The face of fuel retail in India is no more restricted today to sale of fuel. Oil marketing companies (OMCs) in India are today looking at alternate revenue streams.
“Fuel forecourts with 24×7 convenience retail concepts (merchandise & service retailing) within cities and on the highways offer huge scope for expansion of retail. The concept has the potential to create excitement and initiate activities in small towns and cities as well” according to India Retail Report 2009.
The report also says that modern retailing in India will no more be restricted to the metros and major cities. Oil stations scattered through out the country’s landscape can ensure that smaller towns are also exposed to modern retailing formats.
However, the concept is very much in the nascent phase when compared with the Western countries. “There is a striking contrast in the sales mix of oil companies in international market and Indian market. While the contribution of non-fuel to the earnings is 39 per cent and 35 per cent in USA and France, in India, non –fuel retail contribution is less than 2 per cent of the total fuel sales,” according to a recently released FICCI-Technopak white paper on fuel retail in India. Further the study highlights, “The contribution of non-fuel retail towards revenue and profit in the US is 39 per cent and 60 per cent, whereas and it stands at 35-50 per cent of revenue and 40 per cent of profit in Europe.” Back home, the study also reflects the current non fuel retail market standing at Rs 1000 accounting for less than 2 per cent of total sales at present.
Currently, there are already deals existing between OMCs and other retailers. While Vishal Retail has tied up with Hindustan Petroleum to start forecourt retailing at the HPCL outlets, Indian Oil has inked a deal with Future Group. Bharat Petroleum has tied up with Cinemata to set up cinema halls at its 300 fuel outlets on highways across the country by 2010.
An emerging trend in the global retail petroleum industry is the growing entry of retail formats such as supermarkets, large discount stores and mass merchandisers who are placing fuel dispensers in their parking lots to provide added value and convenience to consumers.
India’s oil majors can certainly take the lead to fuel the retail growth collaborating with real estate developers, auto companies, consumer brands, retailers and service providers. This will also facilitate travel and tourism in no small measure. This has happened across the globe and is now happening in India. Travel and tourism are two other sectors that will immensely benefit connecting with retail.
— Shailesh Shah
