Jeff Lenard:
And our guest is Niall Anderton, who is senior vice president operations for Central Eastern Europe and Ireland for Circle. K.

Niall Anderton:
Hello, Jeff. Thanks for having me.

Jeff Lenard:
The big story in the world right now is what’s going on in Ukraine. What’s going on in Eastern Europe. Can you give us a lay of the land in terms of what is going on? Circle K has stores in affected areas. Can you describe the situation and how Circle K is reacting?

Niall Anderton:
Let me take a quick step back, Jeff, to explain. Most people know Circle K, we’re a global, forecourt and convenience retailer with more than 15,000 stores across the world. But specifically in terms of Eastern Europe, we have about 600 stores around that region, primarily in Poland, Latvia, Lithuania and Estonia. But we have 6,500 team members in those countries running the stores. Things have changed radically over the last number of months since the war broke out in Ukraine on the February 24th. We’ve seen refugees moving into the different countries, we now more than 3 million Ukrainian refugees in Poland and that has caused major turmoil. Not only for the people of Poland, but also for the people moving across the borders. There’s the war in terms of the actual people movement, but then secondly, there’s the geopolitical implications of the sanctions in terms of what’s happened there. But specifically to our business, we have a small business in Russia with 350 employees and 38 sites. We made the decision on March 7th that we were suspending our business in Russia. Trying to exit Russia has actually been a challenge for us. If you take a step back when the war broke out, the Russian population were told this was a special operation so the word war was not allowed to be used. So when we announced to our team that we were suspending operations in Russia, we were finding it very hard to actually announce that to them.

Niall Anderton:
We couldn’t even get a Russian translator to actually translate our words. We had to use a third party translator based in Belgium because of the troubles in acknowledging the war. It’s been a challenge, and then secondly, the government announced if any businesses leave at an economic loss, the principles of the business would be arrested. So we’ve obviously had to identify a way to exit the country where we didn’t exit at a loss, or just turn off the lights. And we’ve seen many of those cases recently where the likes of McDonald’s and Starbucks, et cetera, have actually sold businesses to third parties. We’ve obviously done the same ourselves.

Jeff Lenard:
Looking at Central Europe, how were operations also affected outside of Russia?

Niall Anderton:
The most impacted market was Poland, and that’s not to say the other markets weren’t impacted, but initially in the first days of the war, there was a lot of miscommunication. We found that there was increased activity in terms of cyber attacks. And one of the messages that was coming out from Poland was the fuel was going to run dry. So you can imagine there was a run on the stores and very quickly, within 24 hours, we had run dry of fuel in maybe 50% of our sites. And that was just consumers rushing, panicking to get fuel. Obviously it was very similar to what we might have seen in the UK, but this was very, very quickly driven.

Niall Anderton:
So we had to be very careful how we worked it and we had to identify how we could source the fuel. Underneath it all there was no risk at all. The refineries were still fully stocked. Again, it was just panic buying. So that was the first initial reaction in Poland. You can imagine that the second thing was then more the human side of it, where we saw 3 million refugees coming across the border. There was a number of initiatives that the team took on straight away to deal with that. Many of our team members in the country have Ukrainian refugees living with them. I think there’s one case where one of our employees has eight people living in this house. So that’s a real challenge as you can understand, taking and housing those people, but then people coming over the border with no ability to know where to go, how to navigate a new country, it’s a different language, et cetera.

Niall Anderton:
And we have many sites on the border. Our managing director of the Polish business very quickly got down to the border to see things and made a number of very quick initiatives. Things like facilitating giving the Ukrainian refugees SIM cards for mobile phones so they could ring on the Polish network. In addition to that, we facilitated many transport routes so many of the staff got in their own cars and drove down and picked up people. We also very quickly decided to give free fuel to a particular company that was doing transport as well and driving people from the border back into Warsaw, into the transport hubs as well. So many very quick initiatives were undertaken and I’m delighted to say that the team took that on themselves and proceeded with it.

Niall Anderton:
Other things we saw, we introduced a food corridor where refugees were coming in, not only into Poland, but into other countries, we would provide them with some sandwiches or a hot drink, et cetera. Even simple things like toys for the children as they came across, because predominantly the refugees coming across were women and children. And as the war has progressed, we’ve looked at different things to see how we can help. And again, very early on in the war, one thing we felt was very important was how could we get these people employed in our business? If you’re coming across the border, you have no means and people don’t like taking handouts, they want self sufficiency. So what we have done is see how we can reduce the red tape and also lobbied many of the local governments to see how we could take these people into employment.

Niall Anderton:
It’s been largely successful. However, again, just a reality check is that many of these people are women and children and they have no daycare, so they actually can’t work. So that is a challenge, but secondly, optimistically, they all think they’re going to go back very quickly. And that hasn’t happened as quickly as expected because they thought this would be over and they’d be back in their country. So they didn’t want to settle down roots. There are challenges to getting people into the workforce, and then you have all the usual bureaucracy around bank accounts and all those types of things as well. But I’m glad to say our teams mobilized very quickly to do that. So that’s great.

