No easy task to qualify for LCBO kiosk: analysts
On Tuesday, big grocery chains heralded the news: LCBO Express kiosks were coming to select grocery stores.
On Wednesday, they were equally enthusiastic, but mum as to which of their locations — if any — fit the explicit terms and geographic limits outlined in the Request for Proposal document on the LCBO’s website:
Stores must offer at least 2,000 square feet of retail space for the kiosks; it must not be within half a kilometre of an existing LCBO locations; employees must have access to the store’s washroom and if its further than 45 metres from the kiosk, they must have space for a new one; and the store itself must be at least 15,000 square feet with 12,000 of that dedicated to food products.
The list goes on; a list analysts say is so stringent they’re doubtful the LCBO ever supported the idea of grocery store beer and liquor.
“It’s astounding,” said Kevin Grier, a market analyst at the George Morris Centre in Guelph. “I’m very, very surprised. It sounds like the LCBO doesn’t want them to sell booze in grocery stores because that’s a lot of space to have to give and a lot of restrictions.”
The space and size criteria are to ensure “adequate selling space for a good range of products, including Ontario craft beer and VQA wine” and “operational efficiency,” said LCBO spokesperson Heather MacGregor in an email.
Grocery stores have until May 9 to apply for the province’s long-awaited pilot project which will see 10 kiosks installed in stores across Ontario by the end of the year.
Seven communities, including Toronto East, Toronto West, Mississauga, Ottawa, Virgil, Thorold and Longo, are being targeted due to liquor store “service gaps,” although MacGregor said not all will necessarily get one since the pilot will go to the “most competitive proposals.”
The RFP defines Toronto East as the area east of Coxwell Ave., south of O’Connor Dr./St. Clair Ave. E., west of Victoria Park Ave., and north of Gerrard St. E.
The catchment area houses several big name grocers, including a Valu-mart, Loblaws, Metro, No Frills and Sobeys.
Based on the RFP, the Loblaws is ineligible because of a built-in Wine Rack, as is the Metro since an existing LCBO is just 450 metres away.
Spokespersons for Loblaw (No Frills, Valu-mart) and Sobeys expressed enthusiasm for the idea, but declined to comment on whether they intended to submit proposals and whether their stores met size requirements.
In B.C., an analysis by the Vancouver Sun found that under proposed new provincial rules requiring a similar distance (one kilometre) to that of Ontario, only two of the city’s 53 big grocery stores would be eligible to sell booze.
Even once the 10 Ontario kiosks are installed, it likely won’t make much of a difference for consumers, said Rob Gerlsbeck, editor of Canadian Grocer, nor will it diminish complaints over alcohol availability across the province.
“If you believe that beer and wine should be more widely available to consumers in stores rather than LCBO stores this is not a solution,” Gerlsbeck said. “This is the government coming up with stringent rules that will put a few more liquor stores out there in circulation but not that many.”
Ultimately, Gerlsbeck and Grier agreed, it’ll be up to grocery stores to weigh the pros and cons of having a store-within-a-store.
“If they think they can draw more traffic to their store by adding an LCBO express and that’s going to grow their sales they’re absolutely going to want to have one,” Gerlsbeck said.
But “to turn over that much space they’d have to do an analysis about the profitability,” Grier said, “that’s an awful lot of space to devote within your store.”
