Alcool NB Liquor
Whether in the public or private domain, the measure of a corporation’s success can most often be traced to its cultural environment, where workplace attitude and satisfaction sets the tone for efficiencies, innovation and competitiveness. Such is the case with Alcool NB Liquor (ANBL), a provincial Crown corporation that has recently made an emphatic commitment and conscious effort to grow a culture of retail excellence for the residents of New Brunswick, the early results of which are already extremely impressive.
Formed in 1976, ANBL takes responsibility for the purchase, importation, distribution, and retail activity for all beverage alcohol in New Brunswick. With its headquarters in Fredericton, ANBL is directed by an eight member board of directors; seven are appointed by the Lieutenant Governor in Council, and the eighth is the CEO. ANBL provides services for New Brunswick residents and licensees through a network of about 620 full and part-time employees, 44 corporate retail outlets and 85 private agency store outlets with a portfolio of more than 1,800 products, including wines, spirits, beers, coolers and other beverages.
The initial mandate of the corporation was very much about control, but seven years ago there was a major philosophical shift towards becoming a top-notch retailer, focusing far more on customer experience. The Canadian Business Journal recently spoke with Brian Harriman, who took the helm as ANBL President and CEO in February, 2014 in the midst of a major evolutionary change within the organization.
The corporation has undertaken a colossal shift over the past 18 months in terms of culture, attitude and the overall approach to the business, and its success to date can be attributed to the entire corporate team and retail staff who have embraced the new plan and have been the instrumental force in driving its success. In addition to that, Harriman is also the first non-political appointee in the history of the corporation.
“The real shift to becoming a retailer has happened with more of a pace in the last three to four years, and then with the change in having a non-political CEO has been the latest iteration of that change,” he says.
The most crucial transformation has been directed towards the shopper, who is now unquestionably the predominant focal point, resulting in the need by ANBL employees to create excellent shopping experiences on a consistent basis. The new plan is yielding the kind of results ANBL employees had envisioned from the outset.
“It’s being achieved with a big focus on our Service Excellence Program with store staff,” Harriman says.
“There are newly invigorated, more dynamic marketing campaigns and programs. We are also beginning to renovate and improve the physical store environment. The combination of the staff execution, the improvement of our marketing and the store environments are all factors to success.”
The hard work and dedication of each employee is paying tremendous dividends, with customers reporting that they are extremely pleased with the improved methods of in-store delivery thanks to many innovative enhancements. The real proof is in the numbers, which indicate a robust pattern of growth.
“We just finished our fiscal year on April 30 and we grew our topline business by $9.5 million or 2.5% and we grew our bottom-line business 3.2% or just over $5 million in net income growth,” Harriman says.
ANBL has also enjoyed a pronounced growth in the average basket size of shoppers, which clearly speaks to their ability to offer more compelling promotions, and of the sales team in the retail stores to execute them with impressive results. Harriman can’t say enough about how successful the plan has been to date, but notes they must continue to constantly improve and innovate in order to stay ahead of the curve.
“We are very excited about the culture change. We’ve had a fair number of retirees, which has allowed us to bring in a significant number of new people into the organization, which is helping in the new way of thinking in becoming more dynamic and entrepreneurial in the business,” Harriman says.
Positive Customer Response
Another noticeable improvement over the past several years has been an increase in the level of empowerment and freedom for the executive team, but also with the decision-making at the retail operations centre. Such empowerment allows the skilled employees of ANBL to properly carry out the jobs and tasks they are experienced to do, without having to deal with needless outside interference. The changes allow the entire ANBL team to be more agile, quick and responsive to matters of interest happening in the province that the consumers are demanding and expecting from all retailers, including outstanding customer service and satisfaction.
Most satisfying for ANBL is the witnessing of how this new corporate platform and philosophy is resonating with their shoppers. Each day there is more and more anecdotal feedback from people visiting the stores, and it is those same customers who are mentioning how their in-store experiences have vastly improved from days gone by. Harriman credits a philosophical awakening within government that really got the ball rolling, which has allowed this Crown Corporation’s new approach to sprout up and prosper like never before.
