Strategic Plan 2017-2020 - LCBO

1 Strategic plan 2017 -2020 Message from the President & CEO 3 About Us 4 Our Brand 4 Our Mission 4 Our Vision 5 Our Core Values 6 Internal & External Assessment 8 Assessment of Strategic Progress 8 Our Marketplace 10 Mandates 12 Corporate Social Responsibility 14 Maximize Returns to the People of Ontario 16 Support of Local Ontario Products 18 Looking to the Future 20 Strategic Priorities 22 Objective 1: Excellence in Customer Experience 24 Objective 2: Excellence in Operational Efficiency 26 Objective 3: Excellence in Employee Experience 28 Appendix 30 LCBO Three-Year Financial plan 30 Communications plan 31 Enterprise Risk Management 32 George Soleas2 Message from the President & CEOI am pleased to present you with the LCBO s 2017 /18 2019/20 Strategic plan . Our marketplace is evolving. Over the coming years, up to 450 grocery stores will sell beer and cider, with up to 300 of those locations also selling wine. Our strategy must evolve to be effective given this increased choice and convenience for consumers.

2 To succeed in this competitive marketplace, we will be focusing on new opportunities and fresh and innovative ideas. We are making important investments in retail training as well as new digital technologies to better serve our customers. In addition, we are making better use of data analytics and insights to make smarter business the same time, the addition of grocers to Ontario s beverage alcohol landscape represents a new opportunity for the LCBO s wholesale business. We will be a service-oriented partner to the wholesale channel and, in turn, provide benefits to Ontarians. Despite the changes to our competitive landscape, you will recognize similar core elements in this document as in our previous plans, such as maximizing returns to the province of Ontario, upholding our founding commitments to corporate social responsibility and community safety, and supporting domestic you read through this plan , keep in mind its transitional nature given our ever-changing landscape.

3 This plan is constantly evolving and our Strategic discussions are ongoing as we position ourselves to compete and succeed in our new marketplace. In October 2016, the LCBO held its largest ever All Managers Conference in Toronto, where more than 1,000 senior leaders gathered in one place to plan for future success. We talked about how we must let go of the status quo and embrace change. We talked about the need for greater colla- boration and working together as one team. We talked about creating a customer first culture throughout the organization. We believe we are on the right path and will continue to deliver value to Ontarians for years to come. Sincerely,George Soleas, President & CEO 3 Your Source for Entertaining IdeasLet s Get TogetherUncork Something GreatABOUT USOur Mission The LCBO s mission expresses our overarching, endless business goals and philosophies. It identifies why we exist our reason for being and what we seek to accomplish. Since 2013/14, our mission has been: we make a difference in Ontario by being a best in class, socially responsible, customer focused and profitable retailer of beverage alcohol.

4 Our market is changing rapidly, and our responsibilities and role as an organization are changing too. Our wholesale business is increasing in size and importance, and we must seek to embrace and succeed in that role. As a result, we believe it is time to update our mission to reflect the increasing importance of our wholesale role. In doing so, we also wanted to ensure that our mandates of corporate social responsibility, maximizing returns to the people of Ontario, and supporting local products were acknowledged and are excited to have developed a new mission which, we believe, achieves these objectives: LCBO MISSIONWe are a best-in-class, customer-first, responsible retailer and wholesaler, supporting our local communities and delivering value to Brand The LCBO is proud of its strong, reputable and complementary brands that promise to inspire, guide and delight our LCBO s corporate vision provides an aspirational sense of where we see ourselves in the 2013/14, our vision has been: to be the world s BEST beverage alcohol retailer.

5 This approach has driven how we do business, with a desire to be a customer-focused and efficient in our mission, however, our evolving role as wholesaler means that purely defining our success as a retailer excludes an increasingly important part of our business. At the same time, changes to our competitive landscape will require us to more deliberately define what success means to us and how we intend to compete. In developing our new vision, we focused on a number of core principles: Our customer is our priority: for us, our customer is our key focus. In an evolving competitive landscape where shoppers have more choice, it is more important than ever for us to delight our customers and win their loyalty. A broader definition of customer : rather than just looking at our retail business, we wanted to ensure that our definitions of customer and success include our wholesale business as well. A statement that makes Ontarians proud: we take great pride in being a Crown agency, supporting important government investments and programs.

