Shell-7-Eleven split: Why breaking up was the right move by Shell

Shell unveiled plans to end its 11-year partnership with convenience store chain 7-Eleven in a bid to take back its petrol stations in Singapore. A Shell spokesperson told Marketing the stores would be renamed as Shell Select and has also paired up with the likes of McDonald’s to offer “options that are aligned to its customer value propositions”.

Currently, the revamp is already underway and several industry players Marketing spoke to applauded the move by the petroleum giant, saying that this was a means for the station to “take back control” of the customer journey and create a more seamless end-to-end experience.

According to Andrew Crombie, brand consultant and former CEO at Fitch, Southeast and North Asia, the move will create a more seamless end-to-end experience to meet the demanding expectations of the modern mobile customer. This gives them a chance to break the predictable fuel/convenience model offered by most fuel brands.

Crombie added that Shell has an incredible asset in its distribution network, and a huge opportunity to gain first-mover advantage in reshaping the overall mobility and convenience offer against other fuel brands.

“It can’t fully realise this opportunity if it has to negotiate or coordinate each initiative with a third party operator,” Crombie said. He added that with the split, Shell will be in control of the convenience store and the products it offers. It will also have more opportunities to test new concepts and vary its offers geographically and create a more integrated overall concept for each site.

“A lot has changed since the relationship has started in 2006. Customers are more aware and more connected and their needs are different. And mobility is in the midst of a major change. To take best advantage of this change, Shell needs to be able to control every element of its overall offer and this move to part ways with 7-Eleven in Singapore makes this more achievable,” Crombie explained.

From a branding perspective, Crombie agreed that without doubt, 7-Eleven drew the short end of the stick as it loses a ready nationwide-distribution network with convenient parking, and with a regular and reliable clientele. He added:

7-11 loses significant brand presence as its signage numbers are reduced and the strong association of brand credibility and modernity that comes from Shell.

Agreeing with Crombie was Jane Perry, managing director of Geometry Global Singapore, who deemed the move strategic for Shell to better differentiate its business from competitors. The partnership with 7-Eleven, she said, made offering a seamless customer experience for its consumers challenging.

“This is because both Shell and 7-Eleven have strong brand equities – hence the seamlessness of the customer experience might be compromised in the process,” Perry said. She added:

It is also challenging to marry the brand equities of two retail heavyweight brands.

“The move will give Shell 57 more touch-points to engage and connect with consumers. This is something which it was unable to do before as it had no control of customers entering another retail environment,” Perry said.

Perry said the bold separation will give an opportunity for Shell to innovate throughout the entire fuel station experience and offer something different for consumers.

“Customer engagement through fuel stations is something which is still lagging behind in Singapore, when compared to the rest of the world. It’s an experience which at times still feels quite transactional and disjointed,” Perry added.

Simon Bell, managing director of FITCH said currently the partnerships in place between convenience stores and fuel stations are typical with nothing unique or differentiated. Bell added the move was smart of Shell to invest in its own brand and extend the customer experience from forecourt to convenience store, rather than to share its limelight and real estate with 7-Eleven.

“In branding, having an own-able experience is the holy grail. Done right, retail wields this power. To me, Shell is focusing on Shell (or finding new partners such as McDonald’s) that will assist it to achieve this. The point of difference will come in how the new relationship (whether convenience store, fast food or something else) can complement and enhance the Shell forecourt and station experience,” he added.

Source: marketing-interactive.com; 3 Oct 2017

How can fuel retailers become the industry disrupters of the future?

Fuel retailers have the opportunity to disrupt the industry with exciting new customer-focused, digitally-enabled innovations. Zahra Bahrololoumi, Managing Director – Energy, Accenture discusses the future of the fuel retail industry.

How innovative is the fuels retail industry today?

The fuels retail industry is very interesting, but the reality is that we’ve seen little change in the types of services in the petrol industry, particularly in the UK.

We’ve seen some exciting developments in the recapture of market share by the independents, fuelled mainly by the major brand divestments and the significance of these for the industry should not be underestimated.

However, petrol stations are simply not innovating at the rate we see in the rest of the retail industry. And this is where the hypermarkets in particular could gain competitive advantage.

How does fuels retail compare to other retail industries?

Let’s take contactless payment for example, particularly in London. All the big chains, shops and retailers have contactless payment as a very convenient way to pay. They’re thinking about the consumer first and knowing that no one wants to stand in a long queue while they’re in a hurry to grab lunch.