Mark Wohltmann:
Niall, quick follow up on that because I think it’s amazing to see what the Polish people and what the companies operating in Poland have done to support the refugees from Ukraine. It’s as you just said, everyone is taking people into their homes. It’s really heartwarming to see that amount of support. I learned that another effect of the whole crisis and the whole war was that Poland had already a rather large number of Ukrainians living in Poland and working in Poland, but many of them, especially the men, actually left Poland to fight for their country and go back to Ukraine. Has that affected you in any way? I see this having a massive effect on the transport sector, for example, a lot of drivers just left the country.

Niall Anderton:
Absolutely. Where there was the big rush on fuel, the thing that we had to get was more fuel into the sites because there was plenty in the refineries. So certainly getting that, but then there was the double whammy of a number of the drivers leaving and going over the border. What we had to do was see how we could mobilize drivers from other countries into Poland in a very short period of time just to be able to pick up. We’ve had terrible challenges getting drivers to be able to deliver fuel to the stores when there was a time of such peak demand as well. So an absolute challenge.

Jeff Lenard:
I think most of us are thankfully not familiar with being in a war zone or being near a war zone as this enters its fourth month. Are there processes that you have in place to maybe try to get ahead of things? So you can make decisions on what’s important, what’s vital and what’s maybe nice to do, but we’re not able to do it right now?

Niall Anderton:
As time has gone by, we’ve been able to take a step back and look at how we can help the the situation. And I’m glad to say as a business globally, this is now both in North America and in Europe, we decided to launch a program where customers can donate money to Ukraine and we would then double it. We’ve raised almost 2 million US dollars in that initiative that then goes into the Red Cross and that’s facilitated through local charities.

Niall Anderton:
Unfortunately as time goes by, a war like this does become less in the news. We don’t hear it as the top of the news at the moment. So we need to think about how we can reinvigorate that campaign. And we see donations dropping off over a period of time. We’re in the process of looking at that over the summer months to see how we can push that again to increase the donations. The other challenges we have in terms of long-term planning is fuel supply. How do we as a European nation rely less on Russian fuel?

Niall Anderton:
We made a decision very early on in the war that we would not source any fuel directly from Russia, and that has been very hard for us to do. Unfortunately that requires an increase in the cost of fuel, as you can imagine, it’s not as easy to get it. We see that many of our competitors across Europe have also done the same as well and it’s very good to see as an industry we’ve made that decision. Unfortunately that does get passed onto the consumer, but so far our consumers are tolerant enough to why it’s happening. The other thing is we have challenges in the supply chain in terms of just getting products. There’s a food shortage now in Europe, so as a result we see inflation costs there. We can no longer take products in from across Ukraine. We can’t travel down to say Hong Kong as easy as we could in the past, but I think as a business and an organization we’re much more a steady state .

Jeff Lenard:
Mark, you have feet on the ground in Europe, you travel to get a sense of how retailers like Circle K and others are adapting to all the issues related to Russian gas supply shortages. Are there other things that you are seeing or hearing throughout Europe?

Mark Wohltmann:
The primary thing would be energy prices. Energy prices are up and they continue to move upwards and it doesn’t seem to stop anywhere. It’s a two-sided thing. On the one hand you realize that there is fear across Europe. Historically, European nations have been fighting against each other for centuries and after World War II, they sat together and made a very bold statement that European nations don’t ever want to fight against each other ever again. And this is why we today have a European Union, for example. So for many younger people, it was unthinkable that a war could happen on European soil. And now realizing that this 18th century-style smash and grab war can happen.

Mark Wohltmann:
This creates uncertainty and fear among people. On the other side, what we also see is a lot of business as usual in a positive way looking forward, because we also had a two-year period of a pandemic. And that meant a lot of firefighting and not a lot of strategic thinking. Now the time has come for companies to think about their strategic planning, and we see that companies do get back to that. Nevertheless, there is a war, there is disruption on top of that, we still have the aftermath of the pandemic with labor shortages, supply chain shortages, inflation is the big topic across Europe. And that is of course driven and accelerated by everything that is happening right now. So on the one hand there is fear. There is holding back on the other side. There is also in some way looking forward because knowing we have to do something, now we have to take care of all businesses.

Jeff Lenard:
And Niall, I would imagine that employees throughout Eastern Europe at Circle K, all of these things weigh heavily on their minds. The idea of will I have a job, what will that job be like? Are there ways that Circle K is reaching out to employees or taking in stories and hearing from employees about what’s on their mind?

Niall Anderton:
I suppose it’s not whether they have a job, they’re very much worried about their personal security. I think it’s bigger than that. If you’re sin the Baltic states, there’s been a history there of Russian-Baltic aggression for many years. There’s a lot of Russians living in those countries as well. So it’s a tension that is palpable. I was actually in Lithuania the day the war broke out on the 24th of February and you could see the city uprising almost in dismay. I was having a bite to eat at a restaurant and the whole city was walking down literally with flags to protest against the war because they were worried.

