"PiinPoint has become an integral part of my role as Retail Analyst at Cushman & Wakefield Waterloo Region. The platform allows me to put together professional looking reports and provide clients with the insights they need to make real estate decisions.
I honestly don’t know how I would do my job effectively without PiinPoint."
Jessica McCabe, M.Ed.
Retail Analyst
Mike Tompai, VP Store Development and Real Estate, LCBO
State of Location Intelligence and its impact on Retail Real Estate Development
Published: September 15, 2022
As the magnitude of change and acceleration of trends has created challenges during the years of the COVID-19 pandemic, it has forced retail leaders to rethink their business models and strategies as digital technologies are evolving and consumer demand is rapidly shifting.
This new world brings a range of tough challenges and questions for retail leaders at the LCBO.
To get some thoughts on these questions and more, PiinPoint’s Chief Revenue Officer, Tom Peters, sits down for a conversation with Mike Tompai, Vice President of Store Development and Real Estate at LCBO to hear his thoughts.
Tom Peters, PiinPoint
Well welcome to our first in a series of leadership discussions on the state of location intelligence and its impact on real estate development. I'm Tom Peters, Chief Revenue Officer at PiinPoint. PiinPoint provides a cloud-based location intelligence platform for real estate planners.
Today I'm pleased to be joined by Mike Tompai, Vice President Store Development and Real Estate at LCBO. Welcome Mike and thanks for your time today. I am looking forward to the discussion and hearing your thoughts on some topics.
Mike, let's just jump in with a little background. Tell me how you got into this field and a bit about your career?
Mike Tompai, LCBO
Thanks Tom. Listen, I'd be remiss if I didn't say thank you right off the top to you and to PiinPoint. Truthfully has been a great partner both during my time with the LCBO and certainly previous to that at Tim Hortons. So a pleasure to be here today, and thank you for having me.
As it relates to my background, I found myself here at the LCBO, I guess I'd say I started off many, many years back, graduating from the Western University in the urban development program. This is where I dipped my toe in the water I guess with GIS and spatial analysis. But really, my focus was on commercial development, bolstered through years of hands on experience, but also through additional education that I received through UBC and the Urban Land Economics program.
The early years of my career I spent in brokerage and then shifted over to retail leasing with a retail developer and landlord. I spent a few years there before moving over to the tenant side where I spent a good nine years with Tim Hortons. Most recently with the LCBO, I am working on network strategies and looking for ways to grow and develop their respective brands.
Tom Peters, PiinPoint
That's fantastic Mike; lots of years under the bridge! So, tell me a bit about your team at the LCBO and the kind of skill sets they tend to have, the size of the team, and what they do on a day to day basis.
Mike Tompai, LCBO
Yeah, it's scary how quickly it goes by. I've got the luxury of a very talented team here Tom, about 55 deep, and covering a slew of things related to real estate and development - cradle to grave. I have a very talented staff, particularly in the front end with the location analytics team, but also, right on through planning and design, construction, real estate, leasing, and our performance planning.
Then on our asset management side, we've got strength in numbers where we manage our lease administration, our rent setups, and running occupancy and performance reports.
As you know, we own about a third of our overall portfolio. So between leased and owned sites, we deal with all of the intricacies that arise in those various settings from a property management facility standpoint, as well as supporting our retail store network with a facility service desk, and ultimately, our corporate initiatives around environmental sustainability.
So I have a very robust team and feel it's a real honor to be able to be a part of that.
Tom Peters, PiinPoint
Yeah, it's a fantastic team. I know a few of them so I know you are lucky.
Mike Tompai, LCBO
Yeah, I think to your point, and how lucky I am, of particular interest for today's discussion, I want to call the location analysis team on the front end. They are the demographic experts really at the end of the day, and they lead what the analysis team does and determine how we look at driving incremental sales and bottom line revenue. They lead the discussion around market optimization, and they're working collaboratively with customer insights and other teams within the organization. For instance, they run regression analysis and segmentation to understand where our customers are shopping and how they're behaving, so that we can better understand how to curate analysis for our respective internal customers at the end of the day.
Tom Peters, PiinPoint
That's a good segue into how your team works in the LCBO, how they collaborate with other departments, marketing, merchandising, store ops and even outside the organization and logistics outside head office, and how have those roles changed over the years?
