Dealers In, Dealers Out

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Dealers In, Dealers Out

Since the early 1980s when Big Oil companies began their foray into convenience retailing, they wrestled with the best way to execute and rollout their store concepts – direct company operations, dealers/jobbers or a combination of the two.

Over time, the combination model has been the strategy of choice, yet few oil companies seem to agree which really is the winning strategy – one that yields the highest sales, profits, customer satisfaction and brand consistency. What they do agree upon, however, is that "dealerization," if you will, is the easiest to execute since convenience retailing is not the core competency of major oil companies, as is oil exploration, production and refining.

So it seems a cyclical occurrence – or at least it has been over the past 25 years – whether major oil sways toward or away from dealers to manage and grow its store and station base. Lately, and into the future – for the next few years at least – dealerization will continue as many major oil companies have expressed secret envy of the overhead and operational headaches Shell Oil shed when it took a revolutionary move and dealerized all of its convenience stores several years back. CSNews anticipates that most of the major oil companies will continue to divest company-operated stores in favor of dealer and franchise arrangements. Of course, one of the most recent company-operated store divestiture plans was announced by ConocoPhillips last month.

And that brings us to another cyclical major oil trend – convenience store franchise programs, which have come and gone over the years, but mostly gone. Well, they're back in force. Renewed interest is percolating as several players launch new or revamped franchise concepts, including BP launching am/pm franchises East of the Mississippi and its BP Connect with Wild Bean Cafe on a national level; ExxonMobil putting a big push on its longer-standing On the Run franchise and ChevronTexaco rolling out its revamped Extra Mile concept in the Pacific Northwest and broader markets shortly.

The big question, of course, is the support and operational infrastructure that these major oil franchises will offer, and the staying power they will have. Because, let's face it, the franchise business is just as far afield of major oil companies' core competency, as say, convenience store retailing. The proof, as the say, will be in the pudding.