“It’s almost $400 million in annual revenue, which is significant to the province. We needed to evolve in order to stay relevant and optimize our returns to the province,” he says.
ANBL is guided by a memorandum of understanding (MOU) that defines its relationship with the province over the course of five years. Since signing the MOU in the summer of 2014, ANBL has agreed upon financial deliverables for New Brunswick. The executive team has quarterly meetings where they update the minister of finance on the overall progress at the organization, but beyond that, ANBL has an independent board of directors, which is another change that was only implemented seven years ago, when highly qualified business people were specifically appointed to the board for their acknowledged experience and expertise.
“The relationship between the corporation and the province is a very healthy one. It also has very defined roles and responsibilities on how we are going to go about optimizing our value to them and a big part of that is the autonomy to run the business like a retailer,” Harriman says.
Working with Suppliers
An integral part of the success at ANBL can be attributed to a close working relationship with its suppliers. ANBL has positioned itself as being open for business, and that sends a clear, assertive message that the retailer is sincerely striving to seek out new opportunities to grow supplier brands and the categories within the stores. To achieve that objective requires flexibility and the willingness to accept new merchandising and marketing initiatives and experimenting with new products.
“We’re in the unique position whereby we have a great amount of data that we can offer suppliers in terms of how a product or promotion performed,” Harriman notes. “We are able to do this quite quickly, so it’s not a nine or 12-month lead time to have an opportunity to evaluate something in our stores. We’re seeing significant renewal and investment increases from our suppliers.”
At ANBL, defined category growth targets have been established, which means there is one for Canadian whisky, Irish whisky, Scotch rum, Argentine wine, Australian wine, etc. You name it, ANBL has it covered. Every segment of the store has a growth target for the year and tender calls are put out so suppliers can forward their applications. The suppliers then submit all the products they’d like for lineup consideration along with a specific marketing plan for each. The ANBL executive team then reviews the submissions versus their predetermined category objectives and for the opportunity of the amount of support they will provide. Partnerships with the successful applicants are then initiated followed by the launch of the new products on store shelves.
Due to limitations of physical space within store locations, each product on the shelf needs to attain a sales quota in order to remain in the lineup, which is the fairest way to go about it – let the public decide what it wants. To keep track of sales, ABNL has a green, yellow and red rating system to indicate the level of success of each supplier’s brand. Green indicates the brand is performing well and will safely remain on the store shelves. Yellow sends out a cautionary advisory, meaning the brand is not quite up to par and expectations are that it needs to do better. However, ANBL staff will work diligently with the supplier in an effort to improve sales. Red means the product is not meeting the shoppers’ needs and it will be earmarked for replacement. Volume quotas are published on a quarterly basis. If the supplier meets the quota, the brand remains on the shelf.
When a brand does not make it on the shelf, or fails to retain its position, it is often not due to it being an inferior product but is most often related to the amount of time and effort the supplier spent in properly investing in the brand. Did they take samplings and participate with the licensees in the province and go to promotional shows and other public events that help people to discover their product? Surprisingly, certain suppliers seem to neglect this all-important aspect.
There is a wide variety of stakeholders at ANBL, whether its licensees, the owners/operators of the 85 agency stores or microbreweries or cottage wineries and distillers, which results in a great deal of business to business interaction. Harriman says the entire team at ANBL is always working hard to find ways to be a good partner and create success for everyone.
“At the end of the day, it’s in our best interests to find platforms where we can all work together and we have made excellent strides in the past 12 to 18 months,” Harriman says.
New Brunswick has one of the lowest beer prices of any province or territory in Canada but, as it happens, their neighbour Quebec has the lowest, which at times can promote the temptation for illegal smuggling. To combat the scourge, ANBL has introduced a variety of new, innovative programs, specifically within the beer category that are very competitively priced. It is not individual cars driving through the province of Quebec bringing back a 24-case of beer that is cause for major concern or having a significant impact on the business at ANBL, rather it is the illegal businesses where truckloads of beer are smuggled back and sold bootlegging style to some local business licensees that cause a hit to bottom-line profits. But once again, innovative thinking at ANBL has already yielded positive results.
