EG Group expands digital footprint with new retail app, EG Club

EG Group, the international fuel, foodservice, grocery and merchandise operator, is expanding its digital footprint with the launch of an innovative retail app, EG Club.

The EG Club app will enable customers to access fuel, foodservice, grocery and merchandise in a single digital retail platform. EG Club will be launched in Australia first, where shoppers at its c.540 sites will be incentivised with discounts and offers on fuel, grocery and merchandise. Foodservice functionality will be introduced in due course.

The launch is timely, as the 10 international markets in which EG Group operates begin to emerge from lockdown due to the Covid-19 pandemic, which has driven significant changes in shopper behaviour and reset the rules on customer retail engagement.

“Many retailers have been reviewing what is going to be the ‘new normal’ and we have also been reflecting on various strategies of how consumers will want to engage with our retail business in the future,” explains Ilyas Munshi, Group Commercial Director, EG Group.

The pandemic has driven a surge in delivery, for example; plus a massive shift to people wanting to use digital platforms to pre-order, pre-pay and organise delivery.

EG Group is already realising a massive uptake in its delivery channels for both foodservice, grocery and merchandise.

“Our experience in the foodservice segment shows that consumers are comfortable paying a premium for delivery to a location of their choice or even to be served at kerb side. In the kerb side model, the consumer pre-orders and pays on the app before coming to a pre-determined parking space where one of our team put their order in their vehicle for them,” Munshi says.

Digital investment was already on the radar even prior to Covid-19, when EG Group was serving 23 million customers internationally every week. While there is confidence those numbers will return, EG Group acknowledges that a large group of consumers will now wish to access retail businesses digitally.

Munshi says having an effective retail app investment strategy like EG Club, fits well with the high footfall petrol station and c-store retail environment. Digital app investment will provide a more effective return on investment than other technologies such as scan and go or high tech, cashier-less vend solutions where shrinkage is still a massive concern.

In tandem with the introduction of the new retail app, EG Group envisages radical changes in site design and usage, with multi-lane drive thrus becoming more prevalent. Foodservice retailers will even have to consider the possibility of reduced seating areas to accommodate effective social distancing guidance.

“It’s a little too early to say how sites will look but, for foodservice, prior to Covid-19 there was already a seismic move towards customers using drive thru,” Munshi says. Drive thru usage has grown even more due to Covid-19. “A few years ago, everyone underestimated the potential of drive thru and now it’s a given,” he says.

“What will be interesting is how foodservice seating configurations will be considered but what we do know is that we have to effectively invest in digital and that for a certain segment of the customer base, digital access and delivery will now need to be at the forefront of every convenience retailer’s investment thinking and commercial strategy.”

Indeed, EG Group also envisages its sites continuing to be retail hubs for local communities but now with enhanced delivery services, not just for foodservice but also being able to access the same for the grocery and merchandise offer as well.

Global perspective

EG Group co-CEOs Zuber Issa and Mohsin Issa, previously recognised as NACS European Convenience Industry Leaders of the Year, now run a business operating 6,250 stores across Europe, the US and Asia Pacific, and employing over 50,000 colleagues. EG Group has been able to gain a unique perspective on convenience retail especially during the Covid-19 pandemic.

What has been particularly interesting is how each respective market government and consumer group have responded and how the outlook will be as we all begin to come out on the other side with a lifting of lockdown measures.EG Group’s Global HQ in Blackburn, UK has recently seen the return of a number of staff that were either working from home or being furloughed,  and the leadership team have worked tirelessly to ensure safeguarding measures are in place for staff; just as they have to be for shoppers and their supply chain.

Rising to the challenges of the current business environment is not without its peculiarities as Munshi admits. “Furlough programmes, whilst extremely helpful in safeguarding employment, have created an environment where pockets of employees may see financial advantage in being at home rather than at work.

