Service Station and Convenience Retailing Joint Ventures in Europe

Report Summary

In recent years there has been a surge of joint-ventures between fuel and convenience retailers across Europe. Through these collaborations, oil companies have sought the expertise of convenience retailers to improve their shop proposition while convenience retailers have used service stations as an additional growth channel. The maximum potential for new partnerships lies in CEE Europe.Make informed decisions about convenience retail partnerships by examining the advantages and features of ongoing and former joint-ventures.Identify partnership opportunities by assessing the forecourt shop numbers, customer footfall and partnership likelihood for various fuel retailers.Recognize potential convenience retail partners in the growth markets by assessing the store expansion and growth strategies of the major players.Devise new marketing and branding strategies by examining the case studies of various fuel and convenience retail partnerships across Europe.Major European grocers have renewed their interest in c-store formats and are looking at expanding their store networks. Given their advantages of location, trading hours and oil company-brand name, service stations present an excellent growth channel for convenience retailers.While Esso’s service stations with On the Run shops are typically located on busy transient routes catering to drive-through motorists, stations with Tesco Express stores are located in dense residential areas. Unlike the BP-M&S joint-venture, the stores and service stations under the partnership are not co-branded.Central and Eastern European countries present the greatest potential for new collaborations as the proportion of service stations with shops is increasing, thereby supporting the development of the shop offer. Moreover, national and international retailers are looking for growth opportunities for the expansion of their footprints in these markets.Which fuel and convenience retailers have ongoing partnerships across Europe and what are the key motivations and highlights of such ventures?Which European markets offer the maximum scope for new partnerships and which fuel retailers operating in these markets can be potential targets?Who are the major convenience retailers in the growth markets and why they may be interested in partnering with oil companies?Who are the top fuel retailers by the number of service station shops across various markets in Europe and what is their partnership likelihood?

Table Of Contents

Executive Summary

OVERVIEW
About the series
Summary

STRATEGIC CONTEXT
Motivations for convenience retailers to partner with fuel retailers at service stations
Smaller formats have a higher growth potential compared to hypermarkets
Service stations form an attractive channel for the opening of c-stores
Motivations for fuel retailers to partner with convenience retailers
Fuel retailers have fragmented shop strategies and need to create a consistent brand image
Fuel retailers’ shop brands have a stigma attached with them
Fuel retailers can focus on their core business and reduce the number of supplier points of contact
A specialist food and grocery retailer can improve the overall service station shop offer

STRATEGY IN FOCUS: CURRENT JOINT VENTURES
C-stores in the BP-M&S joint venture in the UK are co-branded
BP is the UK’s leading player in the service station retailing market
M&S is a leading food and grocery retailer in the UK and operates the Simply Food c-store format
A partnership was formed to open Simply Food stores at BP-branded service stations in 2005
The stores under the partnership are jointly branded under the M&S and BP brand names
The Esso-Tesco alliance follows a classic joint venture model
Esso operates two shop brands, On the Run and Snack ‘n’ Shop
Tesco is the dominant player in the UK food and grocery retail industry
Esso and Tesco have partnered to open Tesco Express stores at Esso-branded stations
C-stores at Esso stations are branded under the Tesco brand name only
Shell has a supply agreement with Waitrose in the UK
Shell ranks second in the UK service station retail market
Waitrose has plans to expand its footprint in the UK convenience retailing space
Shell service station shops sell Waitrose-branded food and convenience products
Shell-branded service stations feature 7-Eleven c-stores in Scandinavia
Shell has a network of over 1,000 service stations in Scandinavia
Reitan Group is a Norwegian retailer that operates the 7-Eleven c-store chain in Scandinavia
A cooperation agreement was signed between Shell and RSH in 2007
Service station and shop branding is managed separately and exclusively by the two partners
Kesko operates its K-market stores at Neste- and Teboil-branded service stations in Finland
Neste is the market leader in the Finnish service station retailing industry
Teboil is the second largest fuel retailer in Finland
Kesko is a major food and grocery retailer in Finland
Kesko’s K-market stores are located at Neste-branded service stations
Kesko formed a partnership with Teboil for the opening of its K-market stores at Teboil fuel outlets
Service stations and c-stores under the partnerships are jointly branded
Rewe’s Billa c-stores will be opened at all Jet service stations in Austria
Jet has a network of over 140 branded service stations in Austria
Rewe is the second largest grocery retailer in Germany
Rewe has formed a partnership with Jet for the opening of its Billa stores at Jet-branded service stations
The stores are branded as Billa, whereas fuel pumps and the station canopy are branded as Jet
The Galp and Sonae joint venture in Portugal is over 10 years old
Galp is the market leader for Portugal's service station retailing industry
Sonae operates various food and non-food store formats in Portugal
Galp and Sonae formed a joint venture for the opening of M24 c-stores at Galp-branded service stations
Galp is converting all the M24 c-stores into its new shop format, Tangerina, under the joint venture
Delhaize’s affiliate c-stores, Shop 'n Go, are located at Q8 service stations in Belgium
Q8 is the third largest player in the Belgian service station retail market
Delhaize is a major retailing group in Belgium
Delhaize’s Shop 'n Go c-stores are located at Q8-branded service stations
Migros-owned Migrolino c-stores are located at Shell service stations in Switzerland
In Switzerland, Shell has the largest number of service stations with a shop
Migros is a Swiss supermarket chain which also has its own branded fuel outlets
Shell and Migros have a partnership for the opening of Migrolino c-stores at Shell-branded fuel outlets

