NEW YORK — If women had not abandoned short skirts and started wearing pants, I would not have become a consultant to the convenience-store industry and would not be writing this column. What does that have to do with branding electricity? Quite a lot, I believe. Here’s the story …
I grew up in England in a family women’s hosiery business, emigrated to America to join another similar company and was then recruited to head up and combine two hosiery companies that had been acquired by a conglomerate. In four years, I doubled sales and more than tripled profits, created pantyhose and tights as fashion items designed by famous designers like Emilio Pucci and Rudy Gernreich. At 34 years of age, I was elected chairman of the National Association of Hosiery Manufacturers.
Quite a success story, no? So why didn’t I go on to fame and glory in that industry? Not because conglomerates went out of favor (which they did), but because most women stopped wearing pantyhose, and the ladies’ hosiery industry shrank to insignificance.
Get Charged Up
Fast forward to today, and we are beginning to see the same thing happening to gasoline marketing. As electricity becomes the motor fuel of the future, the future of gasoline brands is likely also to shrink to insignificance—unless the oil companies that own the brands can figure out how to apply them to electricity.
For many years, gasoline sold under major brand names such as Exxon and Shell have been seen as higher quality than secondary or unbranded gasoline, although, in most cases, this is illusory. But Exxon electricity? What could possibly be its unique selling proposition?
Electricity is electricity. You plug something into it, and it works.
Could the oil industry’s future really be doomed? It certainly is looking quite bleak right now.
Furthermore, you can plug your car in at home, and in the future, charging will occur while you are driving. So while different ways of delivering electricity, such as changing out the battery or super-rapid charging, may distinguish certain equipment and charging locations from others, it is difficult to see how these could become the compelling market positioning of a major gasoline brand.
In addition, oil companies are not the greatest marketers in the world. They have lived in an environment where they have not had to pay nearly as much attention to the functions of either buying or selling as do most businesses in which these are the fundamental factors for success.
At one end, their product comes up out of the ground, and at the other end, there are buyers who can’t function without it. So their major skills have been in the logistics of getting the product from where it exists to where it is needed. With electricity, this infrastructure already exists, and since ownership of the national grid is very complex and heavily controlled by federal and state authorities and well-established existing utility companies, there is no apparent opportunity for oil companies to dominate in that arena.
So what will happen to the major oil company brands and indeed to the companies themselves? Will they go the way of pantyhose and conglomerates? It’s possible (think of the demise of leading brands such as Sears or even the New York Central Railroad), but I don’t know the answer to that question. What I do know is that c-store operators, who are currently reaping the benefits of increased gasoline margins, must begin to think about how, in a gasoline-impaired market, they will be able to succeed in getting customers to stop at their sites rather than those of their competitors.
How will convenience stores be able to continue to thrive in the evolving electric-motor market, when the gas brand and the price sign are no longer major factors in attracting customers? We’ll search for some answers next week on CSP Daily News.
This Just In
I finished writing this column on May 25th, the day before what Bill McKibben, writing for the New Yorker, called “Big Oil’s Bad, Bad, Bad Day.”
On May 26, three completely separate events forced oil companies’ hands:
First, a Dutch court ordered Shell to cut its emissions of air pollutants 45% by 2030, a mandate it can likely only meet by dramatically changing its business model.
Second, 61% of shareholders at Chevron voted, over management objections, to demand that the company cut Scope 3 emissions, which include emissions caused by its customers burning its products.
Third,ExxonMobil officials announced that shareholders had elected to their board at least two dissident candidates who have pledged to push for climate action, over the company’s strenuous opposition.
The pressure on these major oil companies is clearly now coming from all sides—from governments, shareholders, and boards at the top, and from a new type of motor fuel that they can neither manufacture nor control.
Could the oil industry’s future really be doomed? It certainly is looking quite bleak right now.
Gerald Lewis is a semi-retired consultant who has served more than 300 convenience store and oil companies at board level on five continents for more than 40 years. Reach him at glewis@c-man.net and (646) 215-7741.