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Beyond booze...
Ontario liquor purchasers add entertainment to shopping cart

by Catherine Morrison

Remember when going to your local liquor outlet felt like visiting a military provisions depot in some frozen Siberian gulag? Well, now a trip to a Liquor Control Board of Ontario (LCBO) store is like entering another dimension - multi-sensory saturation and consumer choice so vast as to overwhelm and disorient the faint of heart. This is particularly true if you live in an Ontario community serviced by new flagship stores.

Merchandising strategies focusing on meeting the full range of customers' entertainment needs have meant a whole new ballgame for LCBO purchasers and suppliers. Not that the existing ballgame wasn't a pretty rich one. The LCBO has long been the largest single retailer, hence the largest buyer, of alcoholic beverages in the world, buying wine, spirits and beer from over 60 countries.

Five regional warehouses supply 602 stores across Ontario with over 7,000 products. With net sales of $2.55 billion in fiscal year 1999-2000, up 8.5 percent over the previous year, the LCBO delivers some 283 million litres of alcoholic beverages to Ontario consumers, quite apart from the 664 million litres delivered by Brewers Retail and 14 million litres delivered by Ontario winery stores, the latter two under the aegis of the LCBO. As of March 1999, the total estimated value of Ontario's beverage alcohol market was $6.6 billion. Acquisition costs for the main product, alcoholic beverages, amounted to approximately $1.2 billion in fiscal year 1999-2000, reports Bob Downey, a merchandising director with the LCBO who has been director of both wines and spirits purchasing.

The LCBO's purchasing department, overseen by manager Leslie Brown, buys almost everything other than alcoholic beverages, spending some $100 million to $120 million a year and putting out 60 Requests for Proposal (RFPs) and 250 Requests for Quotation (RFQs) annually. Transport services, largely for shipping the vast quantities of wine, spirits and beer from around the world, account for about $50 million of the total spent. The total also includes consulting services, computers and other office equipment and, of course, the bags in which you take home your personal entertainment choices.

Entertainment is now the official name of the game for the LCBO. Not content with being named Innovative Retailer of the Year by the Retail Council of Canada for two years running (1997 and 1998), the LCBO's strategic plan for the future "calls for us to become Ontario's source for entertaining ideas," according to Board Chair and CEO Andrew S. Brandt. What this means, says Brandt, a former cabinet minister and interim Tory leader, is that the "LCBO would be the place customers turn to whenever they are planning a dinner, a party or another event that brings people together to enjoy food, beverages, music and other elements of good living."

The new LCBO flagship stores, like the 25,000 and 28,000 square foot stores in Bayview Village, Toronto, and on Rideau Street in Ottawa, offer a dizzying array of goods and services. Shoppers head resolutely in among the rows and rows of bottles, with standard and premium products filling the shelves; there are consultants on hand to assist in the colossal task of decision-making. To complement the alcoholic beverage sales, cooking classes and beverage-to-food matching demonstrations take place in an onsite kitchen. There are computer terminals to look up product information on the Internet, a gift centre, displays of entertaining accessories and a listening station, where shoppers can listen to music choices they may wish to add to their total entertainment purchase.

While wearing the mantle of an award-winning retailer, the LCBO is also a government agency. As a regulator and, somewhat paradoxically, a highly successful marketer of alcohol consumption, the LCBO generates over a billion dollars in revenue for the provincial treasury, and operates in a purchasing milieu that private retailers might find cumbersome, to say the least.

The LCBO is an agency of the Ministry of Consumer and Commercial Relations and receives its purchasing directives from Cabinet's Management Board Secretariat. It is subject to the same regulations, legalities and trade agreements that govern purchasing for all provincial government departments. Trade agreements are an especially sensitive constraint, says Bob Downey. With a domestic wine industry making huge strides in their quality of output, both vintners and grape growers would like more support from the LCBO than is possible under current trade laws.

On the other hand, the commercial imperative under which the LCBO operates has resulted in streamlining the purchasing process. Leslie Brown says her department can get an RFP out in two to three weeks, where in other government departments an RFP may take from two to three months to prepare. "Because it's a retail venture," says Brown, "we have to move fast, we have to compete, we can't take the time that other government departments might." That does not mean, she hastens to add, that the competitive part of the process is any less rigorous or transparent than what occurs in other government departments.

According to Brown, it's not so much the process but the nature of what LCBO purchasers buy that has changed so radically. Much of this is related to the merchandising that goes with the LCBO's aggressive retailing posture. It includes the photography, writing and printing for their in-house magazine, Food and Drink, point of sale items such as banners and posters, recorded music and even Christmas garland to grace festive season displays.

This brave new world of alcohol provisioning appears to be an exciting place for those doing the purchasing. The LCBO purchasing department welcomes public sector buyers and their experience. But for those in public procurement who might fancy a role in the product buying side, Bob Downey tosses a wet blanket over those aspirations - in these entertaining times, recruiting from the ranks of public sector purchasers without retail experience, "would be very rare."


Catherine Morrison is a writer based in Chelsea, Quebec. She has been published in the Ottawa Citizen and the Globe and Mail's print and online editions, as well as in Canadian Consumer, Asia Pacific Magazine, the Edmonton Journal and C.A.R.P. Magazine. She was a full-time writer/broadcaster for CBC Network Television and CBC TV and Radio, Winnipeg, and a contributing editor and columnist for Winnipeg Magazine. She is also Managing Director of Morrison&Associates, which supplies communications and public affairs services to government and the high-tech sector.


 

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