Another important development in the Indian retail industry is the emerging concept of Forecourt Retailing, a retail format having an unlimited growth potential in India.
With the rising fuel prices, the margins of the oil companies are being hit hard. More and more emphasis is being given to layout planning, visual appeal, customer service and providing value added services to the consumers. Since, fuel is a commodity and there exists no brand loyalty in the customer’s mind so the companies are trying to 32 woo customers to their fuel stations by providing other ancillary services. It is with this objective that more and more companies are entering into the concept of forecourt retailing. Although the industry is still in its infancy stage of its life cycle, unlike in other places like US and Europe where the industry has matured to quite an extent. In the Asia Pacific region, only the Japanese market has accepted the concept of Forecourt Retailing and in other parts including India, the industry has had a very dismal start.
There exists a strong synergy between Forecourt Retail business and Fuel Retail industry. The various aspects which provide strong linkages between the two industries are:
1. Network: The network of the fuel stations is very huge. They are present in each and every part of the country.
2. Location: owing to its ubiquitous presence, the fuel stations are located in almost every major locality and cater to all the economic segments with are in need of fuel.
3. Number of Footfalls: The number of footfalls in a typical fuel station is almost comparable to that of any big supermarket. Each day, lakhs of people visit these fuel stations to get their automobiles re-fuelled.
4. Space Availability: Most of the fuel stations have much idle space available within their premises. This space can be better utilized to conduct some sort of retailing business like coffee shop, convenience store etc.
5. Financial Backing: All the players operating in the fuel retail sector are very sound in terms of financial strength. This means that if they have the capability to venture into forecourt retail in a big way and scale up rapidly.
Indian Oil is planning to partner with existing retailers, such as Apollo, for pharmacies, Subhiksha, bookseller Crossword and Cafe Coffee Day. This' is similar in concept to the "In & Out" retail store format at competitor Bharat Petroleum Corp. Ltd, which has formed strategic alliances with major brand owners, retailers, and music stores Planet M and Music World, among others.
Globally, petrol pump-based convenience stores have developed into large businesses with companies such as Royal Dutch Shell Pic., Caltex Australia Petroleum Pty Ltd, and BP. Generating profits from convenience store chains. India's organized retail business is quite nascent, constituting 3%, or $6.4 billion, of an estimated $200 billion Indian retail business. Consultant KPMG estimates that the share of organized retailers will reach $23 billion by 2010. A KPMG survey says most large retailers expect to grow in excess of 40% per annum in the next three years. Indian Oil, which racks up losses on its core fuel sales at such stations, is hoping it can benefit from that growth and start generating profits from its essentially existing, sunk cost. To read the initiatives taken by Bharat Petroleum …………….