Niall Anderton:
And many of our employees reached out to me and said, listen, if it goes wrong, can we come to Ireland? That’s how scary it is for these guys. So it’s not just about a job. The job is the least in their mind, they’re worried about their personal security. They’re worried about their families, what do they do, how do they manage? So we obviously have to be very empathetic to that type of thinking and be very open to understanding that we have a big business center in the Baltics as well. I suppose there is always some comfort in what you hear and I’ll give you one good example. I received a letter from a refugee who happened to be staying in one of our employees’ houses.

Niall Anderton:
They took it upon themselves to write me to thank me for everything the business had done. And this is nothing we had consciously done. One of our staff members over the Easter period dropped Easter eggs around to them, made sure that they had what they wanted. A young boy took it upon himself to write to me to say, thank you very much for everything you’ve done. When we share those letters with people, we realize as a business, we’re doing the right thing. What I take comfort from is the fact is we know we have employees in our business that are doing that for other people, which means they’re doing the right thing. They have empathy for these people and they will react. And that’s really important to us as a business. So we take those stories and realize that ultimately when your back is against the wall, as a business, we were reacting the right way.

Jeff Lenard:
I would imagine also the conversations in stores are different than the traditional conversations you’d see in stores in normal times, that there’s a little bit more of a glue, a connection where people may stop and check in with each. Is that also something that you’re seeing in stores?

Niall Anderton:
Yeah, I, I suppose it’s, it’s not, as I suppose on the back of COVID we’ve had as a business, I think that’s really geed as much closer. Um, in terms of, as I, as mark said, you know, you, you react and you’re working in a, in a very tense environment at all times, you know, we stayed open during the whole COVID crisis. So as a business, you know, there is that team camaraderie that we we’re in this together. And unfortunately, this is just another issue, which on the back of COVID just came. But I think, um, you know, it’s things like, how do we, you know, I spoke about trying to get Ukrainian people into work. They don’t speak the language in any of the countries we operate. So we, we have to put up with that. The fact is that we can’t communicate typically we would want a, a staff member to be able to talk to the customers that doesn’t happen.

Niall Anderton:
So how can we facilitate and come into the business and be understanding that that’s not a perfect scenario for a business, but actually understanding it’s the right thing to do as well. It creates that type of bond and team spirit. But again, what I’m delighted to say is that as a business, when we do come against these pinch points, whether it’s COVID-19 or Ukraine or fuel supplies, we very quickly react and we always do the right thing.

Jeff Lenard:
Mark, are you seeing the same throughout Europe?

Mark Wohltmann:
I’d say yes. The pandemic really has opened the eyes of companies when it comes to preparedness. No one could have anticipated that a pandemic would hit us. But what I hear a lot from companies is that what they learned from the pandemic is we need to be prepared for things we have don’t have the slightest idea when it will happen. We can’t prepare for it, but we can prepare our organization to be ready to deal with something that is unknown.

Niall Anderton:
As a business, we’re very fortunate. We have a very well honed process and sometimes when you do this training, you go this is never going to tease itself out. You might have something that happens, but nothing like a pandemic. And in fairness, imagine if you’re on a plane and the plane’s going down, you’re just click into what you have to do to get yourself ready to get off the plane. We clicked into it very quickly, how to deal with this through our emergency response training. It was eye-opening how quickly the team came together and we followed the process exactly how it was.

Mark Wohltmann:
I have a question on strategic growth. Central Eastern Europe has been area where a lot of companies have been investing for a number of years now, because it has been seen as a good area where a lot can and will happen and where there is a lot of potential. Of course we are in a situation of crisis, which means it might get less funding in the immediate future. How do you see that? Is it on hold for now, or are you already looking elsewhere for the next growth region?

Niall Anderton:
No. I mentioned at the start of the conversation that we are exiting Russia, so that’s a divestment. That’s a very clear strategy that we’re not going to invest any more money or time in Russia. That’s very clear as a result of the war, but we see the rest of the countries as business as usual in terms of our investment and our plans for those countries. Poland is one of the biggest markets in Europe, and we have a small market share. So we are looking continually to see opportunities. We’ve never made a decision based on what we’re seeing in the Ukraine at the moment in terms of how we deploy our capital.

Niall Anderton:
Staff turnover is a huge challenge for every business and in an inflationary environment it is an even harder challenge. You can imagine the challenge you have as a business. So that’s something we’re working on in terms of how we adapt our model in terms of looking at how we can retain staff longer. In terms of the supply chain it’s a challenge everywhere. Unfortunately, we’ve had to delay some of our programs, rolling those out across the different markets. Fingers crossed we can see some easing in inflation. We see some easing in staff turnover, we see some improvements in the supply chain. But these things are there and we’re going to work through them like everyone else.

Jeff Lenard:
This conversation is a perfect example about how convenience stores play an essential role in everyday lives, whether in normal times or in times of crisis. Thank you joining us today.

Outro:
Convenience Matters is brought to you by NACS and produced in partnership with Human Factor. For more information, visit convenience.org.

show less