Retailing, the idea that is synonymous with the rising Market economy, has led to newer concepts globally. Hypermarkets, discount-retailers, neighborhood stores, convenience stores are new options that retail market is poised to make giant strides. The demand for a superior shopping experiences and the emergence of organized retailing has evolved the concept – Convenience Retailing.
Convenience retailing was brought about by a large number of retailers who have made a significant presence in the segment, an existing customer base, and strategically located sites. The term convenience arose due to the need shown through research that an urban consumer needs to save his precious time and find convenience in shopping for his basic needs. The implementation of this research has certainly paid off; Tesco in UK, which had 200 stores in 2004 have increased their convenience stores to 2,083 in 2007 and are expected to double by 2010.
Now, does it make sense for Petroleum Companies to venture out into the Convenience Retailing industry? Well, the answer can only be “Yes” even with your eyes closed.
Petrol bunks are seen as the highest traffic aggregators and they have outlets in strategic locations. While retail majors like Tesco, Sainsbury, and Carrefour have added motor fuels to their shopping baskets, it would make perfect sense for motor fuel majors to offer provisional retail outlets, laundry, postal services, courier services, fast food along with their services the way Shell, BP, Caltex operate their convenience stores profitably.
Petroleum as an industry is uniquely different in the market scenario. To look at it, the pricing is regulated across competitors, the SOP’s remain the same – a computerized mechanism with Digital Kiosks is the best way possible for ease in management, the demand and supply is directly proportional across players.
On that note, an answer to what really differentiates each of the players from the others is driving maximum traffic to their respective outlets through innovative ways. In countries like the USA, the UK and Japan it is interesting to note that the fuel companies are greatly involved in the social responsibility initiatives. While Valero, ExxonMobil, Shell are very much involved in donating to the society, BP, the environment friendly company is making efforts in finding alternate energy resources. Branding/Re-branding is definitely an exercise witnessed with them.
On a business note, diversification is another way to generate consumers mind share towards fuel stations and retailing is seen as the best option. Having an outlet at a fuel station is considered important in understanding the needs of the customers. When one views the need and empathize with a person who is exhausted after his long day’s work and leaves office with a long list of shopping to catch up with, there are bright chances of him entering the petrol station retail outlets as :
• These stores are the first to open and last to shut down,
• A person can use his petrocard to shop and earn valuable “Petromiles”,
• Music, cappuccino, magazines, cell phone recharge/ electronic recharge, motor oils, ATM’s of leading banks, all under the same roof,
• Mobile trolleys at the fuel outlet which will bring convenience to the doorstep of the car,
• Fuelling of the vehicle in the same premise,
• Other services like inspection of engine oil, oil filter, battery fluid, air filter, lights, leaks available with ease.
Our very own Indian BP (Bharat Petroleum) has brought convenience retailing to India in 2001. Like the rising demand in US, Indian petroleum industry too has reached a point to plunge into the various options to increase customer base. In addition, we can look around to spot a number of petroleum companies introducing Hypermarkets and Convenience stores. The profusion of the companies across various locations makes them easy to introduce a retail outlet with all amenities and with an information network that connects them to get the products that the customers want.
With retail sales acquiring a significant share in the market place, the emerging concepts are certain to stay for a long time to come!!!
Jolsna Rajan
Monday, January 28, 2008
Convenience Retailing – A Venture by Petroleum Majors
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5 comments:
Petroleum retailing is directly dependent on the maturity of the automotive market in a particular economy. The huge size and dependence on automobiles by developed economies provides scale and opportunity to retailers to sell goods and services to the large mobile population.
Given the fact that India's road infrastructure and automobile mobility is largely restricted to the metros, I foresee some more time before petro retailing will make an impact in the Indian markeplace. Initiatives like the Golden Quadrilateral, NSEW Corridor and mass products like the Tata Nano are key influencers that can and possiby will change the adoption and success metrics of petroleum retailing in India.
The new wave of retailing around petrol bunks conforms to yet another model borrowed from developed economies that rests around towns and cities and primarily around the reach of individual retail chain within those geographical parameters.
The best example perhaps could be the UK based Tesco which has interwoven its retail matrices with its own "brand" service stations (as petrol bunks are called). What more - each "fuel refill" is also linked to a point and card system which interlinks it to the amount you spend on groceries et al at the Tesco counters. And add to the discounts offered, customer and brand building just walks hand in hand ! We surely do have a long way to go...
Interesting article! Jolsna.
I couldnt agree with you more on 'convenience' being the single largest driver to the new store format. It is just a little disheartening to note that all of us are becoming lazy by the day. The whole concept sort of drives away the pleasure of shopping.. which incidently was another big reason for people to meet and hang around together. I am sure with the mall culture , this hanging around will reemian intact.. but the 'convenience' format certainly makes u realize the importance that human beings have started to lay on things which do not require a lot of effort and staretd incorporating the same in their daily routines! Hozzat!! for convenience!! well i gotta go .. waiting for the home delivery pizza i ordered ~~ ;-)
Jolsna...very interesting reading
Reliance too is a making a big foray into convenience retailing at its own gas stations/petroleum stations. I am not sure if this has received media attention yet, but i can find out more about this if you wish.
Regards,
sujatha
This was a very incisive article with forceful arguments: i remember thinking that the Advaith petrol bunk was designed with the comfort and convenience of commuters in mind. There's even an A2B outlet attached to it.
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