Mike Tompai, LCBO
We're a fairly large organization at the end of the day, and I think many mid to large organizations struggle with silos and sharing of information. At LCBO, I think things are starting to open up across all departments. There is increased collaboration and sharing of information on understanding store performance, especially plan versus actual, that has visibility to all different teams to understand where we stand compared to the targets we're ultimately trying to chase.
We put emphasis around how we measure ourselves during our post implementation reviews that we do on an annual basis. Other teams are also held accountable for the different decisions they make. So we want to make sure that we're sharing information and we have that data, ultimately centralized, so that we're making decisions based on the same information.
We really have continued to evolve the last couple of years where we have been working virtually. It's really important that we're holding ourselves accountable and keeping ourselves in check. Our business continues to evolve and on the B2B side of things, as well, obviously, with the primary focus on B2C. We've got 450 Odd grocers that have come onto the scene, and another 600 agencies that have cropped up primarily once in rural only markets but we see them in suburban areas and on the fringe of urban areas. So all of that means increased competition and increased points of sale. It's certainly forcing us to turn our attention to how we want to optimize our markets going forward.
Tom Peters, PiinPoint
How have the tools changed over the years and how has access to more sophisticated tools and data analytics really changed the game for you guys?
Mike Tompai, LCBO
It's funny; I'd say we actually use them today! Gone are the days when you would call up Store Operations and say, “Hey, we have this opportunity at 123 Whatever Street, what do you think?”
And they would say “My grandma used to live in that area and she didn't like the “cut of the jib” of the guy who owns it”.... It's scary that this method was actually utilized. I remember when I first started with Tim Hortons, some of the leasing folk talked about how they'd rent a plane and fly over smaller towns to understand traffic patterns and number of houses, etc. Thankfully those days are behind us.
We've got much more reliable demographic data sources that lead us to decisions we make today. We use statistical forecasting software that's available to us. It's absolutely incredible how we've developed in such a short period of time.
I would say it's almost like a “location analysis utopia”, in terms of where we are today. So, you know, that's really what we strive to be at the end of the day is, is folks that are adopting that type of technology are using it to to better our decision making at the, at the front end, so that we ultimately open up more efficient and in stores that ultimately are you going to deliver to the bottom line.
In terms of the performance, it's so important to be able to evaluate and assess what the incremental gains look like as you build out your three to five year development plans. And further, it's so key to devise your plan so that capital resources can be planned out to fulfil the bottom line expectations. So putting a plan together driven by data, is key in terms of formulating and being able to execute to the bottom line.
Tom Peters, PiinPoint
Now thinking about Omnichannel and the maturity of digital technologies, how is it impacting the way your team plans real estate? Are there key adjustments you and the team are making because of the advent of a lot of digital technologies and the omnichannel demands on your business?
Mike Tompai, LCBO
I think today, we're probably taking a bit of a two pronged approach to this. From my perspective, LCBO has about 680 brick and mortar stores across the province. What are we doing about those in the future? As the competitive landscape continues to open up, how do we address the current state of those stores? Which ones do we need to renovate and where we need to stick our capital at the end of the day as future considerations for growth. These are factors as we consider the omnichannel experience.
From a digital standpoint, we were well aware that these are initiatives that we need to be focused on going forward. So not only is it the real estate side of things, because we understand that there's only so much access to capital, but when we make those decisions on the size of our store, there's a trickle down effect to the various groups, whether it's retail operations, supply chain, etc. If we were to shrink the box, there is an impact there. Are there alternatives to how we display merchandise? Or also considering resource protection and security, theft is a big contender in our retail community. And how do we want to offer merchandise going forward, that we need to take into consideration and that's where we can look to that digital platform, to further enhance some of those initiatives and ultimately drive that customer experience a little bit differently than perhaps we're doing it today.
That leads into the second prong of our approach. One of the things that we're doing is running a pilot program in our newest “flagship” store on Queens Quay, just east of Young at the base of our new head office tower. We are in partnership with Cineplex Digital to really create a digital experience to glean some insights in terms of how our customers are shopping our store and where they are spending the most time, where are they lingering within that store? We want to understand how to better convert customers and whether or not offering more premium products is a factor that we should consider going forward to drive our business.
Tom Peters, PiinPoint
That leads me into talking about customer behavior and preferences. We've just gone through two and a half years of a pandemic. What we've seen in other retail settings, at least from PiinPoints’ point of view, is a change in the demographics of urban areas or de-urbanization. We see a lot of population growth happening outside of major urban centers. We know people are buying things differently online and pickup for example. Have you seen a change in the consumer, and what's most striking to you that has changed over the last few years?
