Retail Merchandiser - March/April 2017 - 75
cording to CEO George Soleas. The platform took about six
months to exceed $3.2 million in sales, putting it on strong
footing for future growth. "You could say we're late comers
to this game but this is new business for us," he explains.
Supply Chain Innovations
Another advantage of LCBO is that the organization acts as
its own distributor, enabling it to create innovations in the
supply chain on a scale far beyond most any other retailer.
LCBO operates five distribution centers in Ontario, the largest of which is 650,000 square feet and is fully automated.
The facility's automated palletization technology can sort
more than 50 million cases annually and was developed by
LCBO's own in-house engineers. The technology impressed
many in the industry and in 2015 earned a Supply Chain
Innovation Award from the Council of Supply Chain Management Professionals Conference.
Technology is not only advancing LCBO's presence online
and in the supply chain, but is also enhancing the customer
experience in-store. The team behind those innovations is
LCBO Next, a Waterloo, Ontario-based co-op that works
out of Communitech, a tech hub that supports the growth
and success of technology companies.
Each semester, four engineering and computer science
students from Ontario universities are chosen to participate
in the co-op and are managed by an LCBO employee. The
first batch of students joined LCBO Next last September
and the program recently welcomed its second group. "We
dream the ideas and they work on and brainstorm the ideas
to develop apps and other ideas for our stores," Soleas says.
The technology developed at LCBO Next help LCBO remain relevant in the face of a major market shift. "We operated in an environment where we were very privileged in the
past," Soleas says. "Now our customers will have an option."
Soleas expects that 20 percent of sales will shift from
LCBO retail locations to grocery stores during the next eight
or nine years. The organization will get some of that revenue back through increased distribution because it acts as a
wholesaler to those grocery stores, but it still must change its
retail strategy to reflect the new market reality. The predictive models and variables LCBO previously used to determine new store openings and renovations will change amid
the increased competition.
But instead of running from the competition, LCBO is
embracing the challenge by finding ways to cement its status as the primary destination for alcohol in Ontario. "We're
already working on ways to make sure the LCBO becomes
customer focused," Soleas says. "No one gives you customer
loyalty. You earn it." O