THE CHANGING FACE OF LICENSEE RETAIL STORES
by Tim Vandergrift

t may seem like it was only yesterday, but it’s been five years since the BC government amended legislation to allow for LRSs in the liquor distribution system. We’ve come a long way - a very long way - since then. While there have long been RASs (rural agency stores), as of March 2007 the province of BC has gone from 290 Cold Beer & Wine Stores half a decade ago to over 631 private LRSs currently in operation! 

When the legislation changed to allow LRSs, there was a lot of media coverage, some protests, and quite a lot of editorial weighing-in. The Consumers’ Association of Canada paid for studies purporting that privatization would raise prices in BC, and many in the left-of-centre news media were sure that LRSs were getting unfair subsidies from the government. 

It was a very serious controversy at the time, but in hindsight it is actually pretty funny: two distinct voices on the same side of the issue, one stating that government subsidies would allow private stores to undercut the LDB, and the other saying that they would raise prices consumers paid. Who knew there was a way to undercut competition with higher prices? Despite the dire warnings of increased competition from LRSs, it is estimated that the LDB will take in $810 million in fiscal 2007/08. It seems to be working out nicely after all. 

Of course, our current situation was not arrived at with all smooth sailing. Like everyone trying something new, there was some fumbling as LRSs found their feet. Some early stores essentially mimicked the tradition of off-sales, with a service counter tacked onto an existing neighbourhood pub or bar. While this proved a convenience for consumers simply looking to pick up a beverage during off hours, it did little to attract people to a complete retail experience. 

Concurrent with that were establishments that either walled off a section of their floor to make a small retail shop or did a build-out on the existing building. In areas where retail space is scarce, like mixed use areas with light industrial and housing, some of these still exist and do a good job of servicing their customers - the Gillnetter Pub in Port Coquitlam being one example. 

But where an existing licensee was not a destination store, and retail space was available within the prescribed distance, something new was called for, and these new rules allowed for the first dedicated, stand-alone LRSs.
Early efforts were occasionally mixed with staff (and sometimes ambience) appropriated from the existing establishment. While many licensees were used to the kind of regimen that it took to make a neighbourhood pub grow, like sponsoring sports teams, offering specials, and featuring events and entertainment, the realities of operating a dedicated retail customer service experience weren’t as well understood right away.

However, with the hard work typical of entrepreneurs in the industry and a little help from consultants, beverage companies, retailing coaches, and associations like ABLE BC. LRSs are now competing with other retail shopping experiences on a more level playing field. 

Of particular note in the last five years have been wine and spirit merchants. While most LRSs are small business people working hard to manage everyday tasks and keep up with regulations while running busy stores, wine and spirit merchants have the financial wherewithal and motivation to grow the industry, by growing each business with tasting programs, educational events, and sales promotions that not only increase traffic, but also increase awareness and help branding. 

Perhaps another motivator is the appearance of retail liquor store chains in the province. Liquor Barn and Liquor Depot operate numerous stores in BC, and more in Alberta. With vast resources and intensely focused corporate sales growth goals, they bring a very sharp and well-developed skill set into the market. The days when an LRS opened its doors and watched people line up are pretty much gone, and staying in competition against corporate-driven stores will definitely be a challenge in the future. 

LRSs trying to achieve growth must look beyond consumers seeking an off-hours alternative to LDB stores. The LRSs that have grown fastest and prospered the most are those that have adopted the four pillars of retailing excellence: operations, marketing, merchandising, and sales. 

Operations is the process of ensuring that a business is efficient and effective, managing resources that deliver goods to customers. No matter how well planned an LRS is, or how knowledgeable the staff is, if the shelves are empty and the POS system doesn’t work, success will elude it.

Marketing is the process of recruiting new customers and expanding relationships with the existing ones. It’s the basics of finding people who want your products and making sure they’ve got solutions for every need they have. Effective marketing takes time and effort, but help and coaching are available, and a good marketing plan is essential to growth. 

Merchandising is presenting and selling goods and services. A dusty, poorly laid-out, unattractive store prevents sales, while a beautiful, well-lit, clean environment with inviting touches throughout can increase sales and help build long-term consumer relationships. There are now some beautiful and bright LRSs with a great product selection and attractive merchandising.

Sales is the completion of commercial activity - asking for money in exchange for goods. It’s a slightly naughty word to many people, but a professional sales approach really boils down to finding out a consumer’s needs through constructive listening, and presenting solutions to them that meet those needs. The fastest-growing LRSs commonly have at least one staff member who is a “guru” to their customers, who come back again and again to purchase their products. It isn’t necessarily personal charisma or hard-sell techniques that make a guru; it’s the ability to find the right product by understanding a need. 

There has been a steady evolution of LRSs in the last five years, with ongoing renovations to expand and update premises happening all over the province. New décor, expanded cooler space, larger locations in high traffic areas, bright new displays and eager, well-informed sales staff all speak to strong and continued growth in the future.