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1
11th Energy Summit
Petroleum Retailing – Future outlook
17th October 2008
2
Understanding Retail Business
3
Market size: Volume
MS( R )8%
Others64%
HSD( R )28%
Year : 2007-08
78.21 MMT
33.6 MMT
9.19 MMT
Retail market is 36% of petroleum products sold by volume in the Country
4
Market Segmentation : Retail Business
Urban
42.4%
Small
town
16.1%
H/way
23.0%
Rural
18.5%
MS (R) HSD (R)
3.90 MMT
1.48 MMT
2.11 MMT
Year : 2007-08
1.70 MMT
Urban
15.0%
Small
town
13.0%
H/way
50.8%
Rural
21.2%
7.12 MMT
17.07 MMT
5.04 MMT
4.37 MMT
5
Evolution of Retail Business
National Oil Companies
Regulated network expansion
Sellers market
Low infrastructure and service standards
De-regulation of Petroleum Retailing
6
Impact of De-control on Retail Business
7
Impact of Deregulation - Network Explosion
Oil Co. Apr. 02 Aug. 08
IOC Group 9429 17755
BPC 4711 8286
HPC 4729 8378
RIL - 1432
EOL - 1152
NRL/Shell/ONGC - 164
TOTAL 18869 37167
8
New Entrants: Business Proposition
Automated ROs assuring highest level of Q&Q Professional Forecourt service Highest level of house-keeping Distinctive Visual Identity Fleet Loyalty Programmes Most ROs company operated Non-fuel facilities like Dhabas, C-store, fast
food, ATM, Vehicle Care, Toilet Complex etc. Discounting Strategy
9
Activities of Existing Players
New Retail Visual Identity
Branding of RO Activities
Introduction of branded fuels
Loyalty Programmes
Non-Fuel Convenience Retailing
10
Challenges from All Sides
11
Improved Visual appearance
Increased focus on Q&Q
Branding of ROs & service
Aggressive new commissionings
CNG, Auto-LPG network expansion
Use of domestic LPG
Diversion of PDS/PMS SKO
““S
ub
sti
tute
S
ub
sti
tute
Fu
els
”Fu
els
”““Exis
ting
Exis
ting
P
layesr”
Pla
yesr”
Challenges from all sides . . .
Customer expectations gone up Quality and quick courteous service
important Bargaining power of specific Customer
groups
““New Entrants”New Entrants”
““High customer demands”High customer demands”
Under pressure . . .
. . . on several fronts
Approval for 11159 ROs High Focus on Q&Q and Service Attractive Appearance
12
Future Outlook – Indian Oil perspective
13
Future Outlook – Indian Oil perspective
Addressing Customer’s need of Q&Q
Market Segment wise Proposition
Network Augmentation
Top Line Loyalty Engines
Dedicated Retail Organisation
Galvanising Dealer Organisation
14
Addressing Primary Need of Q&Q
High Frequency Sampling
Third Party Certification
Retail Automation
Vehicle Tracking
Capability Building of Dealer Organisation
15
Addressing Secondary Need of Network Visual Appeal & Value Added Facilities
Distinctive Retail Visual Identity
Introduction of Branded Fuels
Non-Fuel Facilities
16
Introduction of Branded Fuels
Dosed with Friction Busters
Market share (48.8%); available in 7260 ROs-(52.7% RO covered)
Conversion at 25.9%
Market leader with highest share (60.1%) available in 10,066 ROs (56.7% RO covered)
Conversion at 16.4%.
17
Non-Fuel Business
Non-Fuel Business at Retail Outlets driven by time paucity in matured markets
This Activity is nascent in India
High network of “Mom & Pop” Stores are efficient and popular popular
Value added services
Present IndianOil approach thru Alliance Route
18
Market Segment wise Proposition
19
Xtracare for Urban Markets
Third-party certification & sampling to ensure highest industry standards
100% new generation DUs
Availability of premium fuels
Cashless transaction capability
Distinctive Branding
Trained manpower
Automation
Additional Compensation
More than 2000 ROs in place
20
Swagat for Highway Markets
Large format networked ROs on GQ, corridor and major Highways meeting Fuel and non-fuel needs
Facilities include automated services, food and beverages, communication, shopping, customer health, hygiene, cashless transactions
Distinct branding
Network of 99 ROs in place
21
KSK for Rural Markets
Low cost infrastructure For meeting Agricultural
requirements Addl. Inputs like Fertilizers, Seeds, Cement and Spare
Parts for augmenting dealer revenue
Nodal point for Community Services
2200 ROs commissioned
22
Top Line Loyalty Engines
23
Xtrapower Program
Best and fastest growing reward program in industry for fleet customers
Current strength of over 1.1 million cards and spend of over Rs.1000 crores per month
Accepted at over 4000 ROs across the country
24
XTRAREWARDSTM Program
First & only on-line cash loyalty program in the Industry
Instant membership
Program launched in Bangalore, Mumbai, Delhi, Ahmedabad, Chennai, Hyderabad, Coimbatore & Mysore.
Target to enroll 6 lacs customers during current year.
Alliances with Dominos, Subhiksha, JK Tyres, Rediff Shopping and others
Xtrarewards
25
Challenges before dealership network
26
Challenges before dealership network
Increase in Retail Outlet Network
Increased Customer Expectations and Shifting Loyalty
Low RO Visual appeal and house keeping standards
Increased working capital requirements
Inadequately motivated & trained manpower
Reduced sales and profitability
27
Way Forward
• Economise on logistics costs• Adoption of technology in Retail • Extending reach of network• Wholesome offering to customers in each segment• Thrust on Q&Q • Alternative Fuels – Auto LPG,CNG• Thrust on Bio-Fuels• Upgraded fuels for niche markets• Improved customer service standards
28
Thank you