The LCBO, for all intents and purposes, is a hierarchy that has not demonstrated an interest in the issues affecting their rural retail family-run partners.
Since most retailers are nervous with the possibility of retribution, they are unwilling to voice their concerns.
The OCSA has met with a few LCBO Convenience Store operators and unfortunately the channels of communication are not as powerful as we would hope.
Very little margin, high costs to retailers, no expansion of product lines depending on demographics or customer needs and unfortunately there doesn’t appear to be any current interest from the Ministry of Finance to enter a business discussion.
However, the main benefit we did note is in many cases the collaboration was a traffic generator but due to seasonality, this can be short lived in many communities.
Ideally we could bring the 400 locations under one roof (like the OCSA) to insist that the government direct the LCBO to collaboratively look for ways to better the rural communities and build a sustainable business relationship.
We are asking that your Ministry consider this proposal as the template to move further into an open market as part of the PC platform, while we patiently await the entire review of the way Ontarians can access their beverage alcohol in the future.
Recommendation for LCBO Convenience Agency Outlets:
One area that the Ministry of Finance could quickly consider is the retail sales costs of all beer and liquor products sold in our Agency Stores, while respecting the minimum prices set out by the LCBO.
The option of charging a higher price and allowing the Agency Stores to earn a higher profit is the easiest solution. Keep in mind that bars, restaurants and even delivery companies can charge higher retail prices on these same products to recoup operational costs.
We also know that people shop in the convenience stores for quick and local services with the understanding that they will pay a higher margin for the convenience and location.
1) The government doesn’t have to fight with large brewers about reducing their profits or not allowing them to pass along delivery costs.
2) Customers know that c-stores charge more than grocery stores or mass market retailers.
3) Set a maximum amount the agency can charge to control the amount the customers will have to pay. We suggest this be a 10% above the retail the beer stores post. The 10% + the 9.8 % Agency Stores make now is equal to the average margin convenience stores make on selling beer in Quebec and the USA. i.e., 20%
Here is link to the entire letter sent to Minister Bethlenfalvy (Minister of Finance) on behalf of LCBO Agency Stores.
Editor’s note: The opinions expressed in this column are the author’s and do not necessarily reflect the views of Convenience Store News Canada.