STRATEGY IN FOCUS: PREVIOUS JOINT VENTURES
In the UK, the Shell-Sainsbury’s joint venture terminated in 2008
Shell and Sainsbury’s had a partnership for the opening of c-stores at Shell-branded fuel outlets
Upon the termination of the partnership, the c-stores were to be rebranded under Shell
In 2004, the Statoil-ICA joint venture ended in Scandinavia
Statoil has a c-store at a majority of its branded service stations in Scandinavia
ICA is a major retailing group across Scandinavia and the Baltic region
Statoil and ICA formed SDS for the joint operation of Statoil service stations and shops in Scandinavia
ICA exited the joint venture and sold its stake to Statoil in 2004
The BP-Safeway partnership was disbanded after the takeover of Safeway by Morrisons
The supermarket chain, Safeway, was acquired and rebranded by WM Morrison
BP and Safeway had a joint venture to open c-stores at BP-branded sites in the UK
The partnership terminated after WM Morrison's takeover of Safeway

POTENTIAL PARTNERSHIP OPPORTUNITIES
Central and Eastern Europe offers high potential for partnerships
Convenience grocery shopping is an important parameter for motorists
With a shop penetration of over 80%, Hungary offers lucrative partnership opportunities for c-retailers
In Poland, the proportion of service stations with shops is relatively low
In Czech Republic, there is a shop at about two-thirds of the national service station network
Slovakia has a high proportion of service stations with shops
In Estonia there are partnership opportunities for both new stores and improvement of existing stores
Lithuania's proportion of fuel outlets with a shop is quite low and there is scope for new store openings
In Slovenia there are a large number of service stations with shops
In Greece, there is a large number of service station shops, but a low level of shop development
In Romania, only around half of all service stations feature a shop
In Turkey there is an opportunity for the opening of more shops at service stations
Iberian Peninsula: major players have strong shop offerings and some existing partners
The major oil companies have developed their own shop brands
Three dominant players offer negligible prospects for a convenience retailing partnership
Benelux region: fuel retailers' own shop brands dominate with a strong shop offer
The likelihood of partnership with major oil companies is medium to low in the Benelux countries
Nordic countries: ongoing joint ventures are strong and shop penetration is low
Low shop penetration and existing joint ventures limit the scope for new partnerships
Western Europe: leads in terms of the level of shop development and shop penetration
Fuel retailers have their own shop brands, as well as convenience retailing partnerships
The UK service station space is saturated for any new collaboration
Strong shop brands and supermarket fuel retailers make France and Switzerland less attractive
Germany offers few convenience retailing partnership opportunities
In Austria, there is a scope for new convenience retailing collaborations
Low shop penetration offers an opportunity for new store openings in Italy

APPENDIX
Definitions
Methodology
Further reading
Ask the analyst
Datamonitor consulting
Disclaimer