Non-Fuel Retail: An emerging Business Model

One can see conventional market places in high streets and malls, but apart from that retailers are also interested in non-conventional area such as airports and railway stations for their expansion. At present due to unique facilities provided by these retailers at these outlets enabled high density of footfalls. So retailers thought petrol pumps to be the better places for their business plan. In earlier nineties, Bharat Shell Ltd, joint venture between Bharat Petroleum and Shell Overseas Investments of Netherlands, launched the first convenience store at its outlets and given a sign of new emerging business model. So oil companies are concentrating on more customer needs and they are involved in activities in providing all necessary facilities.

Hence the days of what the petrol pumps was vehicle-related is slightly converting into new business model and coming up with facilities ranging over convenience store, laundry, courier, medicines, flowers, fresh fruits, insurance, fast food etc. The purchasing of petrol is totally uninvolved process, so by enhancing such facilities would add value. In India this model of transformation is going on and would definitely in coming days it would contribute more to the retail and have wide range of services. And this provided all the oil companies to enter into the tie-up with the convenience stores, so petrol destinations are now one of the preferred destinations. After filling their vehicles, customers have no time to wait and they prefer fast service. McDonald’s has tied up with HPCL and BPCL, Café Coffee Day has partnership with BPCL and HPCL. IOC has tied up with Domino’s Pizza and Nirula’s; hence these initiatives would definitely going to cater the needs of the customers.

Since retail in India is gaining momentum, this model would offer convenience to the customers and would be a profit center for the company. If you talk about outlets on highways, there the prime needr of the customers is the refreshment and people looj For food jnints and tohlets in hygienic conditions. And to fulfill those needs BPCL is g/ihg tk invect Rs. 6 ballion in the .ext five years to set up _50 Ghar’ outlets_on highways to provide hoMe-away-from-home experience tk truckers and highw`y tra4elers. These outlets will provide non-fuel facilities like shopping, eateries and entertainment. Due to the art of infrastructure facilities of oil companies will attract customers and restaurants in this outlet will provide relaxing destinations for the travelers. Apart by catering the exact needs of the customers will be profitable business, like Café Coffee Day by offering varieties of coffees also had additional items like pakoras, bread and omlette.

The biggest advantage of this business model is the ever-increasing price of real estate and such retail venues become more reasonable options. Also maintenance cost is cheaper compare to outlets in mall and busy market. And more importantly such tie-up would result in cross-promotion of both the brands.

The retailing format will vary from place to place like in heart of city ATM and STD can be a good option, in highway as already discussed. But in rural areas since people are mostly engaged in agriculture, so company offer products according to their needs like HPCL has tie-up with Godrej Agrovet Ltd and the outlets offer fertilizers etc and also IOC has Kisan Seva Kendra where agro-based products like seeds, fertilizers and pesticides are made available.

If one is talking about the revenue share and the profit which both party will get from this model is that a certain percentage of turnovers will go to companies share and also the rentals. And for retailers since the retail space is cheaper, they would have better return on investment.

So in future this model is definitely going to serve the purposes of the customers by providing best services and will be more convenient for them. As such food joints have good future as well as impulse goods and car care products. So beverages, chocolate, ready to eat items, personal care products and diet products which is in demand, can serve better for the customers. Items not popular in these business format are electronic goods, music, cassettes, cosmetics, toys and gifts will face challenges. But overall the business format has good future and in coming day’s better implementation can be done. So if we analyze Oil Company could have strategies in three models- one is non-fuel retailing at their retail outlets, second is fuel at malls and the third is whether they should look at entering non-fuel retail as a business model.
VIKASH SAHU