July 16, 2016 § Leave a comment
This week saw a first from the BC Liquor Distribution Branch; an apology letter.
A letter was send to every wholesale customer of the LDB. Given that they have a monopoly on all imported product and spirits, this mean close to 12,000 businesses was saw this letter.
The letter starts with an apology for all the shorted orders and out of stocks that have recently plagued the LDB Wholesale Centre. Over the last 3 years fulfillment rates have dropped to 91% yet overall revenues have grown to over $3B. What this means is that $300M in demand has gone unfulfilled and lost to the province’s general revenue.
The letter goes on to name a few causes. Technical, which I totally understand given that they are using databases that were old in 2009 to run $2B worth of orders through, and capacity. The first of these is easily solved and they are in the process of doing so, however the second is a little harder to solve politically although dead easy operationally.
Operationally you would simply lease more warehouse space or trucks, so why is this not happening now? Who doesn’t want an extra $300M in the coffers each year?
The answer is that the government would have to take legislative action to allow non-LDB distributors to deliver directly. All of a sudden this isn’t a revenue issue, it is a political issue, specifically political capital issue, and that is why it hasn’t been solved.
It is sad and you can’t blame the people working at the Wholesale Centre, they are doing what they can. The blame rests on the shoulders of politicians who can’t seem to see the forest through the trees, no matter what side of the political fence they sit.
Solving this issue will take bi-partisan leadership which is something that BC has lived without for decades.
This is just my opinion so if you have other solutions then by all means post them here.
November 22, 2014 § Leave a comment
This weeks announced changes to the liquor industry in B.C. will go into effect on April 1, 2015, but already their impact is being felt.
Social & traditional media has been jammed with calculations, prophecies and conjecture and, full disclosure, I have been apart of it to. However, after a Facebook conversation this morning I took a step back to get a broader perspective.
We have to remember that none of these changes will change the size and value of the market. If anything all they will do is divide the ‘pie’ into more pieces and shift value around.
It is no secret that BC Liquor Stores have been losing share to private stores each year for the last 10 years. Creating a level pricing field is likely the only way that this trend could be reversed using legitimate means. I expect that BC Liquor Stores will start to act like a large grocery concern and leverage their position to either mitigate costs or corner the market on certain products. This could mean disaster for many of BC’s private liquor stores who rely on price and product agility combined with well oiled marketing machines, but it won’t mean any more money into government coffers.
The other big announcement leads to further splintering of the market. Allowing liquor in grocery stores, no matter how it is done, will not lead to any greater revenues for the province or any increased sales for suppliers. It just means that there are more places for consumers to buy booze.
I truly hope that the quality of liquor retailing in BC will improve and I hope that these changes will instill a spirit of continued improvement, however these changes will not change the fact that we pay the highest prices in the country, and it is certain, that they will only mean the pie is divided in more ways.
I would love to hear your comments and feedback so please engage.
I will also be writing a piece specific to Wholesale Pricing so look for that.
May Quality Be Ever In Your Glass
August 5, 2014 § Leave a comment
The following is not sexy or glamourous. It doesn’t involve fancy lunches, travel or even snazzy software. In fact you likely have all the ingredients currently at your fingertips.
#1 Weekly Shelf Adjustments to accommodate new products, seasonal transitions, and changing market conditions.
This is definitely not sexy, but has a ton of impact. Studies over the last 50 years have all concluded the same thing. Consistent adjustments can lead to 3-5% increase in your bottom line per year.
#2 Re-organize your data into categories that best reflect your brand and your customers.
Every LRS fills a unique market position and has a different consumer base. Why your customers shop with you should be reflected in the categories you analyze. Looking at your business in the same way as everyone else only tells your staff and your customers that you are no different. Creating clear points of distinction not only creates loyal customers but is also the best way to increase your profits.
#3 Establish timely and simple measurements to stay on top of changes in consumer preferences.
Customers tastes and demands can change on a dime, not responding to these changes means you can’t possibly have the right product, at the right time and at the right price. Establishing simple and timely measurements can point to budding trends and therefore new opportunities to profit.
#4 Re-establish win-win relationships with vendors by managing categories and not products.
New product introductions, promotions, and pricing actions will have impact over entire categories and not just on one product. By effectively managing categories you create situations where the vendor wins, your bottom line wins and, more importantly, your customer wins.
#5 Know which LTO’s to pass along and when.
This is remarkably simple to do and can save you a ton of wasted price reductions. It is amazing how much money is needlessly lost by pushing through price reductions without first understanding how much a product needs to increase its sales to breakeven.
If you would like more details on these just let me know via the comments or by contacting me at email@example.com or calling me at 1-250-800-0072
January 10, 2014 § Leave a comment
I’m hoping that the government, policy writers, stakeholders ask one question when it comes to the plethora of rules and regulations surrounding BC’s Liquor Industry: Why?
The fact is that although there are hundreds of pages of law and documentation, BC’s Liquor industry is enveloped in millions of pages of policy. Often this policy has the opposite effect of its intention or it is in direct conflict with another policy.
If the threshold is truly public safety and revenue, then every policy should be put to that test. Why do we have this policy? Is there data to suggest that it is effective in insuring public safety? Is there truly a threat? Does the policy restrict the government’s ability to generate revenue or increase it?
When I talk to people about the liquor industry their eyes glaze over. Why because to have some understanding of the issues one must mentally walk through a quagmire of policy directives that often defy rationality.
The liquor review provides an opportunity to fix this, so I’m hoping that someone in government simply asks the question Why?
The Dork Uncorked