“We grew our sales dollars in beer last year for the first time in five years,” Harriman says. “There is an element of helping people understand where the proceeds go for those beer prices that we have in the province and seeing the benefit that they take out of it by being residents of the province.”
On a somewhat related note, the Canadian Association of Liquor Jurisdictions, which is comprised of the CEOs and chairpersons from each of the provinces and territories, convenes twice a year to share best practices and industry-related issues in an effort to find the best ways to collectively improve. There are also working committees that are comprised of the VPs and director level folks from each of the provinces who also meet once a year, with the ultimate goal of delivering the best service to consumers.
ANBL continuously sends out the message on the need for social responsible drinking. It’s about having a good time, but most importantly a safe time. As of this past April, ANBL now asks for proof of ID for any patrons who appear to look under the age of 30, which as Harriman notes, people should take as a compliment. The corporation does a great deal of work in the community to promote safe practices for everyone.
“We do a significant amount of work with MADD Canada, our lead partner on the social responsibility front,” Harriman says. “We are partners with them in an award-winning program on educating high school students and the negative consequences of impaired driving. The program is called 24 Hours.
There is a really powerful video presentation that we do with MADD Canada and we also spend a tremendous amount of time training our staff on social responsibility and we make sure they are checking IDs at the appropriate level.”
As an extension of the social responsibility, corporations and organizations are also more and more mindful of being as environmentally friendly as possible, and that commitment shines through at ANBL with several major initiatives.
“From a store designing construction perspective, we’ve set standards at all of our new stores, so essentially as their 10-15 year leases expire we have a commitment that all new renovated stores or new locations will be a minimum of 25% more energy efficient than the previous location,” Harriman says.
The ultimate goal of ANBL is to be viewed as a world-class retail organization that the people of New Brunswick love shopping at, with an abundance of excellent products to select from along with courteous, highly-skilled and well-trained staff members who are always providing excellent customer service. Increased sales will allow ANBL to give back more revenue to the province every year, with the proceeds being used to fund a variety of tremendous causes that help improve the lives of its citizens.
The stark cultural evolution is what really stands out along with the positive experience that is being attained for both the shoppers of ANBL and also its employees.
“One of the things I’ve really enjoyed seeing since I’ve been here is the different energy level in the building now. We’ve created more empowerment and more opportunity for people to contribute and it’s become a more fun place to work and the business results are getting even better,” Harriman states.
ANBL takes a lead role in supporting a number of community initiatives and is a proud sponsor of three elite annual festivals. The Atlantic Beer Festival in Moncton was held at the end of May. Due to overwhelming popularity – and it being the 10th Anniversary – a Friday night session was added to the regular Saturday event where more than 170 beers from around the world were available for tasting. The New Brunswick Spirits Festival is held in mid-November and will be celebrating its 20th anniversary in Fredericton. Finally, there is the World Wine Expo in Moncton, which takes place at the end of October or early November, depending on the year.
“It has been a great way to expose people to fantastic wines,” Harriman says. “As part of that we have our Wine Excellence Awards where we rate and evaluate wines and then bring them into the stores as part of the Award Winners Program.”
This past fiscal year ANBL contributed an incredible $166.5 million to the General Fund of the provincial government, which can be used for a variety of programs being run throughout the province in many local communities. ANBL supports a number of corporate initiatives across the province including charities such as the United Way. Partnerships have also been established with the Canadian Mental Health Association and the Red Cross. On top of that is a significant amount of store-level support for community and charitable causes that are of particular significance in each local municipality.
“Overall, with the level of understanding we have with the province and with the philosophical alignment we have with the government we are moving in the right direction. We are seeing that we have much more ability to make important decisions and be a proper retailer and it’s turning out in the results,” Harriman says. “I feel very good about the progress that we’ve made.”