Danny Ho, the LCBO’s Director of Innovation and New Business and the leader of the LCBO Next innovation lab at Communitech. (Communitech photo: Sara Jalali)

Months ago, when the LCBO began building a new downtown Kitchener retail location at 340 King St. W., Danny Ho, the LCBO’s Director of Innovation and New Business, and the leader of the LCBO Next innovation lab at Communitech, watched its construction and then had one of those lightbulb moments. Ho saw an opportunity.

In the three years since the doors of his lab opened, Ho and his team had landed some solid wins, helping various corners of the province’s alcohol retailer shore up and modernize operations through creative technological solutions.

The process, Ho says, required “finding sponsors within corporate who have the means and the will and the interest to work with us to build something.”

Which was fine on its own. But the process left Ho with the nagging feeling that “we were leaving lots on the table – that we could be even more efficient,” he said.

And then that store on King Street – which was little more than a stone’s throw from the lab’s Charles Street West location – began to take shape.

And with it, an idea.

What if that nearby store, and another LCBO location farther up the street, could serve as a joint test-bed – places for the lab and its designers to frequently and casually interact with customers, with employees, with the store manager, discover pain points, quickly design solutions, test them, and then iterate?

“Like all other innovation labs, we’re trying to, in large part, help serve the mothership to bring back value, to help with revenue, build stronger relationships with customers and staff, cost savings, cost avoidance, all these great things,” says Ho. “But we’re also helping them to bring new things to market, or bring new things to operations.”

With that in mind, Ho reached out to Kendra Greenwood, the LCBO’s Acting Director, Store Operations and Support, and described his idea.

Greenwood, who is a Waterloo Region resident, liked it, and brought it to her vice-president, who also liked it, and at the next meeting of the LCBO’s Innovation Council, the idea of “pilot stores” was raised and was quickly given a green light. That was 2 ½ months ago.

Fast forward to Sept. 13, when Ho and his team officially unveiled their “alpha” and “beta” test locations, the former being the new LCBO store in Kitchener, at 340 King, and the latter being the store at 115 King St. S., in uptown Waterloo.

As Ho explains, an alpha software release is one that may contain incomplete, or partially complete, features. A beta release is one that is generally more complete but may contain unanticipated bugs. Ergo, the 340 King location will be the place where the lab tests its just-out-of-the-box products. The 115 King locale will receive products that are more mature, but perhaps not quite ready for prime time at all LCBO locations.

“In our Kitchener-Waterloo “alpha-beta” pilot stores we will be able to  validate that the right features are being built in order to better serve our retail customers and store staff, and ensure that features work as intended and will be readily adopted,” Ho explains.

And the benefit?

“This approach can significantly reduce project cost and project risk when developing new customer experiences – because we are validating with our users and getting their buy-in from the start of the product design cycle.

“With the opportunity to incorporate store staff and customer insights throughout the design, development and testing phases, we have the potential to build the right products, on the first attempt, and at much lower cost.”

The lab has rolled out two products for test thus far. One is an app that helps customers search and locate products. The other is a “mixology” app, that offers recipes based on LCBO products. A kiosk has been installed at 340 King West just inside the front door, allowing staff and customers to experiment with the apps.

“One of the biggest barriers to purchase is: What do I do with [a particular bottle of alcohol],” says Stacee Roth, the LCBO’s Director of Spirits.

“Our strategy at the LCBO is to train our staff to be experts in cocktails. So, the idea was, let’s have our own app to … create some advocacy among our store staff around cocktailing. Build some excitement. Get them testing and trying new cocktails themselves, sharing their own experiences about what they loved, what they tried. Maybe they tweaked a recipe. Now they can have that [recipe] saved as a favourite. They can now share the love [of] cocktails with the customers.

“Growing the trust of our customers is very important for us.”

The project requires plenty of buy-in from the alpha and beta store managers, who have to be comfortable with allowing the store they oversee to be a “test vehicle” as it were.

“It feels great – it’s an honour,” says Patrick Henderson, the LCBO’s Acting Manager at 340 King St. W. “[Actually], it’s not just an honour. It’s a responsibility.”

“We have to figure out what customers are looking for. We have to dig into it.”

There’s precedent for this type of test-bed collaboration, both in Waterloo Region – which pioneered the Blue Box program – and among retailers and their innovation labs. Canadian Tire, for example, made use of its retail stores in the Waterloo Region vicinity to test products and collaborations that emerged from its lab, a lab that was once housed in Communitech and now operates nearby.

Ho says there’s room to expand the initiative. He says it’s possible that other innovators, both in Waterloo Region and along the Toronto-Waterloo corridor, might one day, pending approval, be invited to test-drive their products in LCBO stores.

“You tell us what your pitch is and how you think it benefits yourself and how it brings value and benefit to LCBO, and if that sounds like something that fits everyone’s needs, you’ve got the floor [in one of our stores] for three days,” he says.

Innovation, after all, is the name of the game.

“Nothing should stop us from thinking of different ways to work with the public and private sector to really strengthen the opportunities we have here.”

Communitech is a partner of Startup HERE Toronto.  This article originally appeared on their site.