ExxonMobil Exits Retail

Another Big Oil company shifts retail operations to distributor class

Angel Abcede, Senior Editor/Tobacco, CSP

FAIRFAX, Va. -- Announcing the formidable transition of 820 company-owned and -operated retail sites and 1,400 dealer-operated sites yesterday, ExxonMobil became the latest major oil company to exit direct retail in favor of alternative paradigms, in this case, primarily to the distributor class of trade, as reported in a CSP Daily News Flash yesterday.

Groups of these direct- and dealer-operated sites are located in Texas, Florida, Tennessee and California, but the transition involves numerous metropolitan markets across the country, a company spokesperson told CSP Daily News.

&[image-nocss] ldquo;As the highly competitive fuels marketing business in the U.S. continues to evolve, we believe this transition is the best way for ExxonMobil to compete and grow in the future,” said Ben Soraci, U.S. director of retail sales for the company. “Quality, dependable Exxon- and Mobil-branded fuels will continue to be part of the branded distributor offer.”

The company would not offer details as to how the changeover will occur, nor would it peg down a timeframe, saying only that it would be a “multi-year process.” Prem Nair, a spokesperson for ExxonMobil said a “majority” of the sites would be transitioned to distributors, adding that 75% of the chain 's more than 12,000 branded retail sites are already distributor served.

She said the fate of the direct-operated, On the Run convenience stores has yet to be decided. “The details I 'm not able to share,” she told CSP Daily News. “What I can tell you is that we are currently evaluating all options.”

When asked if the sluggish state of the U.S. economy had anything to do with ExxonMobil 's decision, Nair said, “The fuels-marketing sector is very challenging, with reduced margins and the growth of competition [becoming] significant. The move is, for us, one that will build on the strength of our current distributor network.”

Danny Roden, marketing vice president for the Americas, for San Ramon, Calif.-based Chevron Corp. was not surprised by the news. “That 's the direction all the…major oil companies seem to be going—to the marketer model,” he said. “A large percentage of our sites are marketer-supplied, so we see that as an important class of trade.”

Chevron has both direct operations and, in the last year, has moved further into franchising with its ExtraMile c-store concept. “We still strongly believe in direct-supplied for [our markets] in parts of the West,” Roden said. “And we see the Chevron/ExtraMile offering as being one that can succeed even in this tough market. We 're all in, and that has allowed us to compete effectively.”

Houston-based BP just a few months ago announced the conversion of company-operated stores to its West Coast ampm brand, selling off properties and franchising stores. “We 've been moving, for a number of years, more and more of our retail [operations] to talented operators and jobbers,” Scott Dean, a spokesperson for BP said. “I can 't speak for others, but it 's been part of our strategy.”

Angel Abcede, CSP/Winsight By Angel Abcede, Senior Editor/Tobacco, CSP
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