Exclusive: Canadian alcoholic beverage retailer LCBO is modernizing e-commerce with artificial intelligence

Vanda Provato, director of marketing and digital at the LCBO

LCBO enhances omnichannel customer experience and prepares for growth with AI-powered personalization.

The age of the store chain I recently spoke with Vanda Provato, director of marketing and digital solutions at the LCBO, a crown agency of the provincial government of Ontario, Canada. The retailer generates more than $7 billion in annual beer, wine and spirits sales and operates a network of more than 1,000 retail locations, including licensed convenience stores, as well as a significant digital media presence.

LCBO will soon expand, addition more retail distribution points in grocery, convenience and big box stores, but it has found its legacy the e-commerce platform became outdated and customers spent too much time searching for products, leading to a decline in customer satisfaction.

Provato explained how LCBO leverages Coveo’s AI-powered e-commerce and enterprise search platform to provide customers with a modern, omnichannel experience and properly support the growth of its business.

What challenges has the LCBO faced with e-commerce?

Our customers primarily use our website to check inventory and browse or search for selected products before going to their local store to purchase. Our digital footprint has grown alongside our physical presence – we now typically see 1 million site visits per week.

In our quest to deliver a compelling and seamless customer-first experience, we realized that several challenges were holding us back. Firstly, we were working on legacy systems, which meant we had limited functionality and integration issues, hampering our ability to adapt and effectively meet modern requirements.

We also struggled with a lack of personalization, which meant we were unable to tailor user experiences based on context or in-session interactions for anonymous users. The inability to use loyalty program data for logged-in customers also puts us at a disadvantage.

Finally, manual search rules and the lack of machine learning capabilities have led to time-consuming and frustrating searches for our customers who must navigate an extensive product catalog of over 34,000 products. This frustration manifested itself in lower Net Promoter Score (NPS) and satisfaction metrics.

Why did you decide to implement artificial intelligence-based personalization?

To address these challenges, LCBO has undertaken a comprehensive modernization effort to transform processes and technology to align with our vision of a more efficient and customer-centric experience.

Our comprehensive modernization efforts began with customer-facing elements, including “replatforming” our website and implementing Coveo as our AI experience layer for product discovery and recommendations, with plans to use it for personalization in the future.

We realize that delivering truly personalized experiences is a journey. AI and ML technologies are crucial. The LCBO also recognizes that people value personalization but also want to protect their privacy. Most visitors to our site don’t log in or use guest checkout, so the AI ​​must work even without the customer’s personal data, based solely on what the shopper does in the session.

(Read more: Conclusion: the era of artificial intelligence has arrived)

How did you choose and implement Coveo?

Having the right search partner is an important part of our digital transformation and vision to simplify online product discovery and provide our customers with an effortless experience, while streamlining the customer journey both in-store and online.

Since two thirds of our customers shop both online and in stores, the omnichannel experience is very important to us. This customer segment generates almost twice the annual spend of single-channel shoppers.

To achieve its goals, LCBO needed a partner with deep experience in both business-to-business and business-to-business commerce, as well as AI-powered search and personalization technologies that would deliver relevance and drive financial impact.

Specifically, we selected Coveo for its ability to unify our data to offer relevant search results, enable predictive search using AI models, improve our product recommendations and create a unified search experience across our digital channels.

What were the results?

After implementing Coveo in business-to-consumer commerce, we saw significant increases in relevance and conversion rates, with a 58% increase in click-through rates and a 2x increase in search conversion rates. This means that customers find what they are looking for quickly and efficiently.

We expect to see similar results as we roll out our new online business service this spring. As a result of Coveo ML’s capabilities, we have seen significant improvements in search ranking for desired products, with a 16-position improvement in product placement across our product pages and search lists.

Most importantly, improvements in product search and discovery have enabled us to better connect customers with the most relevant products in our catalog, leading to a 3% increase in customer satisfaction scores.

Finally, the Coveo platform enables us to gain greater insight into consumer behavior, which influences future product merchandising and purchasing decisions.

(Read more: Direct selling retailer Blindster boosts search returns with AI)