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LCBO launches innovation hub in Kitchener to explore new technology Add to ...

The Liquor Control Board of Ontario, the government agency that manages alcohol sales across the province, is tapping into Kitchener-Waterloo’s startup community as it seeks to modernize the way it interacts with customers at its retail stores.

Even though the LCBO already has an innovation lab at its downtown Toronto headquarters, the scope of development there has been limited because of what the LCBO admits is a lagging approach to problem-solving.

The LCBO, one of Ontario’s prized cash cows, has realized that a lot of the technology used by private-sector retailers is coming from innovation hubs rather than corporate headquarters. It has opened a small space at tech-hub Communitech called LCBO Next, where it hopes to pluck ideas from entrepreneurs who are already ahead of the game.

“We need to be just as up-to-snuff as those folks,” said Michael Eubanks, the LCBO’s senior vice-president of information technology and chief information officer. “We are an old organization that’s had a business model that’s been pretty static. It’s now changing.”

Four University of Waterloo co-op university students are part of the Kitchener team, which has already built a kiosk prototype that could potentially be used in stores one day.

One advantage of embedding them at Communitech is the flow of fresh ideas, said Mr. Eubanks. “They don’t come with any of the legacy baggage that potentially back at home office they may have.”

The LCBO wouldn’t disclose how much money it’s putting toward this initiative, but said spending is lumped into its operating expenses, which in 2015 came to $835-million.

Through its 650 retail locations, the LCBO is by far the leader in alcohol sales in Ontario, recording $5.6-billion in revenue last year, nearly $2-billion of which is siphoned off by the province as an annual dividend.

This year the Ontario government relaxed its stranglehold of the market by allowing a limited number of grocers to stock shelves with booze. Retail analyst John Williams said the LCBO’s market dominance isn’t an excuse to be complacent with how it treats patrons.

“The fact that they’re a government enterprise doesn’t get them off the hook for delivering quality products and the best possible service,” said Mr. Williams, a partner at consulting firm J.C. Williams. “They’ve realized that retailers are using technology to up the game.”

Many of the ideas that will be tested at LCBO Next were born from customer feedback. Imagine making a last-minute dash to the LCBO during peak store hours to find a wine to pair with your meal. The LCBO wants to provide customers with a virtual assistant on their smartphones to help guide them to make the right selection if all the floor staff is occupied.

Or, if you insist on speaking with a real person, product consultants may one day wear a “beacon” on their nametags that will help shoppers locate them in some of the LCBO’s larger locations, the equivalent of a taxi rooftop light.

The LCBO is also tinkering with a new phone app with voice-recognition technology that could be released before the end of the year, although it didn’t specify exactly what it would enable a user to do.

Mr. Williams acknowledges that much of this technology already exists in the marketplace and the LCBO would be “remiss” if it didn’t get its hands on it.

Mr. Eubanks said some other technology in the works will be invisible to the public eye and relate to things like supply chains, intellectual property or patents.

One thing that the LCBO wouldn’t disclose, however, is if any type of platform for marijuana sales would be in development. The federal Liberal government is expected to legalize cannabis next year and in Ontario the LCBO has emerged as one of the front-running candidates to sell it.

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