RPS Energy Fuel Retailing Tough Choices to Drive Future Success … Barrett, RPS. Fuel... ·...

Sensible solutions – Delivered by specialists

RPS Energy

Fuel Retailing –Tough Choices to

Drive Future Success

RPS Energy – Who we are and not ? is this taking too

much space and also, how long should a title be ?


What We See Happening in The Industry


• Decline in fuel demand

• Growth in shop sales

• Growth in food and coffee offers

• Refinery margins under severe pressure

• Retail margins declining in many markets

• Reduced profitability and pressure to improve returns

• Oil majors reducing their participation in some markets

How do oil retailers respond to these challenges ?




Tough Choices




Sensible solutions – Delivered by specialistsSensible solutions – Delivered by specialists

Need to Make a Clear Choice on Offer and Brand

Positioning – 2 Choices

Option 1: Low Complexity & Low Cost Model

• Fuel focused, low complexity

•Low fuel price (in unregulated markets) to drive higher volume

•Tight cost control

•Channel of trade –Dealer reduced complexity & costs

• Site could even be unmanned

Option 2: Higher Complexity, Higher Cost Model

•Fuel and non fuel (shop & food/coffee) offer

• Consumer offer based on distinctive offer, service and added value

• Channel of trade could be directly managed Company operation, to capture 100% of margin

•Could involve 3rd party c store/food brands to deliver more complex non fuel offers




Examples of Low Complexity, Low Cost Model – Tinq,

NL’s





NL’s





Examples of Low Complexity, Low Cost Model – 123,

Lithuania





Examples of Low Complexity, Low Cost Model – Statoil,

Latvia





Examples of Low Complexity, Low Cost Model – JET, UK





Examples of Higher Complexity, Higher Cost Model, BP

Connect & Wild Bean Café, UK





Examples of Higher Complexity, Higher Cost Model, BP Connect & Wild Bean Café, UK





Examples of Higher Complexity, Higher Cost Model, BP Connect & M&S Simply Food, UK





Examples of Higher Complexity, Higher Cost Model-

OMV (Viva), Hungary






OMV, Hungary






OMV (Viva), Hungary





Examples of Higher Complexity, Higher Cost Model- Aral

Germany





Examples of Higher Complexity, Higher Cost Model- Aral

& Petit Bistro, Germany





Examples of Higher Complexity, Higher Cost Model,

Emarat, UAE





Option 1: Low Complexity & Low Cost Model

• Fuel focused, low complexity

•Low fuel price (in unregulated markets) to drive higher volume

•Tight cost control

•Channel of trade –Dealer reduced complexity & costs

• Site could even be unmanned

Option 2: Higher Complexity, Higher Cost Model

•Fuel and non fuel (shop & food/coffee) offer

• Consumer offer based on distinctive offer, service and added value

• Channel of trade could be directly managed Company operation, to capture 100% of margin

•Could involve 3rd party c store/food brands to deliver more complex non fuel offers

Being in the Middle is Challenging & Becomes Difficult as

Markets Evolve

Medium Complexity

& Medium Cost




But not as Difficult and Dangerous as Having a Low Complexity Model with a High Cost Base……


• So if the market structure/evolution favours a low complexity model,

need to focus on:

– Developing a simplified site offer

– Reducing capex costs to build the sites

– Choosing the right channel of trade to operate the sites

– Reducing operational costs to operate the sites

– Making sure overhead costs to support the business are not

high




Delivering a Higher Complexity, Higher Cost Model


• Means you have to create and deliver

– A distinctive site offer….

– That drives strong fuel volumes and fuel margins…

– That drives strong sales from shop and food/coffee sales…

– And an operational model that means high sales translates into

high net profit




Tough Choices to Drive Future Success – A Summary


• Markets are at different stages of evolution, but ultimately will face similar challenges

• We believe success lies in making clear ‘tough’ choices on which model/option is appropriate:

– Option 1: Low Complexity & Low Cost Model

– Option 2: Higher Complexity, Higher Cost Model

• Then reorganizing your site offer and business model to fit the model you have chosen & relentlessly pursuing that model over time

• Think about this issue now, and plan proactively vs. waiting until you have a problem, then reactively making changes

RPS Energy Fuel Retailing Tough Choices to Drive Future Success … Barrett, RPS. Fuel... ·...

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