6 As a public asset, we wanted a vision that would make Ontarians both our retail and wholesale channels, our customer experience is paramount, and we know we can delight our customers by: Focusing on our extensive product offering; Emphasizing and demonstrating our product knowledge and insights; and Bringing global experiences to our local market to engage our communities and enhance our trusted a result, we have arrived at a vision which symbolizes how we hope to succeed as a business over the coming years:Our Vision LCBO VISIONTo deliver remarkable experiences as the trusted destination for the world s wines, beers and the LCBO, we have identified and adopted a set of core values to articulate how we do business and what we represent as an organization. Our core values make up the foundation of our commonly-held beliefs and promises. More than just words on a wall, these values are our guiding principles for employee behaviour and organizational decisions and actions.

7 In fiscal 2016/17, we added Excellence in Innovation as our fourth objective. After careful consideration, we believe that it is best to elevate this objective into our core value of Excellence to: Signal its importance; Increase organizational awareness; and Focus the mindset and efforts of all our LCBO strives to foster a culture of innovation and to pursue new opportu-nities in an evolving environment. Innovation will underpin our three objectives (customer experience, operational efficiency and employee experience), and must be a way of working at the LCBO every day. We encourage new thinking, the testing of new ideas and adopting proven USOur Core Values 6 Customer Service We value our customers and are committed to providing engaging customer service. Our people are welcoming, responsible, outgoing, creative and connected; they are the ambassadors of our brand. Our people provide the human touch that creates excellence in the customer operate with integrity, transparency and good faith in all of our interactions.

8 We listen carefully, and treat one another with respect. We are honest, trustworthy and embrace innovation and learning. We value the ability to anticipate and respond to a changing business environment, to create solutions for new challenges. We encourage new thinking, the testing of new ideas and adopting proven concepts. We understand the power of community and draw on the strength of people working Responsibility Social responsibility is a public trust that we take very seriously. We promote responsible retailing and consumption by informing and educating our customers and stakeholders in the responsible and safe use of the products we sell. Our social responsibility efforts also encompass product quality and safety, environ-mental initiatives that produce positive change, support of communities we do business in, and partnerships with worthy & Safety We value the health and safety of our employ-ees, customers, business partners and the communities in which we operate.

9 Health and safety is an integral part of our daily work-place. We are a good neighbour. We look out for each other, adopting and practicing a safety- first CORE VALUESC ustomer ServiceHealth & Safety Social ResponsibilityExcellenceIntegrity7 INTERNAL & EXTERNAL ASSESSMENTCORPORATE SOCIAL RESPONSIBILITY**Challenges million Y/Y decrease Refusals 258,628 Y/Y decreaseTotal Fundraising$ million Y/Y increase Assessment of Strategic ProgressA SUMMARY OF LCBO 2016/17 PERFORMANCE*We monitor the progress of our Strategic plan through key metrics. By evaluating our performance relative to our mandates and objectives, we can review progress and ensure we are on track.# of Customer Product Quality Complaints Requiring Investigation216 complaints Y/Y increaseAverage Investigated Customer Complaint Response days days Y/Y decrease% Reduction in Same-Store Electricity Use 1% Y/Y decrease * Fiscal results forecasted based on LCBO year-to-date performance to Period 12 unless otherwise stated.

10 ** Fiscal 2016/17 results. ** Excludes Extraordinary Gain HO Sale.** 2015/16 results. The Customer Satisfaction survey will be replaced by the more robust Customer Engagement Study going VQA: Vintners Quality Alliance 2 ICB: International-Canadian BlendsMAXIMIZE RETURNS TO THE PEOPLE OF ONTARIONet Sales $ billion Y/Y increase ($48M over plan )Net Income $ billion** Y/Y increase (met plan )EXCELLENCE IN CUSTOMER EXPERIENCEEXCELLENCE IN OPERATIONAL EFFICIENCY82%Customer Satisfaction** (2015/2016) Y/Y increase over 2014/2015 Inventory Turns Y/Y decrease (met plan ) Expenses as % of Net Sales Y/Y increase (met plan )Customer Engagement Scoresout of 10 (2016/ 2017 ) no change FOR LOCAL ONTARIO PRODUCERSNET SALESVQA Wine 1$ million increase ICB Wine 2$ million increase Craft Beer $ million increase Craft Cider$ million increase Craft Spirits$ million increase Excludes all product not flowing through LCBO Supply Chain and Retail & EXTERNAL ASSESSMENTTHE ECONOMY Although Ontario s economic growth is expected to moderate slightly in 2017 , prevailing favourable conditions and steady consumer confidence are expected to provide a supportive foundation for consumer spending.