Bharat Petroleum readies to roll out full-fledged retail operation

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New Delhi | Updated: June 16, 2015 8:52:13 AM

With 12,500 fuel outlets where anywhere between 24 million and 36 million customers top up their tanks daily, BPCL is readying to roll out retail operation.

BPCL has joined hands with Amazon to set up pick- up points at some of its outlets to test whether the model will work.BPCL has joined hands with Amazon to set up pick- up points at some of its outlets to test whether the model will work.

With 12,500 fuel outlets where anywhere between 24 million and 36 million customers top up their tanks daily, Bharat Petroleum Corporation (BPCL) is readying to roll out a full-fledged retail operation. A revamp of the non-fuel retail operations, which now fetch less than 1% of the firm’s revenues, is on the cards and Boston Consulting Group (BCG) has been tasked with finalising a blueprint for a fresh roll-out both the In&Out convenience stores and also quick-service restaurant (QSR) outlets. The consulting firm will also come up with ideas for loyalty cards and the lubricants business, two highly placed officials at BPCL told FE.

Even as it taps into a larger share of customers’ wallets, the public sector oil marketing company (OMC) wants to differentiate itself from competitors so as to be able to retain its customers. The BPCL top team believes a separate strategic business unit (SBU) may be called for to house the non-fuel retail operations. George Paul, executive director, retail, confirmed BPCL was looking to monetise the non-fuel business, making it a big enabler to grow the fuel operations. “Earlier, the non- fuel businesses were treated like any other initiative. But now it’s a strategic business proposition because this could help customer retention,” Paul said.

The initiative will not just be restricted to offering food or merchandise; financial and banking services, e-seva kendras and Aadhaar centres too are being contemplated. BPCL has joined hands with Amazon to set up pick- up points at some of its outlets to test whether the model will work. “We are in a vantage position and can designate these as Amazon pick-up points. At the end of the day e-commerce companies need to have a brick and mortar logistics network and we’re well positioned for that,” Paul observed.

Paul pointed out that several large retailers were struggling since they needed to maintain stores on high streets at high rentals. “We already have 12,500 fuel outlets where we can potentially open up stores. We already have stores earning Rs 400 per sq feet in locations like Delhi,” he said.

Pramod Sharma, executive director in charge of business strategies, said the oil retailer was toying with the idea of teaming up with other retailers to open stores outside of BPCL’s retail outlets and possibly even managing the back end.

Paul said that for last 10-12 years BPCL has been experimenting with these non-fuel businesses. “We want BCG to update us on the international best practices so we understand the changing requirements,” he said. Indeed, not all the oil retailer’s stores have been a hit; nearly half of the 400 stores opened have been shut down. But the firm is hoping BCG’s catchment analysis will help it assess locations better in future. BPCL, which offers a range of loyalty cards that reward fuel purchases, now plans to introduce a common card across product categories including lubricants and LPG.

“All these initiatives are targeted at aimed at retaining the customer,” Sharma explained.

Sharma believes the QSR business segment, for which BPCL has teamed up with top chains like Subway and Cafe Coffee Day, can look at newer formats. Moreover, BPCL could also potentially reach out to several of these customers through its lubricant offerings.

Over the last seven years BPCL has utilised the LPG distribution business for its ‘Beyond LPG’ initiative where it supplies kitchen appliances, white goods and safety gadgets to LPG buyers; last year the company crossed the Rs 1,000-crore sales mark. The OMC wants to offer similar services by working together with agencies that clean houses, apply pesticides and arrange for a driver on call. In FY15, BPCL reported revenues of Rs 2,42,419 crore and a net profit of Rs 4,807 crore. At present the company has six SBUs — refinery, LPG, aviation, lubricants, industry and commerce and fuel-retail.

Shop talk:

* BCG to finalise blueprint for rollout of In&Out stores, QSRs
* Separate SBU may house non-fuel retail operations
* e-seva kendras, Aadhaar centres also contemplated
* joins hands with e-traders to set up pick-up points
* Hopes BCG’s analysis will help it to assess locations better in future

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