Fresh And Green

Applegreen, Ireland's leading independent forecourt retailer, focuses on delivering value and fresh foods

Applegreen is on a roll. Since winning the Insight NACS International Convenience Retailer of the Year Award in 2010, Ireland's leading independent forecourt retailer has been honing its concept of a strong fresh food offering and value-driven fuel business.

It has extended its store count and has additional sites in the pipeline for this year. It has expanded its central distribution facility and its own brand range. The company has implemented a new staff training module and plans further rollout of environmental and corporate social responsibility (CSR) initiatives.

Not bad given the current recessionary climate in Ireland.

"We are very pleased and happy with how things are going," said operations director Joe Barrett.

"It's been a good year, in a year of financial meltdown in Ireland."

Applegreen currently operates 79 gas stations — 65 in Ireland and 14 in the United Kingdom, including one in Northern Ireland. Another four sites are planned for Ireland and six in the U.K. by this year's end, which will create an 89-strong chain.

Expansion would, however, have been more bullish in a better market, noted Barrett.

"We would have expanded further if more banking facilities had been made available. In Ireland, the banks have more or less ceased trading. They are technically saying they are ‘open for business,’ but are really rolling over existing relationships. But conditions are improving and we see 2012 as an improved year with better access to capital funds for expansion."

That said, Applegreen has opened six motorway service station sites since its award win and is now bidding for the second tranche, which will be made available with the development of Ireland's road network.

The Applegreen sites feature the retailer's own cafe — aCafé — plus Burger King and Costa Coffee stores, as well as a convenience store. According to Barrett, the relationship with Burger King is being "significantly developed" as the fast-food chain opened on its first non-motorway Applegreen site this August. Motorway sites are being developed both privately and via PPPs (Public Private Partnerships), providing two avenues of growth.

Barrett reported there is potential for 20 to 25 motorway sites in total. Applegreen has the lion's share of the existing eight, while rivals Texaco and Topaz, which has partnered with McDonald's, have one apiece.

Across the entire store base, approximately 50 percent of sites are now branded Applegreen, the fascia introduced by parent company Petrogas in 2005. The Applegreen brand will only be introduced on completely refurbished sites that provide the right facilities such as parking and toilets, so as not to devalue the brand. "We will not put the name over anything," said Barrett.

‘BETTER VALUE ALWAYS’

In tandem with the store expansion, Applegreen has doubled the size of its central distribution center (DC), opened in 2009, and expanded its own label range as a result. Barrett said the expanded DC enhanced category management, pricing and availability, and deliveries are now made three times a week to every site.

Applegreen introduced new products under its "Better Value Always" promise, such as two bars of chocolate for €1.50 and any two soft drinks for €2.25. New private label offerings include sweets, oil and car accessories plus a range of wine, which has been specially selected for Applegreen though it does not carry the retailer's name.

"Own label" dairy lines have also been hugely successful, according to Barrett. Milk, for example, is now offered at €1 per liter vs. €1.65 last year; while cheese and ham products targeted at school lunch boxes are sold for €3 and two breakfast products for €3.

"We are giving the customers much better value and they are delighted with it," he said. While overall sales have dipped a couple of percentage points, transaction volumes are up vs. 2010.

Next, Applegreen plans to bring in more standard grocery lines including tea bags, coffee and toilet rolls through its central warehouse, buying more competitively and selling at a better value. The focus on value chimes with Applegreen's fuels proposition of offering "low fuel prices always."

But with oil prices under pressure, due to the continued unrest in Libya, it's becoming a more challenging offer to provide, conceded Barrett. The situation is not helped by the growth of smuggled fuel in the Irish market, he added.

Consequently, the total fuel market is down by around 8 percent year over year, although Applegreen claims to be growing and has maintained roughly an 11-percent market share, boosted by increased volumes from its new motorway sites.

Applegreen is in tune with customers and adapting to straightened economic circumstances. Shoppers' disposable income has been hit by the increase in fuel prices — an average car fill-up is now €90 vs. €70 previously — and tax hikes, reported Barrett.

"Shoppers have less disposable income, therefore there has been a reduction in areas such as car washes and coffee — the impulse lines," he noted. But shoppers are also voting with their feet and snapping up the better value deals. The number of shoppers buying confectionery within a promotion, for example, has doubled from 15 percent to 30 percent.

"People like promotions and are seeking good value," Barrett said.

The retailer continues to work to ensure its offer remains as compelling going forward as judges found in Applegreen's submission for the Insight NACS Award.

A RESPONSIBLE RETAILER

Applegreen's environmental initiatives and execution won plaudits from judges, too, and are ongoing. Key features such as harvesting and recycling rain water, LED lighting, CHP (combined heat and power) and Dresser Wayne pumps have all helped to reduce energy consumption and will be rolled out to new sites in due course.

Applegreen recently teamed up with carbon accounting firm Nootrol to track carbon emissions across its supply chain. Suppliers are invited to log on to the online system and share their carbon inventories to enable Applegreen to build a picture of its carbon footprint and ultimately reduce emissions.

The retailer's community focus provides another unique slant to Applegreen's bid to be a responsible retailer. It has created its own charitable fund — every time a consumer makes a purchase in-store 1 percent of the sale is donated to the fund. Money raised is divided between two registered Irish charities and allows customers to support two worthwhile organizations without any action or request other than to buy a product in an Applegreen shop.

This summer, a team of 22 Applegreen employees completed The Three Peaks Challenge, climbing mountains in the Lake District in aid of one of the retailer's chosen charities, the LauraLynn Children's Foundation. The team raised more than €30,000, which helped fund the opening of Ireland's first Children's Hospice.

Giving back to customers is part of the marketing mix and their feedback is positive, said Barrett. "People are comfortable [that] we are trying to do our bit," he added.

"Shoppers have less disposable income, therefore there has been a reduction in areas such as car washes and coffee — the impulse lines." — Joe Barrett, Applegreen

Team buy-in is critical and engendered via training programs. This year, Applegreen has introduced a new staff training module designed to grow talent from within. It's a four-tier program to progress employees from a trainee manager position, to assistant, to deputy store manager and finally a store manager's post.

"It's proven very successful," said Barrett, who noted that a large proportion of its site managers started with the company working at the checkout till.

Applegreen now employs 1,100 staffers and retention levels are high. "A cynic would say it's the environment we are in, but we are very happy and don't tend to lose people," he said. "The culture of the company is about giving people the authority to make decisions locally and, as a result, people stay with us for longer."

With 10 new sites on board, plans for a loyalty card and food manufacturing unit, plus increased deliveries from its central distribution unit, Applegreen is poised to further drive volumes. The retailer is on a roll indeed.