NEW YORK -- Do you remember when oil companies disdained convenience stores? No, I’m not talking about now (although it seems they do once again). I’m talking about 40 years ago, when a Big Oil company’s sales vice president told me that convenience stores at Shell sites would be added “over my dead body.”
At that time, Shell had over 100 convenience stores at their dealer-operated sites that their regional managers had quietly authorized and financed using their expense accounts because they knew that their dealers could not stay in business just pumping gas. They needed a second revenue stream.
Soon this same recognition dawned on all of Big Oil, and the major oil companies began scrambling to keep their dealer networks solvent.
Their first solution was to create identity packages for the “shops” at their sites to make them look clean and attractive—and conform to their graphic standards. Not being retailers, the oil companies paid no attention to what was inside the shops, so the customer experience varied from site to site, and the only consistent element was that they were all pretty awful. Thus began the negative reputation for buying food at a gas station.
Then some enlightened executives at a few oil companies--ARCO with ampm and later Mobil with On The Run, for example—came to realize that, if they actually became retailers and developed real branded convenience store programs themselves, they could solve a number of problems simultaneously! They could:
- Keep their dealers in business.
- Enhance the value of their underutilized, prime retail real estate.
- Lower the price of their branded gasoline (by covering their site costs with their retail revenues).
- Draw traffic away from their competitors.
Eventually all the majors adopted some kind of branded retail program:
- Exxon developed TigerMart.
- Shell floundered in the United States with a brand called ETD (which originated when a senior Shell executive fell in love with the slogan “Experience The Difference,” which he saw on a doormat at a Shell site).
- Chevron developed Extra Mile.
- Amoco created Split Second.
- Sunoco converted the ampm stores it acquired to APlus when took over the original Atlantic Oil assets from Atlantic Richfield (ARCO).
As a result of these changes, most of the major oil companies, always uncomfortable being retailers, found that they had solved the problems that had made them become retailers in the first place: Through developing and franchising or licensing their retail programs, they had made their franchisees/licensees profitable; they could charge market value rentals for their real estate; and they could be price-competitive with gasoline as a result of margin-need accounting and retain the supply contracts with the sites they sold. With so many problems solved, they decided to sell their retail assets and head for the exits.
All of this explains why, when I read the announcement of BP’s new “to go” retail image, I looked at the calendar to make sure that it was still 2014, that I had not magically slipped back in time to 1974!
Having worked over the years with many of the key players as part of this evolution, I found it hard to believe that BP had again made such a fundamental marketing error and seems to have forgotten everything oil companies had learned about retail.
BP’s “to go” is a “pseudo brand.” It uses a catchy graphic for a generic name that is mostly used for take-out foods. BP is using it for shops at their gas stations, regardless of what they sell, in order to make the sites look good. The program pays no attention to the needs or expectations of the customers. In fact, it adds to their confusion and contributes to the poor image that the convenience store industry has tried so hard and for so long to overcome.
The fact that CSP magazine’s current issue features Wal-Mart To Go as its convenience store entry simply reinforces the folly of the BP program, which, according to their announcement, will be appropriate for “ampm stores, BP Shops and sites with no convenience image.” According to the BP spokesperson, it will “[enhance] the overall retail experience.”
Really?
Brands are delicate things that have to be nurtured. Think of Apple, Wawa, Trader Joe’s. Brands carry expectations that, if unmet, destroy them. Think of Fresh & Easy. Wal-Mart To Go (no relation) is a well-thought-out offer. It carries expectations that, if successful, will enhance and extend the Walmart brand.
What can customers expect from BP to go? Pot luck! And what will this do to the BP brand? It will add to the two self-inflicted wounds the brand has already taken. First was dropping Amoco, the best gasoline brand name in the U.S. in favor of the also-ran BP, a decision that cost hundreds of millions of dollars and is still hurting the company’s customer loyalty. Second, of course, was the management failures that led to the Deepwater Horizon disaster in the Gulf of Mexico. The resulting oil spill has cost tens of billions of dollars and a huge hit to BP’s reputation.
BP to go is not of the same magnitude as either the oil spill or the Amoco abdication, but it does show that BP still has a long way to go.
Gerald Lewis provides transformational retailing guidance and execution to convenience store operators. He can be reached at glewis@c-man.net or (646) 215-7741.
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