Michael O'Loughlin on forecourts, Millennials and electrification

Michael O’Loughlin, former UK managing director for Applegreen, is in reflective mood.

He’s just completed a tour of duty with former Nisa group symbol director, John Heagney, judging retail stores around the UK for the 2017 Retail Industry Awards, which will be presented at the Grosvenor House Hotel on London’s Park Lane on 28 September.

He’s also completed a number of oversees consultancy projects with Insight Research and has recently been persuaded by Co-operatives UK COO, Neil Turton, and Bolt Learning’s Tom Fender to take part in the MAG (Mines Advsiory Group) 500km Laos Cycle Challenge on 18 February 2018, which he is really looking forward to.

The ventures have provided an opportunity for O’Loughlin to consider his own career in the convenience and forecourt industry and forecast future trends.

Since entering the industry in 1997, none of the fundamentals of operating in the sector have changed. “It’s about looking after the consumer and their needs,” he says. However, today’s consumer is more complex than ever, he adds. “And, I’m not sure anybody is totally getting it correct.”

On his time with Applegreen, O’Loughlin is delighted to have seen the business go from strength to strength and he says it was a pleasure and a privilege to work for the forecourt operator.

The decision to leave - he resigned from the business in October 2016 to return to his native Ireland - was a difficult decision for both O’Loughlin and his family.

“Janeanne [his wife] and the children have made great sacrifices and were probably more Applegreen than me - all of the children grew up with Applegreen - so the decision was more traumatic for them than me,” he says. “Anybody who has moved their family from country to country will know that it does change their outlook but there were also plenty of positives. However, after eight years in the UK, the transition back into Ireland has also had its challenges,” he says.

During his 19-year career with the retailer, O’Loughlin rose through the business from site retailer to serve on the board. But it was his tenure as UK managing director, which truly shaped him, he says. Being a MD of an overseas subsidiary was initially a lonely post. “All the support I was used to having was no longer there, but ultimately these things make you stronger.

“When I arrived in the UK in 2008, I had this cocky view that I would show these Brits how it’s done. However, I soon realised that it’s was a whole diffrent ball game.”

At the time, O’Loughlin was invited by the ACS chief executive, James Lowman, to join the Association, ultimately serving on the Independents’ board. “I can honestly say that joining the ACS was a defining moment in my UK journey and probably the largest factor in the business’s success - it provided an opportunity to network with the industry’s best and I never looked back,” he says.

O’Loughlin has also enjoyed engagements with NACS, visiting the NACS Show, experiencing the “bright lights” of the US and discovering new opportunities, which could be exported back to the UK and Ireland. These included the Beer Cave concept, which enjoyed great success.

However, O’Loughlin feels that there’s no single solution to succeeding in convenience retail. “Having operated stores in both Ireland, Northern Ireland and England, I’ve found there is no one solution for each marketplace. Even within the UK, there is huge diversity.

On the current trading environment, O’Loughlin reports the market is experiencing some ‘bounce’ from economic recovery and perhaps more so in Ireland.

“Markets in both countries are showing significant increased output and the reported retail fuel margins are at their highest for 10 years,” he says.

Supermarkets are also contributing to this trend. Historically they have filled their forecourts by offering low fuel prices. “In the past this was a useful tool to battle their competitors and ‘plummet’ the industry, but it’s no longer an effective tool in defeating the discounters,” O’Loughlin adds.

In Ireland, for example, Aldi and Lidl’s combined market share has jumped from less than 10% in 2010 to 23% today. “They are just mainstream now. They’ve really raised their game and their food is better than ever. I predict they will reach similar numbers in the UK, since today the consumer mission shops - one location for fuel, another for food and another for grocery. The supermarket solution is becoming outdated,” O’Loughlin says.

Future proofing

But there are fresh opportunities, O’Loughlin says. “The industry talks about the Millennium generation but it is nearly becoming old news. The next group is the iPhone generation, which will ultimately require everything at their fingertips,” he says.

Sure, food to go has developed on UK forecourts exponentially. “10 years ago, coffee to go was non existent and you could count the food to go operators on one hand. That’s changed but so has the consumer expectation. It’s difficult for operators to find a niche, when so many businesses operate the same brands. Plus they have to compete with the high street, which is also full of the same brands and the consumer doesn’t differentiate between the locations. In short, it’s a very crowded marketplace. And coffee and food to go is not enough to support the industry in the future. Who knows, the next generation may not even like coffee,” O’Loughlin says.

Keeping pace with Millennials and their likes will be key, O’Loughlin claims. Wi-Fi is incredibly important to this group, he adds; but suggests social media such as Facebook, WhatsApp and Twitter are ‘old hat’ for this generation. “They find them laughable. You have got to keep up with them or else you won’t be able to communicate,” he says.

“This generation is the most complicated that we have seen so far but few are thinking about their future needs. They will form their habits early, so for those who make the early connection, the future will be prosperous ” he maintains.

But there are glimmers of hope and inspiration, O’Loughlin says. On his travels with Insight, O’Loughlin reports he as seen some remarkable methods of communication, which “talk the language of this generation”.

“Not every solution travels but on my return to the industry, I will be giving it a go,” O”Loughlin hints.

On electrification and the recent news that the UK will ban the sale of all petrol and diesel cars and vans from 2040 - O’Loughlin is doubtful that government can really deliver.

“They said we’d have superfast broadband coverage to 95% of UK homes by the end of 2017 and they are not even close - they can’t get that right.”

According to O’Loughlin, the targets are political rhetoric. “It’s sticking a finger in the air and keeping everyone happy. Governments are sick of the oil countries holding them to ransom and the public are sick of the revolving pump prices saga, so there is momentum for change but not at the speed they promise. Also, the National Grid is not developed enough and there’s insufficient infrastructure to carry it,” he says.

The move to lithium batteries would also put a severe drain on the world’s lithium supply. “The UK alone would use up 15% of the world’s lithium - where is it going to come from? The technology has to change,” he says.

“But there will be more electric advancement and it may catch the smaller operators out; so it’s something we will all need to keep a close eye on.”

On his recent collaboration with Insight, O’Loughlin is full of praise. “I’ve been a supporter of Insight for many years and attended their events. The opportunity to work with Dan [Munford] and Nick [Scherzer] has been totally eye opening. Their helicopter view of the industry is fascinating. But they are incredibly humble too and don’t fully appreciate the vital role they play in the pollination of the global market. Without their existence, the global industry would be very boring and not so profitable. Their globe trotting really benefits everybody,” he says.

So is he relishing his return to the market?

“I’ve enjoyed a good break from the industry,” he says. “But for those who know me, know I like to see life from a humorous point of view and nobody knows that better than my wife and children who, I can confirm, will welcome my return to work.”

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Fiona BriggsFiona Briggs Freelance retail business journalist

Fiona is an experienced journalist and editor, writing exclusive content for GCSF. She is founder of retailtimes.co.uk. She contributes regularly to NACS Magazine and writes articles on omnichannel shopper trends for Radial. Fiona is available for commissions at fionalbriggs@gmail.com

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