Advisory Panel Recommends Changes to Ontario’s Liquor Retail

S. St. Jeb · Post by **S. St. Jeb** » Sat Nov 15, 2014 4:35 pm

I had this SKU thing explained to me many years ago, but I sure could use a refresher as I'm not following all the details of this discussion.

"SKU for Dummies" or "SKU 101" so to speak.

Someone please.

MatttthewGeorge · Post by **MatttthewGeorge** » Sat Nov 15, 2014 6:12 pm

SKU Counts for Dummies

Basically every store is allotted so many SKU's per category. Beer, cider and coolers (yes coolers) are all in the same category. This SKU count is based (mainly) on the sales volume of each store, meaning a store that does a large volume of sales will have more SKUs allotted than a small volume store.

After the person in charge of this section (usually called the Beer Ambassador, or BA for short) deals with all the forced listings, whatever number of SKUs they have left over is now at their discretion. So in the summer when most LCBOs where forced listed 25+ coolers, this would have been at the expense of beer.

So beer reps such as myself go into the LCBO and try to convince BA's to carry different products and the BA decides to carry the product depending on first the SKU count, and then after that (in no particular order) the beer, the rep, the sales potential and so forth.

Now you can imagine that some BA's are craft friendly and therefore getting listings is fairly easy. However, if you get a non-craft friendly BA, basically a BA who is either bottom-line oriented or just apathetic, they will list 4 different pack sizes of Bud instead of 2 pack sizes and 2 extra craft SKU'S. There are unfortunately more of the latter than the former.

Why is this SKU count system in place? I have no idea. Like most things in fascist Ontario, we embrace scarcity instead of abundance. As I said, getting rid of the SKU counts would lift the largest barrier to breweries and distributors, no doubt about it.

S. St. Jeb · Post by **S. St. Jeb** » Sat Nov 15, 2014 7:39 pm

Thanks for the explanation. Now the earlier posts make sense.

Except, of course, that no one seems to have an answer to the question "why is there a SKU limit"?

As Belgian suggested, there must be some historical reason for it, but it's hard to imagine what it is. Harder still to imagine why this doesn't get changed.

I don't count myself among the group of you who have a real hate of Ontario's liquor system.....but this issue alone could pull me over.

NRman · Post by **NRman** » Sun Nov 16, 2014 9:14 am

S. St. Jeb wrote: Except, of course, that no one seems to have an answer to the question "why is there a SKU limit"?

Allow me to put my tinfoil hat on and propose a possible partial answer.
SAP.
If I recall the BO runs SAP and in all SAP systems there is a real cost that comes with the creation and maintenance of a SKU (master data in SAPanese). If the persons responsible for SKU creation are measured on SKU management they might help cause this SKU limiting? It could be a poorly thought out IT decree that limits operations - "Fewer SKUs lower cost!"?
Just look at how long it take them to bring a SKU online and the accuracy of the data associated with it? My guess is this process is a struggle for them (like many large corporations) So instead of improving SKU management (MDM) they limit SKUs to manage cost.
I see the ridiculousness of this, but I would not be surprised if this wasn't part of it. 20 yrs in IT and you see some crazy shit.
Surely there must be someone out there who is/knows someone in IT at the BO who can verify?

S. St. Jeb · Post by **S. St. Jeb** » Sun Nov 16, 2014 10:14 am

NRman wrote:SAP.

We use SAP where I work....it does have it's issues.

But if they've already created Master Data for a product, how does it save anything by limiting a store to a particular number of SKUs?

toweringpine · Post by **toweringpine** » Sun Nov 16, 2014 12:13 pm

I don't have any experience with SAP but I have lots of experience with inventory control. I am responsible for the rolling stock and warehouse stock for a large service company. Everytime I have to add a SKU I must find somewhere on the shelf to put it. Everytime I run low on a SKU I must reorder it. Less SKUs equals less work and less expense. My business is different in that everytime I use a product it costs us rather than the traditional retail model of selling more product meaning generating more revenue. I am lucky that I don't have to deal with layers of middle management and a single source warehouse both of which just add to the time and expense associated with every order placed. If I want to order something I just do it, no need to get authorization or select from the pre-approved list but I can totally understand why having less SKUs makes things more efficient. Having said that, I would definitely choose only one size of Bud and open up other SKUs for more craft beers. Let TBS sell Bud in singles, sixes, twelves, fifteens and twenty fours of both cans and bottles and let the LCBO sell it in singles and nine other types of beer as well.

