that typically face challenges in moving off the shelves and exercise restraint when discounting best-selling products. Retailers understand that popular, limited-edition, ultra-premium items are already likely to be purchased at their regular price and therefore, do not need to be discounted. As the industry navigates the complexities of pricing and promotions, a thoughtful and strategic approach may be the key to long-term success, ensuring that the festive highs don’t come at the cost of eroding brand value and profitability.
Grön calls for “industry peers to go beyond just price reductions and adopt creative strategies, such as providing a complimentary gift with a purchase, which can be a powerful way to enhance a brand’s visibility while protecting margins during this holiday shopping season,” says Christine Smith, Founder and CEO of Grön.
We hope our extensive retail data analysis of Green Wednesday and Black Friday offers retailers and brands alike valuable insights, enabling a more strategic approach to becoming profitable. We recommend integrating retail data into broader business systems for a comprehensive understanding of business performance not only for the upcoming holiday season but well into the future.
Delving into Treez’s 2022 Green Wednesday and Black Friday data analysis provides a comprehensive understanding of the dynamics at play. The data, collected from hundreds of thousands of cannabis shoppers across 13 U.S. markets, highlights comparable transaction volumes, units sold, average order values, discount percentages, and gross margins between Green Wednesday and Black Friday. The findings paint a fascinating picture of a holiday week where consumers seize the opportunity to stock up and enjoy deep discounts.
This article was submitted by a guest contributor to GreenState. The statements within do not necessarily reflect the opinions of GreenState, Hearst, or its subsidiaries. The author is solely responsible for the content.