It wouldn't be the first time a union shot itself in the foot. The only main union demand I can see having traction is a reduction in part-time positions. Knowing that their main competitor is going to be independent retail, as far as I can tell, they are already at parity with grocery store employees. Job protection is going to be a hard sell and they probably know that if they go to an arbitrator/conciliator they're not going to get it.
I haven't looked too closely at it, but to my recollection, most LCBOs are down to 1 full-time, non-management staffer.
The larger, high-volume stores may have a handful.
I'm torn. I actually like to LCBO concept. I drink only craft beer (ok, the odd Corona) and, from what I've seen, independent retail, and even the Beer Store, only stock the stuff that moves well which in most cases is the corporate brands. I'm not much of a hard liquor drinker anymore but my preferred brands of Whisky are hard enough to get at the LCBO - I can't imagine retail expending much shelf space on the amount of variety even the average LCBO has.
I like the LCBO at its best, for the selection, as you note, for knowledgeable staff (some of the product consultants) and the nicer stores also have a good ambiance about them.
That said, in much of the world, wine and beer especially are much more widely/conveniently available, and in many, but fewer cases, so is the hard stuff.
There is a certain convenience to the one-stop shop, particularly for those not owning cars, but even those of us who do. As I spend a fair bit of time in downtown TO, I often, also grocery shop there before heading home.
Its a convenience when I can grab the wine that goes w/dinner and stand in line only once, rather than have to schlep a couple of bags of grocery a few blocks away to the nearest LCBO outpost.
I think there's an argument for both concepts (wider distribution and stores that sell greater breadth of product and/or more dangerous product with greater care)
Elsewhere, my experience has been you rarely see stores w/the LCBO depth, though it does happen; but what you see more of is boutique offerings. So the selection is around, but not under one roof.