Extended Expert View: Models of C-Store Joint Ventures in European Forecourt Retailing

Publication Date	December 2005
Publisher	Datamonitor
Product Type	Report
Pages	20
ISBN Number	not applicable
Product Code	DAT00498

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Summary

Introduction

With BP Connect having entered into a partnership with Marks & Spencer (M&S), this extended expert view suggests that the UK market now has two forecourt joint venture models; the classic joint venture, where there is a clear brand split between fuel retailing on the forecourt and convenience retailing in the shop, and the hybrid joint venture where convenience retailing is co-branded.

Scope

An explanation of the classic joint venture model and five examples of forecourt partnerships in Europe operating under this format
A description of the new hybrid model of joint venture convenience as currently being trialled by BP and M&S in the UK market
An assessment of the relative strengths and weaknesses of the classic and hybrid models of forecourt convenience retailing
Insight into the future outlook for both of these forecourt models of convenience in the UK and Europe

Highlights

Although the hybrid forecourt joint venture gives the retailer more flexibility to choose a range of products suitable for the motoring consumer, there is some dilution of individual brand power with the hybrid ventures that is not present in the classic format.

The growing presence of established retailers such as Tesco, Carrefour and Ahold within the fuel retailing arena questions their willingness to enter into convenience partnerships with their oil company competitors. For example, Tesco in the UK has almost 400 of its own independent petrol stations.

The BP hybrid model is likely to be a success, however, replication of the model elsewhere is less certain. Joint ventures in general can only ever make up a fraction of the European forecourt market, both for legal and business strategy reasons.

Reasons to Purchase

Identify key examples of oil companies and convenience retailers in partnership on the European forecourt
Assess the strengths and weaknesses of the different models of forecourt shop joint ventures
Ensure your company is fully informed of innovative formats in the forecourt shop

Content

Chapter 1 Introduction
- Following the launch of BP's joint venture with Marks & Spencer, this expert view compares different models of convenience partnerships on the forecourt
- The extended expert view consists of four sections
- With BP Connect co-branding with M&S, the UK now has two separate models for JVs on the forecourt
Chapter 2 The Classic Model
- Shell's JV with Sainsbury's in the UK and Esso's partnership with Albert Heijn in the Netherlands are two examples of the classic joint venture model
- The JV between Tesco and Esso dates back to 1998 when it began its first two year trial
- Despite ICA divesting it share in SDS, a JV between itself and Statoil, it continues to supply Statoil shops in Scandinavia
- The Sainsbury's Local and Shell JV started in 2000 following the demonstrated success of the Local format at non-forecourt locations
- Albert Heijn of the Netherlands and Esso terminated their JV agreement in 2004
Chapter 3 The Hybrid Model
- BP Connect and M&S now have an innovative hybrid model, splitting the retail space 50:50 between BP's Wild Bean Caf and M&S Simply Food
- BP's first JV with Safeway in the UK was of a classic format and drew to a close when another retailer acquired the supermarket
- The majority of sites from the BP Safeway Partnership are being transferred back onto the BP Shop network
- M&S and BP are trialing the hybrid model in 8 sites in the UK
Chapter 4 C-Store Model Assessment
- Both the hybrid and classic models have different benefits in terms of products and promotions
- A hybrid forecourt joint venture gives the retailer more flexibility to choose a range of products suitable for the motoring consumer
- Classic Forecourt Joint Venture
- Hybrid Forecourt Joint Venture
- There is some dilution of individual brand power with the hybrid venture that is not present in the classic format
- Classic Forecourt Joint Venture
- Hybrid Forecourt Joint Venture
- There are few differences between the sites and location of each type of JV, as both can survive on the same mix of foot and vehicle traffic
Chapter 5 Future Outlook
- JVs in general can only ever make up a fraction of the European forecourt market, both for legal and business strategy reasons
- Growth in classic JVs in general will be limited within Western Europe
- The BP hybrid model is likely to expand to some of the Safeway sites, however, replication of the model elsewhere is less certain
Appendix
- Contact details