Tapsucker · Post by **Tapsucker** » Sun Nov 16, 2014 6:19 pm

NRman wrote:
S. St. Jeb wrote: Except, of course, that no one seems to have an answer to the question "why is there a SKU limit"?
Allow me to put my tinfoil hat on and propose a possible partial answer.
SAP.
If I recall the BO runs SAP and in all SAP systems there is a real cost that comes with the creation and maintenance of a SKU (master data in SAPanese). If the persons responsible for SKU creation are measured on SKU management they might help cause this SKU limiting? It could be a poorly thought out IT decree that limits operations - "Fewer SKUs lower cost!"?
Just look at how long it take them to bring a SKU online and the accuracy of the data associated with it? My guess is this process is a struggle for them (like many large corporations) So instead of improving SKU management (MDM) they limit SKUs to manage cost.
I see the ridiculousness of this, but I would not be surprised if this wasn't part of it. 20 yrs in IT and you see some crazy shit.
Surely there must be someone out there who is/knows someone in IT at the BO who can verify?

This probably explains why when you go to buy an 8pack of Mad Tom or Creemeore cans, they have to rip the box open and scan a can 8 times. I kept thinking they just couldn't get the bar code right.

Speaking of which, I still laugh when at the TBS and they have to hunt down a SKU in their register. The so called Brewers Retail, still hasn't adopted bar codes. Then again, they probably sell more ball caps and sunglasses than beer anyway...

midlife crisis · Post by **midlife crisis** » Mon Nov 17, 2014 11:25 am

toweringpine wrote:I don't have any experience with SAP but I have lots of experience with inventory control. I am responsible for the rolling stock and warehouse stock for a large service company. Everytime I have to add a SKU I must find somewhere on the shelf to put it. Everytime I run low on a SKU I must reorder it. Less SKUs equals less work and less expense. My business is different in that everytime I use a product it costs us rather than the traditional retail model of selling more product meaning generating more revenue. I am lucky that I don't have to deal with layers of middle management and a single source warehouse both of which just add to the time and expense associated with every order placed. If I want to order something I just do it, no need to get authorization or select from the pre-approved list but I can totally understand why having less SKUs makes things more efficient. Having said that, I would definitely choose only one size of Bud and open up other SKUs for more craft beers. Let TBS sell Bud in singles, sixes, twelves, fifteens and twenty fours of both cans and bottles and let the LCBO sell it in singles and nine other types of beer as well.

Yes, this is exactly why opening up the LCBO to 12-packs is the wrong way to go. All of the other recommendations make sense, but if anything the (non-beer-boutique) regular LCBOs should sell singles and (I guess) sixes only, of as many different products as possible. Heck, I wouldn't even mind if it was singles only.

shintriad · Post by **shintriad** » Mon Nov 17, 2014 4:18 pm

I love the idea of craft-only beer stores and the like, but I always understood there was some NAFTA injunction against that sort of thing?

That doc that came out recently (which I haven't seen mentioned here) didn't touch on that either: http://www.momandhops.ca/now-playing-st ... n-ontario/

midlife crisis · Post by **midlife crisis** » Mon Nov 17, 2014 4:31 pm

shintriad wrote:I love the idea of craft-only beer stores and the like, but I always understood there was some NAFTA injunction against that sort of thing?

That doc that came out recently (which I haven't seen mentioned here) didn't touch on that either: http://www.momandhops.ca/now-playing-st ... n-ontario/

The NAFTA thing relates to Ontario only craft beer stores I believe. The Wine Rack, etc, were grandfathered in. Nothing wrong with a store that sells craft beer generally from various provinces and states.