But it’s not just about keeping pace. Some retailers are actively making changes by shaking up the industry in shaping consumer expectations.

What can fuel retailers do to keep up – and differentiate?

When we talk about actively shaping consumer expectations, we’re really talking about disruption in the industry. What does disruption in the fuels industry really look like?

Imagine you were a fuel retailer: what if your customer could pay without leaving their car because of the technology available on the forecourt or in their car?

What if your consumer could pre-order their lunch or coffee via their smartphone before they arrived on the forecourt and it would be waiting for them?

What if you were able to deliver fuel directly to your customer while they were sleeping, and perhaps pop their grocery shopping into the back of their car?

And what if your site was the site of choice for driverless cars due to the sensor technology on the forecourt that helped driverless cars navigate through it successfully?

These might sound daunting to a fuel retailer, but these are the types of innovations that are here and set to shake up the industry in the future. There is no doubt there is a need for many fuel retailers and the fuel retail industry to get a handle on their basic operations and associated costs. But really this industry should not lose sight of the opportunity to be a disrupter.

Source: Accenture; Sept 2015

Nestlé employs fleet of robots to sell coffee machines in Japan

Pepper the android is set to rival George Clooney as the face of coffee in 1,000 Japanese stores, thanks to SoftBank.

Pepper and George Clooney

Move over George Clooney – Nestlé has employed a fleet of chirpy robots to sell its coffee machines in Japanese stores.

The US actor, who has become the global face of the Nespresso brand, has been given the elbow in favour of Pepper, a cheeky and chatty android, which its makers claim can answer customers’ questions.

“How do you enjoy coffee? Number one: An eye-opener coffee; Number two: A post-meal cup of coffee,” Pepper asked a Japanese TV personality, Kyoko Uchida, at a promotion event in Tokyo on Monday.

The 120cm-tall robot has a human-like face perched on top of a white plastic body, with rollers and what looks like a tablet computer on its chest.

The gimmick will eventually see 1,000 stores across Japan with their own Pepper, which makers say can understand up to 80% of conversations.

The robots will “help us discover consumer needs through conversations between our customers and Pepper,” said a joint statement from Nestlé and SoftBank, whose French arm Aldebaran developed the technology.

Pepper – which was unveiled in June by SoftBank’s president, Masayoshi Son – already sells mobile phones at SoftBank’s 74 Japanese stores, where it has been used to collect customers’ opinions.

Engineers claim the robot’s artificial intelligence has allowed it to expand its conversational ability by listening to what customers say.

The robot will go on sale to the public in February, with a price tag of 198,000 yen (£1,060) plus monthly fees.

Source: theguardian.com; 01 Dec 2014

Study of the UK petroleum retail market

The UK’s Department of Energy and Climate Change (DECC) commissioned Deloitte in 2012 to conduct a study of the UK petroleum retail market in order to develop a better understanding of the implications of recent trends in the number of petrol filling stations (PFS) on the overall security of supply and the resilience of the downstream oil sector. For the purposes of this study, the UK petroleum retail market is defined as the retail sales of road transport fuel (petrol and diesel) to consumers and businesses via the UK’s PFS network.

This report provides an overview of the UK petroleum retail market, including its size, key demand drivers, types of retailers and PFS proximity, and how these have evolved over time. It also sets out the key business drivers in this market and the ensuing business models and strategies of different market participants.

Source: Deloitte, Dec 2012

Click here for full report

The future of petrol retail branding

Forty years ago the petrol filling station was an iconic landmark.

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Post-war romantic visions of futuristic architecture were played out on the forecourt.

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During the 1970s, these iconic stations were replaced by bland, generic formats owned largely by the major oil companies.
Architecture and service was rationalised and standardised across the world. In most regions, attended service was removed and customers were left to fill the car themselves.

More recently, the oil majors have stepped back from retail sites, focusing on franchising the forecourt operation to independents and the shop offer to well-known grocery brands.

At the same time supermarkets have taken significant market share by offering cheap fuel next to grocery shopping.

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But retail has moved on…

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While petrol retail has become bland and uniform, nearly every other retail experience, from banking to supermarkets to buying cars, has been revolutionised.

Shopping for fuel is one of the few experiences still termed as a ‘distress purchase’.

So what’s the future for the filling station?

Read more

Source: Circle Brands, UK  (May 2010)