Shell Shakes Up Network

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Shell Shakes Up Network

HOUSTON -- In a June cover story interview with Convenience Store News, Russell Caplan, vice president of Houston-based Shell Oil Products U.S., said changes were in store for the company's U.S. operations, particularly in the ways dealers and jobbers operate.

As the company pursues those changes, the ripple effect is spreading outward to independent operators as Shell and Motiva Enterprises LLC, a joint venture operated with the oil company by Saudi Refining Co., announced it would discontinue its current salary-operated retail operations (SORO) and contract-operated retail operations (CORO) and replace them with a multi-site operated model (MSO).

The move, the company said, allows for the creation of a "new class of trade that will provide retail opportunities for a new wave of entrepreneurs" consisting of current operators and prospective clients.

Caplan acknowledged that the system set up the joint-venture companies with Texaco Inc. in the late 1990s, Equilon Enterprises LLC and Motiva, had flaws that were keeping the oil company from significantly expanding its distribution and throughput. To that end, he said, Shell was looking to sever ties with stores that lacked serious volume potential and replace them with new partners that promised higher volume.

Multi-site operators appear to fit the bill. MSOs will be self-employed contractors of Shell or Motiva that manage and operate 10 to 20 convenience stores. The operators' main responsibility will be to meet Shell's brand image and customers service standards while maximizing sales and profitability.

Shell and Motiva will retain ownership of the fuel at the sites, while the operator will be responsible for c-store inventory and sales. "Successful multi-site operator candidates will possess strong retail management experience, a customer-focused approach and the ability to meet financial requirements," the companies said in a statement, which encouraged current wholesalers and direct retailers in the network to apply.

The new class of trade will ultimately enhance the position of the Shell brand and its network by driving accountability to stores and reducing corporate costs related to marketing support. "The new approach will be more competitive, simpler and more efficient," the statement said. "The simplified support structure will deliver a significant head-office savings due to reduced human resources and training needs, planning, retail accounting and marketing costs."

Shell and Motiva plan to continue ownership of the current 750 SORO and 1000 CORO units, with the multi-site operators managing the retail business at the store-level. The new format will begin rolling out nationally in January.