The UK Government’s furlough job retention scheme covers 80% of workers’ wages, for example, but those employees cannot do any work for the employer. The 20% delta would otherwise been an employment cost the individual would have incurred in commuting, buying meals etc.” he says. A huge push will now need to be made to get people back into work and  Government’s will clearly need to lead the way by making sure guidance is pitched at the right tone. A number of staff members have also taken on second jobs whilst on furlough to supplement incomes such as with delivery/logistics or supermarket businesses; this is also a hindrance to encouraging people to return to their principal employer” he says.

Similarly, there are work environments within the EG Group business that don’t easily lend themselves to social distancing, such as the kitchen and preparation areas in foodservice concessions and restaurants.

Equally, for EG Group’s partner brands; to adhere to the 2m social distancing rules are nigh on impossible in smaller outlets. “You would have to revisit and redesign the whole piece and that’s a massive undertaking,” Munshi says.

There is no doubt EG Group is up to the task of coming out of this period even stronger. EG Group ended 2019 on a high, extending its reach in the US with completion of Cumberland Farms in Massachusetts. Combined with smaller network acquisitions in Fastrac, Minitmart and Certified Oil, EG Group now has over 1,700 convenience store chain in the US, spanning across 31 States.

In Australia, EG Group also purchased circa 540 sites as part of a deal with Woolworths last year and, just prior to the lockdown, they completed the purchase of KFC’s largest European franchisee from Belfast-based The Herbert Group.

The Herbert Group move underscored a recent change in direction towards foodservice for the EG Group. “Until now we have focused on securing fuel stations and overlaying our foodservice, grocery and merchandising. Over the last two years we have had a growing confidence to independently look at foodservice specifically in traditional formats,” Munshi says.

EG Group tied a strategic relationship with KFC three years ago but growth potential was proving to be challenge due to existing franchisees having already secured pre-defined development territories.

“Acquiring the Herbert Group, who was established franchisee and had allocated franchise geographies across the UK and Ireland, has opened up a lot of geographic regions for us to develop our KFC network,” Munshi states.

According to Munshi, EG Group has already identified a number of new locations across the UK for new KFC restaurant builds and is working on opportunities to extend its portfolio across Continental Europe.

Pandemic impact

The Covid-19 pandemic has impacted the EG Group estate in different ways, as Munshi explains. “Covid-19 was a curve ball that threw everyone. Given it is a global pandemic, the challenges are international but every country has its own take and approach. Some were more conservative and held back on the lockdowns.

State measures were more calculated in some markets like the UK versus Italy, for instance, which suffered with a rapid rise in deaths early on and had to take extreme measures. However, if we now look at the number of deaths in the UK, we have suffered more. Every government has a different take on how to deal with the situation but in this unique predicament, we believe there is no right or wrong approach. Once we pass through this period, it will be interesting to reflect on each country’s strategy,” he says.

EG Group has kept its ear to the ground across its different markets, ensuring local teams and management are connected into government departments, public authorities and the business follows respective guidance and protocols. Regular one to ones with country teams and weekly performance reviews with all country leads have been undertaken in order to stay on top of the management disciplines, share good practice, understand performance and needs of each market.

“The leadership sessions are opportunities for respective country leaders to absorb what’s happening, even if there are things that have not gone well,” Munshi says.

The business has also focused on how it motivates colleagues to go onto sites and feel safe. Across the business, there has been a significant investment in PPE (Personal Protective Equipment) and social distancing guidelines have contributed to giving colleagues confidence. Office staff have predominantly worked from home for the period and have taken advantage of technology EG Group’s IT function have deployed. Furthermore, regular communication from the senior leadership team to all colleagues globally has been ramped up as well.

“We’ve been communicating more from the centre with important key messages at these moments,” Munshi says. “People are waking up each day and need to feel informed and motivated. Regular communication is critical.”

Falling oil prices along with lower fuel volumes have been worrying. However, EG Group has been able to ride the storm better than other operators as lower footfall has been augmented by a solid grocery and merchandise retail offer which has proved attractive to convenience consumers. “We have witnessed lower footfall across markets, however fuel margins across our sector have held stable and that has allowed retailers to keep going,” Munshi says.

In convenience retail meanwhile, average basket spends on grocery and merchandise have increased significantly as consumers, frustrated by queues and out of stocks at supermarkets, find the convenience retail channel a more viable option.

