The Bar Towel

There have been some interesting newspaper articles about the LCBO recently, so I thought I’d pass along the highlights to those of you who didn’t see the articles.

In last Saturday’s Toronto Star Gord Stimmel had a full-page spread about the recent changes at the LCBO. The former president of The Bay, Bob Peter, is now part of management and is bringing some of his retail ideas to the LCBO, including two critical changes. First, that LCBO employees shouldn’t be spending so much time shifting stock, and second that there should be a greater focus on best sellers.

Stimmel wrote that the LCBO is reducing its warehousing activities and is switching to a just-in-time model, the end result being that many stores are either dangerously close to running out or are completely out of popular stock, leaving customers and suppliers frustrated. And the focus on popular brands has caused a reduction in the variety of the products that the LCBO offers.

In yesterday’s National Post, there was an LCBO sidebar next to a story on the upcoming privatization of the B.C. liquor sales. The Post reported that the LCBO “earned record profits last year of $905-million on almost $3-billion in sales.”

Is anyone else astounded by the sales-to-profit ratio?

The Post went on to say that “about 6,500 products are available in Ontario, with that number declining as the LCBO reduces inventory levels and concentrates on best-selling wines and spirits. Alberta consumers, by contrast, can choose from among 18,876 products at 907 private stores, some of which are open until 2 a.m. almost every day.”

Lastly, I saw an article in the Toronto Star a couple months ago that said that the LCBO was experiencing much lower hard liquor sales, and would try to mitigate their loses by raising the price of wine and beer accordingly. I’m not sure of the source of the information, whether it was conjecture or actually from someone within the LCBO.


Anyway, food for thought.

Part of the problem with this developments is the coporate ideology of maximizing profits at all costs, most often if not always done at the expense of choice and quality. If we pursue this logic to fullest, shouldn't the LCBO (and Beer Stores) sell only one product. Surely it's the best way to keep costs down. I don't know, a 30% profit margin seems good to me, if not excessive.

Joe.

<font size=-1>[ This Message was edited by: jcappadocia on 2002-07-26 14:06 ]</font>

First, that profit number is amazing - any company doing that is either performing very well or abusing their monopoly position to gouge the crap out of their customers.

Second, by concentrating on the best sellers they are simply following a logical business model. Problem is, this is a crown corporation, owned by the Ontario public, and should therefore serve the Ontario public. If I private firm wants to limit its offerings, so be it, but a public firm should service the public. Can you imagine if the health care system were only available for those with the most common ailments, or those that were most cost-effective to treat? Or if we only offered education to high-density, affluent areas because that's the best way to make money at it?

If a crown corporation is not going to serve the needs of all of its constituents, from the consumers to the producers and importers, then they should be privatized and have their legislated monopoly ended.

The key point here is that in the private sector if a company decides limit its selection and focus on best-sellers, someone else could presumedly step in a pick up the slack. Unfortunately that can't happen here in Ontario.