Wheel of Retailing re-invented – Convergence hitting Indian Organized Retailing, specially in Petroleum/ Convenience Formats

I read this feature article in a business paper recently that said “Indian Oil, Bharat Petroleum, Hindustan Petroleum to open over 3,000 outlets this year” Which, given the loss making nature of these government owned oil marketing companies, should come as a surprise. Apparently, they are doing it to raise competitive barriers. But, what interested me more, was their stated intention of raising the contribution from non fuel retailing. IOC apparently currently earns about Rs 200 crore from its non-fuel retail, and hopes to take that up to Rs 3,000 crore per annum in the next few years.
Now, according to me, Non fuel retailing suffers from ‘confused’ positioning between ‘Kirana stores’ and ‘organised’ retail outlets – on the face of it, these outlets offer the ‘convenience’ of shopping/ snacking whenever you stop to fill petrol – and ofcourse, that’s a powerful proposition. But in India, where in any case, there are kirana shops littering the streets – willing to deliver products to your homes at a phone call, at rates that are lower than MRP, and also with a comfort level of very often offering you a ‘monthly account book’ – the proposition falls a little short. Add to it the fact that a) unlike the West, where you get out of your car or two wheeler to fill ‘gas’ yourself, and then its only a few steps to the store to pick up your eggs and bread; in India, you very often do not leave the comfort of your car while the petrol station attendant is filling ‘er up, and so the inertia of getting out to shop is higher; b) very few gas stations if any may have extra space for parking if this behavior were to grow; and c) A bulk of the convenience store merchandize is liquor and tobacco in the West – in India, liquor sales are regulated, and tobacco is maybe the best distributed product category; it really makes you wonder about the robustness of the model.
The ‘powers that be’ seem to agree - "We have some concerns and are not happy with the idea. Oil companies have more important problems to concentrate on such as adulteration and retail automation," said Mr M.S. Srinivasan, Secretary, Ministry of Petroleum and Natural Gas, when asked about Indian Oil's plans to enter non-fuel retailing.
Notwithstanding that, we now hear about the majors in Petrol and Retail tying up to sell a wide range of products, and even services (like insurance!)
This actually nullifies a classical theory on the evolution of retailing formats – the wheel of retailing – the theory shows a cycle of retailers/ retail formats gaining a foothold into a market through productivity and low prices, only over time to lose some of that edge and beginning to move upstream in terms of product mix and customers, only to again later face more competitive problems as the newest round of low price competitors attacks from the bottom – the tide seems to be turning in India as all forms are converging, and there is a real ‘mashup’ of formats.
I think we just have to wait and see which way the wheel turns.