Munshi reports one customer is now spending on average as much as two to three customers on grocery and merchandise prior to Covid-19 at its sites.

Foodservice

For the UK market, 23 March was a monumental day as EG Group’s foodservice brand partners decided to switch off the lights and networks. Partner businesses followed suit, furloughing staff and closing the respective foodservice networks.

Now, as the EG Group enters into a reopening phase, it is working with brand partners like KFC, Starbucks, Subway and Burger King, to manage their supply chains; as well as ensuring consumers have confidence that their wellbeing is being looked after and standards in foodservice preparation are strictly observed and necessary measures introduced to mitigate the concerns around Covid-19.

Continental Europe is a different scenario, where EG Group’s proprietary foodservice offers, alongside fuel stations in the Netherlands and France, for example, kept open. Menus options reduced and the operating hours were different to normal but sites had to maintain health and safety with increased diligence around cleanliness and sanitation so that foodservice could continue.

Back in the UK, EG Group has moved from offering delivery-only through to drive thrus with the queues and tailbacks at those newly reopened KFC and Starbucks sites testament to the latent demand when people have been cooped up at home. Again, the key is managing the demand with a reduced menu and ensuring that items don’t run out. Training has also been vital to ensure colleagues adhere to the new rules and effectively communicating how customers access the product, Munshi says. However, the early signs are promising.

Munshi reports. “Following the temporary restaurant closures, the KFC team were first off the block to actively work on a re-opening strategy. This has paid off as is shown in the consumer pent up demand to access popular foodservice products,” he says. “Consumers have been eagerly waiting for our favourite brands to reopen.

The big headline in foodservice in the US was that we did not see a dip in consumers coming to the store but the proportion accessing sites through drive thru channels jumped from 75% to 90-95% on average,” he says. “And in markets where we stayed open, foodservice has not gone down. People are ordering more because they want an alternative to making food at home,” he adds.

Support for emergency services

Around the world, EG Group has stepped up to the plate in support of the emergency services and health workers, not just by staying open to enable access to daily comforts, wash rooms and a friendly service but providing free coffee too.

The company’s commitment to frontline health included a £350,000 donation to the NHS (National Health Service) in the United Kingdom and it is helped secure warehouse space and products for a food hub operated by Blackburn with Darwen Borough Council. Elsewhere in the country the company has supported a number of community initiatives.

In Australia where, prior to Covid-19, the country was already facing huge environmental challenges due to the mass devastation from bushfires and then severe flooding, the local team were already supporting local communities and ensuring colleagues on site were comfortable and able to carry on. This support work has been extended during the current pandemic, Munshi reports.

In the Netherlands, EG Group is working with Esso to give out 50m litres of free diesel to the Red Cross and food banks. Vehicles from these support organisations can fill up with diesel at Esso branded fuel stations of EG Group in the Rotterdam, The Hague, Breda, Tilburg and Utrecht areas.

In all our markets, our teams have been running initiatives that help to enable people to come out stronger out of this crisis as a global community and be more appreciative of all the things we had become nonchalant about, Munshi maintains.

EG Group is already looking to the future and will shortly be moving into its new state-of-the-art head office and support centre in Blackburn, a facility for its global operations, and is currently ensuring the site is equipped to meet enhanced needs with adequate meeting room spaces, state-of-the-art video conferencing and communications, and a fully-fledged restaurant in due course.

Covid-19 may have prevented overseas travel, for now, but it has not stopped the business’s ability to engage and get its key messages across. They have stayed firm to their vision and values.

“With over 50,000 employees across the world, it’s important to have a strong business to support colleagues and their families and the communities they live in as well. We are very proud of our local teams and number of lives we are touching on a daily basis,” Munshi states.

“In such times of adversity, creativity flourishes and new growth opportunities are waiting to be realised,” he adds. “A lot of people will be thinking of a different world and how they position themselves in that world, as individuals, businesses or brands. The adversity creates that environment,” Munshi says. “The piece we referenced on digital strategy, for example, was something we were already planning for. If anything, Covid-19 has accelerated the need for that particular investment.”