Targeting convenience shoppers pays handsomely

REVENUE from petrochemical group BP's convenience retail store division soon will account for 50% of gross profit globally, more than double the current 20% provided.

Merchandise GM Rui Jardim said BP was following the global trend in convenience retail. The trend was being driven by consumers having money, but not the time to shop.

He was speaking at the opening of a new-look BP Express Store in Randburg where he launched the Express Store's new internet services and its coffee shop chain, called The Wild Bean Cafe.

Jardim said petrol retailers have long claimed their profit margins were under pressure, with government's prescribed margin too low.

Retail Motor Industry CEO Jeff Osborne said the opening of stores was one of the ways the industry was trying to add further streams of revenue.

Osborne said running the stores was not easy because of security issues resulting from their being open 24 hours a day.

Although the petrol companies received a fair return from the franchised stores, Osborne said profit for the franchisee could not be called 'dramatic'.

Jardim said the BP Express Stores, mostly situated in affluent areas, were performing well, although those in lower income areas had shown good returns as well.

BP had earmarked seven stores to offer the new services, to be opened this year. The group aimed to roll out about 20 stores a year.

From now on the company would not open a petrol station without an Express Store. The group said it would be looking to roll out the stores across Africa.

Already 250 of the new 'concept' stores have been opened in the US, UK and Australia and BP plans to have a further 138 store up and running by year-end.

Richard Griffin, head of BP retail globally, said in addition to the new coffee shop chain and the 24-hour internet access, the stores would also offer instore automated tellers, a Lotto pay point and a drop-off courier service.

In a first, as part of BP's 'environmental concerns', the roof covering the forecourt at the new store was made out of solar panels to save energy. The car wash at the service station used recycled water.

Jardim said there would not be a general approach to the layout and size for the stores. They would be 'tailor made' for the type of market they targeted.

Research has shown that the BP Express Stores brand was the most recognised forecourt convenience store in the country.

However, BP was 'exploring options' in seeking a partner to supply goods to its stores, Jardim said.

Griffin said although the BP Express Stores were doing well in SA since starting up eight years ago, the group felt it was time to start offering new services and give it a makeover to keep it ahead of the other forecourt stores.