Get ready for Gulf
Dermot Fallon, managing director of the newly launched Gulf Ireland, is no stranger to the Irish forecourt sector, and he believes he has something very different to offer the independent retailer
13 October 2008
“I’m a second generation retailer in the filling station business, and what we’ve seen over time is that retailers need to be independent but there is that need to have a brand,” Dermot Fallon explains. I have come to the SHOP expo in Dublin’s RDS, where ‘Gulf Oil’ are displaying their new branded forecourt kit – and Rosanna Davison atop the pumps is being snapped by a tabloid photographer.
No oil executives, no suits, just three ordinary men from Sligo and an assortment of forecourt furniture. Not at all what I was expecting. “We’re not a venture capital company, we’re not in an ivory tower in the IFSC. We’re the licencees in Ireland for a massive global operation, Gulf Oil International,” says Fallon.
“We happen to be the licencees, we won the licence, and we’re rolling that out. We’ve been both sides of the counter – our national sales manager, Padraig, ran a filling station – We’ve supplied retailers. We know what they want, and more importantly, we know what they don’t want.”
A new departure for Irish forecourt retailing
Over coffee Dermot explains to me the essence of his new venture. Having come from a petrol station background, he established National Lube Oils Ltd, a distributor of lubricants and power wash solutions to forecourts in Ireland for 26 years, including those made by Gulf Oil. Having also always been in the filling station business, Fallon saw a gap in the market for a new type of retail partnership.
“I feel as a distributor and a retailer, the traditional way the forecourt operates is inefficient. Major oil companies are taking away some of his margin, as he’s contracted to buy from them.” However, research has shown that “if you haven’t got a brand sales aren’t as strong,” he points out, “That’s why some forecourts aren’t willing to move away from the major suppliers.”
Here lies the opportunity. “It’s a radical and unique departue; we supply the brand and image and they can then do whatever they like. He can buy on the stock market but still have the benefit of a brand. It’s a new model for forecourt retailing, and a more profitable one. The retailer retains more of the profit.”
The main premise of Gulf’s offer is that the retailer is completely independent and is free to source petrol and product from wherever they like, and to charge whatever they want also.
“The main point we’re trying to make is, in order to have that brand in Ireland at the moment, you have to buy all your supplies from the owner of that brand. But what we’re doing is, we’re licencing the brand to filling station owners and they can buy their fuel from a number of different sources. They buy it from the stock market every week. We supply the brand and image; we’re just a marketing company,” says Fallon.
Gulf Oil estimates that this operation, without a wholesale buying arrangement, will save a forecourt retailer between once and two cent per litre of petrol. And it’s up to the retailer alone how this saving is utilised. “It could ultimately mean lower prices for the consumer, but we’re mainly dealing with the trade.”
Gulf Ireland aims to have about 80 licencees within three years, which is approx 8% market share. “Over a 10 year period we’d like to see that expand to between 120 and 130 stations,” says Fallon.
“We’ll support the retailer by promoting the brand and developing it; we’ll be giving marketing support, Gulf International will be developing the brand globally, we’ll be developing the brand nationally, and of course the retailers will develop the brand locally.”
Although the bulk of Gulf Ireland’s brand development will be concentrated on its expansion programme and brand rollout, Gulf Oil branded retailers have the benefit of belonging to a major global name with substantial presence around the world. “Gulf Oil is one of the oldest brands in the world, it had the first drive through filling stations in 1901 in Pittsbourg.” Gulf Oil is also famously associated with the Aston Martin and the Le Mans endurance racing tournament, which constitutes one of many global marketing drives for the brand.
Dermot tells me there are plans to “get involved” with some road safety authority initiatives too, but in terms of outward communication and marketing the operation in Ireland will be somewhat low-key for the present, and very much focused on delivering value to the retailer.
“To keep ourselves competitive we don’t want to charge too much for the licence. I think the Gulf brand already has a fairly good standing and people recognise it. Okay, we will have to do a certain amount of development but we don’t actually intend to spend all these millions because, at the end of day, that would be spending the retailer’s money.
Setting up shop
Gulf Ireland has already kitted out one forecourt in Co Sligo. The 1,800 sq ft retail unit and external forecourt is the first to rebrand under the Gulf banner and is already doing well, trading in the region of 120,000 litres a week. There are already plans to expand the footprint to 5,000 sq ft, having only switched to the Gulf Oil brand around a month ago.
Fallon’s operation plays no role in the store layout, which remains entirely in the hands of the retailer or symbol group shop owner who owns the forecourt. “We’re keeping it simple, we’re purely a marketing company, supporting the brand and supporting the retailer. We’re not getting involved in property”
Gulf Ireland kits out everything in the external area of the forecourt, from canopy to carwash, leaving the details in-store to the retailer and/or their group, if there is one. “We leave the shopkeepers to look after the shop.” I ask Dermot if Gulf Ireland would be open to a partnership with a particular symbol group? ““This is mainly geared towards the independent guy but we’re open to partnership with a symbol group if they wanted to do it,” he says. Fallon hopes Gulf Ireland will develop strong relationships within this sector and believes there are good opportunities for brand synergies.
But ultimately, Fallon has one straightforward plan. “It’s more about the retailer – it’s for the independent retailer. That’s the message we’ll be sending across,” he says.
“People are afraid to leave their supplier. If they leave their supplier they lose their brand and if they lose their brand they lose their value; they go white. And if you go white then you always have to be the cheapest in the market.
“This is a new concept, it’s never been done before. It’s a new model of retailing designed to leave the money in the retailer’s pocket. It’s quite simple. We don’t work off wholesale prices, we don’t work off schedule prices. We’re very cut and dried, it’s very clear.”
And he’ll never waste a minute of your time using more words than he has to.