Fuel Retail market is generating less revenue since it has become very competitive and the number of competitors is growing in most emerging markets. Profits from the sale of fuel are dwindling because of the decreasing unit gross margins left to fuel marketers: in regulated markets such comes from the government taking a bigger of profits, and in deregulated markets such is the result of competitors offering lower prices to secure more volume. I was usually framing up that challenge while explaining teams and the Board that “the future of Fuel business goes through Non-Fuel business”: in order to ensure profitable growth and sustain while being able to invest, fuel marketers must develop their non-fuel offering and focus on the Shop, Food and Services where margins are bigger. The Shop segment is very specific and a field of expertise with dedicated individuals. A beautiful and well-managed convenience store is among the most efficient ways to attract vehicle drivers and their family to the gas station then retain them while purchasing a whole variety of consumables and non-consumables from the c-store. As a result, revenues get diversified –no longer depending on the sales of fuel only- and increase while generating more profit from higher margin businesses.
Oman Oil Marketing is the owner of the largest chain of convenience stores in the Middle East with 110 Ahlain shops. Despite having a solid brand awareness, this business had the potential to do much better. Decision was made to adopt a new business model while no longer depending on an operator but managing it on our own and more efficiently in the future. Such a change would also meaningfully impact the brand “Ahlain” which no one knew better than Oman Oil Marketing as its owner: the company would now be able to consistently balance the brand promise and the brand delivery.
Oman Oil Marketing took back the control of all strategic functions: category management, sourcing and the negotiation with vendors then adding marketing and digital functions. We trained our people and recruited talents to grow our expertise, we also invested in our shops and worked on a new design for the future Ahlain c-stores. Costly functions of manpower and inventory management were tendered after 20 years staying with the same operator. This new business model allowed Oman Oil Marketing to benefit more rather than the operator managing its own way and getting most profits. Also, relating the business of c-store to the service station unfolded its full potential while studying how the c-store could attract more customers thus impact the sales of fuel and create more engagement from customers with the brand.
RESULTS AND IMPACT |
Beyond increasing the profitability of c-stores and generating more traffic for the service station, it also created more interest from Oman Oil Marketing employees by allowing a full control over our assets and enhancing the brand value. Then cross marketing could start while designing offers and campaigns linking the c-store to the various services present on the service station. The whole network of service stations transformed while offering a solution for every customer through the creation of an integrated hub of offerings. Ultimately, Oman Oil Marketing could consistently build and sustain strong brand equity by ensuring alignment among the strategic functions of category management, sourcing, marketing and digital thus increasing value for company shareholders.