The Liquor Control Board of Ontario (LCBO) is a 97-year-old Canadian retailer and wholesaler of wine, beer, and spirits. With over 680 retail stores, around 400 LCBO convenience outlets, 5 warehouses, and $7 billion in annual revenue, LCBO is one of the largest alcohol retailers globally. They carry 34,000+ products from 76 countries to serve customers across channels like LCBO stores, convenience outlets, wholesale grocers, websites, and apps.
LCBO first launched online shopping on LCBO.com with buy online pickup in store (BOPIS) in 2016. In 2022, they launched a new website to better meet modern consumer expectations. Their digital experience drives significant traffic, with 1 million visits every week, making it the starting point for most customer journeys.
Vanda Provato, Chief Marketing and Digital Officer at LCBO, explained, “Our ecommerce vision is an extension of our overall vision which is to provide a personalized and easy to shop experience with convenient delivery options and physical integration. It’s also reflective of our brand promise, which is: perfect choices made easy, moments made great.
“Delivering on this value proposition is even more important in the coming years with the Ontario provincial government opening up the market and increasing the points of retail distribution that will include convenience and big box stores and further expansion in grocery. This could add thousands of new competing places for people to buy beverage alcohol, and we want to remain their preferred choice.”
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Challenge: Improving Digital Experience to Meet a Powerful Brand Promise
While LCBO had seen success in its stores, the brand strategy for its digital properties was struggling to meet modern customer expectations. This created several key friction points for their target audience.
First, LCBO’s ecommerce platform technology had become outdated. “With our old ecommerce platform, we didn’t have the benefit of AI. There wasn’t any machine learning,” said Provato. “So, all the search functionality was quite basic. And it was being directly managed by us. There wasn’t continuous learning. There wasn’t any improvement.”
Without AI and machine learning capabilities, site search was basic and required constant manual optimization. There was no mechanism for continuous improvement of results.
This led directly to the second challenge – widespread decreasing customer satisfaction with search and discovery. Without relevant results, customers were spending too much time scrolling through LCBO’s vast catalog. Feedback surveys and NPS scores made the dissatisfaction clear.
Additionally, LCBO lacked the true omnichannel capabilities that would deliver on their great brand promise, allowing them to better serve shoppers using both online and offline channels. They had rich insights into in-store behaviors but had no way to leverage this on the website to tailor experiences for customer loyalty.
Modernizing the digital experience to live up to their customer service vision meant addressing each of these core challenges with updated technology and AI capabilities.
Solution: Adopting Personalization AI to Drive a Strong Brand
To overcome the brand experience challenges and truly deliver on their vision, LCBO made AI-driven personalization central to their marketing strategy by partnering with Coveo. Specifically, they leveraged Coveo’s semantic search capabilities, which combines multiple types of data to help the search engine surface more relevant results informed by user intent. This meant search could serve customers without needing fully precise input.
LCBO also implemented Coveo’s machine learning algorithms to recommend products and content tailored to each user. For example, the site could mimic an in-store sales associates’ ability to guide shoppers to unique value. The goal was to connect insights between online behaviors with in-store interactions to power true omnichannel experiences and meet their brand promises.
LCBO now pays close attention to how users are searching and spelling queries to continuously improve search relevance. Monitoring search language also provides valuable insights into product demand signals – including items LCBO doesn’t currently stock in their inventory. This information gets shared with merchandising teams to evaluate potential new products to carry, providing market research that could identify opportunities to expand brand value. Even for searches without an exact product match, LCBO can recommend similar inventory to better serve customers.
Additionally, Provato touched on the importance of balancing sponsored product placement from suppliers with overall search relevance. Trade partners can pay for featured exposure, often tied to promotional campaigns. However, LCBO prioritizes putting the most relevant results based on searcher intent ahead of paid placements for the best brand positioning.
“It’s not just about driving conversion, because remember, our store network, it’s very convenient people can easily come in and buy what they’re looking for. So for us, it’s broader than just looking at conversion,” said Provato.
The Results: Higher Value Customer Service
Key Outcomes:
- Online conversion rate was more than double with search versus without
- 58% increase in click-thru rate to product pages from search results
- Average click rank improved by 16 positions
- Significant customer satisfaction in site search and ease of finding products
With AI delivering more relevant and personalized experiences that align with their brand messaging, LCBO was able to measurably improve key performance metrics and the subjective perceptions of today’s consumers.
Specifically, LCBO saw their on-site search conversion improve considerably thanks to their enhanced AI-powered search capabilities.
“When there is a search action involved [conversion] is almost twice as high versus a visit where there is no search involved. That relationship, that ratio, has actually improved with our new site versus our old site,” said Provato.
Average product position also improved in relation to search relevance. That is, relevant items appear far higher in search results – on average 16 results higher – with the new website. This has led to notable gains in product discoverability. Customers can find relevant products faster with less scrolling and repeat queries, helping LCBO make good on its compelling brand promise.
LCBO has also seen tremendous gains in satisfaction around site search and ease of product discovery. “What we’re seeing in our customer surveys is significant improvement in comments related to search and how easy it is to find things,” said Provato. With conversions up, findability improved, and customer perceptions positively transformed, AI delivered on LCBO’s customer experience vision.
What’s Next: Scaling AI Across More Touchpoints
While pleased with the customer experience and business improvements from their initial AI implementations, LCBO understands there is much more potential to leverage these capabilities across their business.
LCBO’s key focus areas for scaling Coveo AI include:
- Product Discovery Experiences: Continuously optimizing and enhancing AI-powered search, recommendations, and discovery experiences through testing.
- Personalization through AI: Combining known customer data with anonymous session behaviors to drive more tailored, individualized experiences, without relying solely on logged in users.
- Adopt a Single Platform for B2B and B2C: Migrating all digital properties onto a unified platform, including both LCBO.com ecommerce and the new wholesale site.
“We have a lot happening across initiatives to further elevate experiences,” said Provato. “A core focus is enhancing product discovery through search and recommendations. This means continuous optimization and testing – especially refining our recommendation models to serve more specific, relevant suggestions throughout customer journeys.”
Rather than generic popular items, LCBO wants to provide personalized recommendations matched to individual interests across the homepage, product pages, and even shopping cart.
To power this level of personalization, they need to combine data through loyalty programs and transaction history with session-level insights from AI about current activities. Bringing together these intelligence streams is key for tailored experiences – whether known customer or anonymous visitor.
They also want to focus on modernizing their back-end systems by connecting their consumer ecommerce site and new B2B platform onto a unified infrastructure. Said Provato, “This future-state environment will let us fully capitalize on investments in personalization and AI to fulfill our digital experience vision.”
Leveraging AI for an Effective Brand Promise
As LCBO continues its AI and modernization journey, platforms like Coveo that leverage AI and machine learning to automate and elevate search functionality will help them achieve a successful brand promise. Sheila Morin, Coveo’s CMO, explained, “If you want to offer that best in class, personalized experience, there’s no way around it. You need AI. You need an AI platform that can help you get there to connect all your omnichannel touchpoints together and offer that frictionless personalized experience.”
With Coveo’s end-to-end solutions, LCBO can mimic their renowned in-store experiences with data-driven, yet humanized digital interactions. This means leveraging AI to power relevant search results, tailored recommendations, and even natural language conversations that help customers find the perfect products.
Much like an in-store wine expert guides customers, Coveo’s AI aims to provide LCBO visitors with informed, delightful online experiences that reflect their individual preferences and contexts.
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