Future of fuel retailing in India Intro 50
Analysis 800 850
Cons 50 100
Major players in Fuel Retailing space: IOCL, BPCL, HPCl, REL Products: petrol, diesel, CNG, LPG, lubricants
Deregulation in the 90’s is the first major steps initiated by the then government for a tectonic shift in the sales and marketing of fuel retail business. The major retail verticals are being forced to plunge in for promotion with vigour and to partner with tech leaders to upgrade their age old facade and services at their petrol dispensing outlets to provide a new retailing experience to their end customers.
Personal and commercial mobility continues to grow:
Key factors are economic growth of large middle class, increasing urbanization of satellites like noida, navi mumbai and extremely slow or naught development of public transport infrastructure Total personnel vehicles on road expected to grow by near 9%, over the next 10 years
Demand for retail fuels to grow, increasing pressure on majors like IOCL to deliver Retail fuel demand (mostly petrol &diesel) expected to grow at near 7% per annum India’s concern on energy security, import dependence for crude is around 75%, will expected upto 80-85% by 2020 Access to import crude and the volatile pricing mechanism(existing pricing Regime) pose significant threat to national energy security/sufficiency.
Indian Fuel Retail sphere lags in few areas
More focused on volume enhancement and pipeline network(distribution) than control over pricing/margins and return on asset
Dependent Mainly liquid fuel based with alternative fuels (e.g. CNG) at early stage Innovative types of retailing (e.g. unmanned, hypermarkets, integrated retail) yet to be Introduced
Next 5-10 years may see some game changers in fuel Retailing Three crucial factors of change anticipated
International Market based pricing of fuels in Retail Majors Stricter emissions and efficiency norms, e.g. Euro 4 (2005), Euro 5 (2008/9) Growth and storage of alternative energy and efficient electric vehicles
Winning in the future will require a different set of capabilities and partnerships Moving forward, Indian fuel retail sector will experience certain game changers which may eventually reshape the fuel retail market landscape
To stay competitive fuel retailers need to develop a distinct set of capabilities - wider fuel offering, new capabilities, technology, proactive customer relationship, partnerships/collaborations etc.
Need to offer a wider range of fuels including CNG and electric More focus on CNG, to form it part of multi-fuel based outlets in urban areas, given the fact urban real estate is costly. Retailing and marketing of LNG as a fuel can be adopted for trucks along highways and freight corridors Construction of electric vehicle (EV) charging infrastructure EV infrastructure development requires planning at macro level to identify right distribution of charging stations across cities.
Collaborate with Auto industry and enhance end customer knowledge Industry majors could develop differentiated products through collaboration with Auto original equipment manufacturers(OEM’s) Marketing for end customer awareness, should be used for promoting premium products and to educate customers about the need for fuel efficiency & lower emissions. Comprehensive and viable methods could be adopted to reduce carbon footprint & manage green regulations & models etc.
Develop capabilities in dynamic pricing, branding and technology Retail Majors should develop capabilities in dynamic pricing, earning margin and branding
Prepare for entry of non traditional competitors(Foreign retailers like shell,BP) and higher technology investments
Disinvestment and deregulation period 2002-05, though short-lived, had tremendous impact on the market sphere, customer attitude & outlet infrastructure
Impact of Deregulation
Customers tried to...
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