Sorry to continue the hijack, but you asked.
There are a number of reasons. Probably the most important is that the Beer Store is run by private interests (currently Molson, Labatt, and Sleeman own all the shares), and the LCBO is run by the government. It is a long story, but to make it short, this is due to a part of the Ontario Liquor Act 1927 that says that Ontario brewers and winemakers can set up their own retail operations to sell their own products (this is also why the Beer Store only sold made-in-Ontario beer until about 1994 or so).
In spite of the fact that the LCBO has a limited selection of beer for sale and deposits collected at the LCBO can be refunded at the Beer Store, there is a certain amount of rivalry between the two.
The Beer Store doesn’t believe that the LCBO can provide the service that the Beer Store does. Such service includes things like recycling beer packaging (bottles, cans, cardboard, caps, plastic rings–they’ll take all of them for recycling), as well as selling only cold beer–all beer sold in a Beer Store is sold cold and ready to drink, unlike the LCBO. (Although, IMHO, the Beer Store doesn’t need to chill the Guinness as much as it does. :))
There are other customer services, like the carry-outs I mentioned above, but there are plenty of things that the retail customer doesn’t see also–the pub deliveries, the bottle returns and necessary deposit credits during pub deliveries, the chilled warehousing for products like draught beer that need it, and the Draught Equipment Service are examples.
Anyway, the Beer Store does a lot more than it believes the LCBO would be willing or able to do. Given the level of service that the Beer Store prides itself on (whether justified or not) and the fact that Molson, Labatt, and Sleeman would have to give up a very lucrative retail operation, I don’t think we’ll see any sort of merger in my lifetime. Certainly, if it somehow someday comes to pass, I don’t think it will be, as you say, “one happy store.”
End of hijack. Back to our regularly-scheduled GQ.