Retail Petroleum Players Set To Compete For Growth

Retail petroleum players are set to compete for growth in their efforts to increase market share in a more challenging environment.

In the pursuit to improve revenue and profit, the players are focused on building customer loyalty at the petrol stations and increasing operational efficiency to reduce cost and optimise uptime.

In concentrating on customer service and productivity, they also are turning to technology to improve their bottom line.

Despite the challenges, the petroleum players are still upbeat about growth in the industry.

Boustead Petroleum Marketing Sdn Bhd (BHPetrol), a unit of Boustead Holdings Bhd, is confident of increasing its share of the retail market to 10 percent through various initiatives, including stepping up its loyalty programme and introducing a contactless fuel payment system at all its kiosks.

Boustead Holdings’ group managing director Tan Sri Lodin Wok Kamaruddin said being a small player in the market, BHPetrol needed to be efficient and effective.

“Our biggest consideration is the return of investment, so we have to work very hard to ensure that we achieve all that,” he said.

BHPetrol will spend RM30 million ringgit in rebranding all the 245 former BP stations following the company’s acquisition of a 70 percent stake in BP Malaysia Sdn Bhd from BP Asia Pacific Ltd.

The Armed Forces Fund Board (LTAT), which holds a 30 percent stake in BP, is also a major shareholder of Boustead.

Lodin said BHPetrol was looking at opening more service stations at suitable locations throughout the country.

“But we will do this on a gradual basis. We are not in a rush to open as many as possible. We know that we are a small player, but we have a niche market and we want to remain at that sort of level operations,” he told Bernama recently.

According to earlier reports, Boustead Holdings planned to invest about RM50 million annually to build between 10 and 15 new petrol stations.

For next year, 10 new BHPetrol stations are planned nationwide, starting with Johor Baharu in the first quarter.

Shell, which currently has a 36 percent share in the retail business, is working hard to maintain its market leadership, being well ahead of its plans to maintain presence in the country’s key markets.

Mokhzani Wahab, managing director of Shell Malaysia Trading Sdn Bhd and Shell Timur Sdn Bhd, said with Malaysia being a growth market, the Shell group has continued to sustain high investments in the retail business.

“We retain market leadership by understanding the ever-changing needs of customers and satisfying their requirements,” he told Bernama.

Asked whether Petronas could pose a challenge for the top retail position, Mokhzani said the group would not comment on its competitors.

He said to maintain its strength, Shell has invested in new growth markets and innovations such as launching the latest generation of differentiated fuel and lubricants besides providing high quality customer service at its stations.

To satisfy the ever-increasing expectations of consumers in the face of recent increases in pump prices following the upswing in global crude prices was among the key challenges of the industry, Mokhzani said.

“This is particularly so as the Malaysian public gets more sophisticated and demands more value for ringgit spent,” he said.

In a regulated market with pump price and margins determined by the government, each player has to be more efficient in running their business to satisfy customers’ needs in the face of increasing costs to meet the latest health, safety, security and environmental standards, he added.

The Malaysian retail landscape was changing in a competitive world whereby new information technology (IT) was needed to comply with authorised payment standards, Mokhzani said.

The increasing cost of land to be developed for petrol station sites was another industry challenge as a new site could cost between RM6 million and RM12 million, he said.

As for Shell’s cutting edge in the retail business, Mokhzani said consumers enjoyed a good experience refuelling at Shell, adding that it was the only petroleum retailer offering Malaysian motorists differentiated fuel.

“We launched a reformulation of main grade fuel which carry the Guinness World Record certification for fuel economy. Consumers love the newly installed ‘pay at the pump facilities’ which is the fastest system in the market,” he said.

Its largest network of petrol stations provided consumers with convenience and they get loyalty points with the BonusLink card which is the largest multiparty loyalty programme in Asia with about four million members.

Shell Malaysia plans to continuously offer new products and services for the retail segment.

The group has spent over RM500 million for 2005 and 2006, including over RM100 million for new payment solutions for credit cards and Shell cards, as well as expanding with about 15 new retail sites per year.

For ExxonMobil, which is operating about 570 Esso and Mobil service stations nationwide, the focus is on offering high quality fuel and services to customers.

In Malaysia, its retail business is being carried out through three subsidiaries — Esso Malaysia Bhd, ExxonMobil Borneo Sdn Bhd and ExxonMobil Malaysia Sdn Bhd.

Esso Malaysia operates the Port Dickson refinery and service stations under the Esso brand in Peninsular Malaysia while ExxonMobil Borneo operates service stations under the Esso brand in East Malaysia.

The service stations under the Mobil brand in Peninsular Malaysia are being operated by ExxonMobil Malaysia.

All the three subsidiaries market lubricants, engine oil, speciality products and cooking gas under the Esso and Mobil brands.

ExxonMobil plans to add five to 10 service stations each year to its network in Peninsular Malaysia.

Last year, Esso Malaysia invested about RM54 million, mainly for the acquisition of service station sites and construction of service stations as the company continued to grow its network through selective investments in high growth areas.

To serve customers better at its service stations, it is also operating state-of-the-art convenience stores called “On the Run”, in addition to Esso Tiger Marts and Mobil Marts.

Esso and Mobil were among the first in the industry to enable the new security chip-based credit cards to be accepted at the pumps for petroleum purchases.

They have also introduced their new Smiles Driver Rewards loyalty cards while the Diesel Discount Card was launched in June 2006 to help diesel customers better manage their diesel expenses.

– BERNAMA