Monday 4 February 2008

Convenience Stores - Partner Brand or Own Brand?

In developed countries, the traditional petrol station shop has suffered as a result of out-of-town supermarkets offering petrol alongside their other goods. Traditional petrol stations have been limited to mainly automotive-related products and have responded to this new competition by upgrading to fully-fledged, separately branded convenience stores. This separate branding was necessary as the brand of a traditional oil company was not credible to operate the new C-stores under. The first question for many oil companies is how to run such an operation which seems such a radical departure from their core experience in the oil indsutry. In reality, selling fuel and selling grocery products are both forms of retail and rules apply to both - notably "give the consumer what they want in the most comfortable environment!".

Many oil companies have opted to partner up with an established brand rather than creating their own new brand. The established partner brings experience and often an existing support structure. Even relatively experienced petrol station c-store operators such as Esso with "Tiger Mart" are opting to combine skills with UK no. 1 supermarket, Tesco. Tesco's success has been the driving force behind many of the recent retail initiatives of the major oil companies, so this collaboration is clearly a case of "If you can't beat them, join them".

From a business point of view there would be a potential longer term financial benefit in establishing a totally new brand, owned by the oil company. The challenge is to launch the new brand as far along the learning curve as possible. To run this new division of the company, there must be a dedicated team within the oil company which may include many pure retail specialists. Running a C-store may not seem that difficult, but examining existing examples on the market, especially in old petrol stations, shows there is a lack of expert knowledge.

Having an own-brand convenience store does not necessarily preclude partner brands elsewhere on the same site (space-permitting), especially when those brands include the likes of McDonalds, Pizza Hut, Dunkin' Donuts or Starbucks. A strategy of "The more the merrier!" has worked to tremendous effect on the South Superhighway in Manila where all the above brands exist alongside Petron own-brand, "Treats". It is critical for the designers of such developments to avoid visual anarchy amongst the competing brand symbols and colours. Previously, the c-store represented a 'distressed purchase', where the consumer stops because they need petrol and has to go into the c-store to pay. Increasingly, the c-store is now becoming a destination for customers.

© Copyright by Minale Tattersfield Design Strategy

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