Mike Tompai, LCBO
Yeah, it's been an interesting ride over the last couple of years, no doubt. On the surface, we've seen a significant sales migration there, so we continue to shift and adjust our programs to accommodate and complement that shift from urban to suburban/rural and rural markets that have truly taken off and grown. And I don't think that we're an anomaly by any stretch on this end of it, but certainly we're paying attention to it and trying to understand if this is permanent. It’s too soon to say perhaps, but lately things are starting to soften a little bit in those markets. Maybe that's just normalization occurring but whatever that looks like we're ready to adjust and cater to our customer accordingly.
We saw a significant shift in the basket size due to a major increase in our customers' propensity to buy more. Whether that's panic buying or just to “stocking their pantry” consumption, we saw an impressive amount of sales converted on the retail side. Conversely, we lost it on the B2B side, but we're starting to see that come back.
Across all programs, ecommerce same day and curbside pickup programs specifically, we accelerated through the last couple of years and hit numbers that truthfully were never dreamed of in any short or long term forecast. But we are seeing some softening there, but we'll continue to bolster those programs and look for ways to incorporate those initiatives going forward, both in new store design and also where we're renovating or reconfiguring stores.
We want to be aware that whatever the “new normal” looks like, we are ready for it. We're constantly looking at how to design our store of the future to account for these changes. We have various initiatives for the customer such as three or four tier shelving that impacts the customer experience and how they shop the store but also from the back end perspective of inventory and fulfillment design.
There are capital intensive projects as well. The Ready to Drink platform has grown exponentially over the last few years. So do we want to continue to bolster that through refrigeration programs? This is probably one of the most costly elements of our stores. So we're constantly looking at that analysis to determine whether or not we want more beer “cold rooms”? So all of that comes back to the team having that data at our fingertips so we can inform those kinds of decisions accurately.
Tom Peters, PiinPoint
We are approaching a new normal - where will it land? Nobody knows but we are in interesting times! It's cool that the analytics that your team does informs more than just finding the “right dirt” for a new store, but they inform many other decisions as well.
Last question Mike as we wind down here. What keeps you up at night when you're thinking about keeping fresh in the industry, and the challenges coming down the pipe for you and the LCBO.
Mike Tompai, LCBO
Yeah, lots of things that keep me up at night. I'd say, the biggest one for me is network optimization. We talk about it and we try to make sense of it at the end of the day, and we all have our different perspectives. What does it mean to “optimize?”
There's a ton of data: we have no shortage of data throughout the organization. It’s just a matter of how clean is that data and where do you want to go with it? Then you have to align the various stakeholders to the most common KPIs or organizational goals, so that we can all move forward and again, avoid those silos. A collaborative approach will drive the business forward.
So to me it's a matter of “herding the cats” and making sure that we're all in this together. We need to understand the different opportunities that we have to leverage the data that's available to us, and then make the decisions accordingly. But ultimately, we need to revisit and come back and see what’s working and what isn’t and then continuously improve!
Tom Peters, PiinPoint
Well, that's all I had for today, Mike. Really appreciate your taking time to talk to us today and sharing your views on a range of topics.
Mike Tompai, LCBO
I appreciate it Tom. I have a lot of time with the entire crew at PiinPoint - you have been a great partner, and I know you'll continue to be! So appreciate the opportunity and thank you and your team as well.
Mike Tompai leads LCBO on strategic planning, leasing, design, construction and asset management. His focus is on a continuous search for creative ways to drive revenue growth from site analytics through to project development oversight within a fast-paced and rapidly changing environment. Previously, he led Tim Hortons in Real Estate & Development initiatives across the Canadian marketplace. Most recently, Mike has focused on delivering a 200,000sf new head office for LCBO, transforming the traditional office environment into a dynamic workplace.
Tom Peters directs PiinPoint’s Revenue Team with over 30 years of advising clients on achieving improved pricing discipline, building revenue and profitability management solutions, and marketing performance improvement to drive demand. Prior to joining PiinPoint, Tom was the former Customer Insights & Analytics Partner and Pricing and Profitability Lead at Deloitte Canada. He is currently accelerating PiinPoint’s growth throughout Canada and the US to help further empower customers in solving today’s most pressing and complex retail network priorities.
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