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In expanding their offerings, fuel companies have a choice: go it alone and extend their brand into non-core areas or hook up with an existing retail brand. In the UK, for example, several fuel retailers have teamed up with national supermarket chains. “Just as fuel retailers wanted to improve their c-store formats, the supermarkets also moved into the convenience sector,” says Kurtz. “They have searched for great c-store locations and think that forecourts are prime sites.”
Where better to place a well-stocked convenience store than in a gas station? You can locate the stations on busy commuter routes, near office blocks or in areas of high population (with disposable income). Suddenly you have access to millions more consumers, many of whom will already be loyal to your brand.
BP started the trend in 1996 when it partnered with Safeway. Safeway transformed forecourt shops on BP sites into mini-markets. Motorists could buy BP gas, but pay for it (and any other items from a wide range of convenience products) in the Safeway store.
Since the success of BP’s deal, others have followed suit. Shell and Esso have teamed up with the UK’s two largest supermarket chains (Sainsbury and Tesco respectively) in similar deals.
Sainsbury began trials of its Sainsbury Local c-store format in 2000 and in the summer of 2003 announced that it would open 100 new outlets in Shell stations over the next three years. The filling station stores provide a range of ready meal options, fresh fruit, vegetables and prepared salads, beverages, everyday non-food items and Shell’s range of car care products.
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In the US, the c-store sector already has strong brands making it difficult for supermarkets to break in. “We seem to have a clear line in the sand,” says Brannon Cashion, senior vice president at brand consultancy Addison Whitney. “The convenience store brands (7-11, OnTheGo, Circle K) have entrenched themselves with the gas stations while the supermarket brands have remained out of this channel.”
An important aspect of supermarket branding in the US is size. Supermarkets are large stores, synonymous with cheap prices. It seems incongruous that the Wal-Mart brand, for example, could be extended into the convenience sector.
Nevertheless, UK supermarkets have succeeded in this leap of faith, building on shoppers’ existing loyalty and brand awareness. Indeed, 11 of Sainsburys’ top 20 stores are Sainsbury Local convenience stores. So perhaps mini Wal-Marts could soon appear in filling stations. The promise of cheaper prices could easily attract motorists and shoppers alike and tempt them away from the pumps of the traditional c-store companies.
Fuel retailers hope to cash in on the lure of a big name supermarket brand on their sites. But while it is almost certain that motorists are more likely to make purchases from their favorite brand of supermarket, will the presence of the c-store drive up sales of fuel or improve the fuel retailer’s own brand awareness?
Andrew Welch, executive client director at Landor, a brand consultancy, believes that the fuel/supermarket combo marks the beginning of destinations brands. “The joint ventures will start to create preference of one site over the other. People will usually buy gas from their nearest filling station, or the cheapest one locally. But with the supermarket stores, customers are more likely to go the extra mile.”
“I believe there is a lot of potential [where] branding -- through joint ventures or brand extension -- can change the fuel retailing sector,” says Welch. “There are actually service providers with 20,000 points of contact with consumers. At the moment, the richness of the fuel brands are not expressed in consumer channels. Their innovation, for example, is not recognized. At the moment, the forecourt is a very low driver of education and of what the fuel companies are achieving. But it could become a shop window for the brand.” [12-Jan-2004]
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Edwin Colyer is a science and technology writer based in Manchester, UK.
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Mar 29, 2004
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Celebrity Branding -- Alycia de Mesa
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As a star ascends it can take a product or two with it. Similarly, as a celebrity falls from grace, so goes the appeal of the brand.
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Jan 5, 2004
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Which Bud's for you? -- Mark Jarvis
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As Czech Budweiser prepares to launch its first international marketing campaign, the battle between the two Buds is bound to rise to a head.
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