«Life After Oil» is one of the most quoted events held during the St. Petersburg International Economic Forum. “For our country the oil is everything, it is 25% of GDP. So to imagine the structure of our economy without the oil which has not only a direct impact, but also an indirect contribution to GDP by attracting investment through consumption, is probably impossible”,- quote from a speech by Herman Gref.
Accepting this new reality is difficult not only to Russia. In Canada they also believe that country’s status as an energy superpower is under threat because of the more rapid speed of decline of the era of fossil fuels on the market than it was thought previously.
We’ve told you already about the history of the financial relationship of David Rockefeller and company Exxon Mobile.
David Rockefeller-Sr., the grandson of the founder of the dynasty, said he had lost faith in Exxon Mobil and donated its shares, which he’d got directly from his great-grandfather, to a non-profit Rockefeller Family Fund, which deals with environmental issues.
For non-fuel gas station businesses this trend has some good news in it. The modern driver’s need for a cup of coffee and some rest occurs more frequently than his car runs out of gasoline. This can easily be confirmed by the figures. Shell in 2015 had an operating loss from the core operations in the tune of $5.7 billion, but profits from “auxiliary” businesses, including retail, have grown over the past year three-fold to some $10.2 billion. Source >>
Therefore i consider an interview of Istvan Kapitani, executive vice president and Head of Retail businesses in Royal Dutch Shell, to be an essential one.
Istvan Kapitani joined the company in 1987 as a manager of filling station in Hungary, namely at his homeland. Today he leads the direction, which includes more sales outlets than Starbucks or McDonald’s. 43 000 gas stations, 500 000 employees and 25 million customers in 70 countries every day.
The future of fuel retail
Many of the current problems of fuel retailers today can be reduced to one thorny challenge – how exactly gas stations should be transformed in the light of the needs of the world with constantly falling oil prices, growing environmental requirements and the upcoming emergence of unmanned vehicles.
Shell does not disclose the financial performance of its non-fuel retail business with the exception of the total volume of transactions in this area – $6 billion of turnover in retail transactions every year. The total volume of Shell revenues fell by 37% to $ 272 billion in 2015. The loss in the main activity of the company was some $5.7 billion, but profits from “auxiliary” businesses, including retail, have grown over the past year three-fold to some $10.2 billion.
According to Brad Madderson, chairman of the Association of Fuel Retailers, low interest rates and low inflation also helped to set a new record for the number of new cars on British roads when cheap oil has helped to significantly increase the intensity of the cars and vehicles fleet use. Demand for fuel has increased by 1.1% last year, denying forecasts.
Against this background, both independent gas stations and gas stations chains are trying to find support for alternative sources of replenishment of their budgets. And this is the reason to be proud for Kapitani under whose leadership the Brazilian company Raizen was created (as part of Shell), producing ethanol from sugar cane. Last year, Raizen produced more than 2 billion liters of the fuel, whose CO2 emissions are lower than that of conventional gasoline by some 70%.
This enables Shell to remain a world leader in the biofuels segment – the company is selling it more than anyone else in the world. Also, the company remains at the forefront of innovation in the direction of hydrogen. The joint venture company with Daimler was working on the commercialization of hydrogen projects in its eight sites, planning to launch the first hydrogen columns at 400 filling stations in Germany by 2023.
Responding to the demand in the field of electrical machines (especially from California residents and the Netherlands) Shell also develops direction of charging stations for these vehicles. Moreover, the company is working on a pilot project of such station, where all the necessary energy including the amount meant for selling, is being generated by a huge solar panel on its roof. All of this is the general implementation of the strategy designed by Kapitani in order to prepare the company and its gas stations to the future of fuel retail.
In today’s “connected” economy with its phenomenal opportunities for the satisfaction of consumer demand, retailers need to work more and more to attract new customers. This is especially true for the gas stations where the price and the location were always valued higher than brand loyalty, against the background of intensifying fight with the supermarkets. Almost every gas station Shell in the UK today operate a Costa Coffee shop, while 30 of them also have a Waitrose shop.
According to Kapitani, Shell has spent “quite a lot of money” in 2012 to upgrade 400 of its gas stations in the country, expanding their area, adding parking lots, installing DHL post boxes etc. Another 50 will be upgraded during this year. Total sales in upgraded stores increased by 15%, food sales at the stations increased by 49%, and retail margins at gas stations grew by 19% due to increased demand for premium products.
In general, gas station format, or rather its vector of development, is obvious – stations need to attract customers, even when they do not need any gas. More and more people come to the gas station and leave them without having a refill – they buy breakfast, a cup or two of coffee, wash the car. That is, the modern driver’s need for everyday purchases occur more frequently than their cars actually need gasoline.
Judge for yourself – in the past year, Shell has sold 60 million cups of coffee via Costa coffee – «a huge breakthrough”, Kapitani estimates. He said that today there are a number of stations in the chain which make more money by selling non-fuel products.
Always keeping this in mind, the company is developing various scenarios to attract consumers and extent the time that they spend at the stations. The company has two gas stations in Bangkok that sell only V-Power, the highest quality gasoline under the Shell brand. These stations also have fashionable cafes and every customer gets help of two employees, one of them serving the people, the second – their car. In Luxembourg the company has the largest gas station with 25 000 customers a day.
Building up retail functional at gas station becomes today more important alongside the quickly developing energy-efficient technologies used in cars. As a result – refueling vehicles require less and less fuel. Despite this, Kapitani believes that gas stations will not disappear: “We just start to offer a range of services in addition to the fuel of which today we do not even know”.
To offer the customers what they do not know yet they need – is both a challenge and a drive. And it was so with the remote monitoring of coffee machines. After a couple of years we’ve come the path from puzzled shoulders shrugging to the federal project of a large Russian retail chain. History repeats itself with a “smart watch for the gas station”, merchandising automation, processing of non-fuel businesses, only in terms of time everything happens much faster.
Every weekday of Kapitani is a full 12-hour shift from 6 a.m. to 6 p.m., but he took the time to share with The Telegraph his considerations on the gas station business and the entire fuel sector.
Accepting this new reality in which fossil fuels (oil, gasoline), won’t have any priority is difficult not only to Russia. In Canada they also believe that country’s status as an energy superpower is under threat because of the more rapid speed of decline of the era of fossil fuels on the market than it was thought previously.
A week ago, we asked the question whether there are any prospects for the plans of “Gazprom” to put filling equipment at the gas stations of “Lukoil”. If you cut thin and thick trolling, the idea turns out to be of some perspective. Nationwide cars running on gas represent a strategic approach with great potential. If you take the near future for instance, then definitely yes. If you take the distant future, we should take an example from the Government of Canada.
Coffee machines telemetry have become the industry standard where WMF is an undisputed leader. Moreover, WMF equipment is being successfully integrated into the telemetry systems of the key customers. The most glaring example – IT solutions from RusHOLTS, providing connection to different systems of telemetry of filling stations with more than 1000 professional automatic coffee machines by WMF production. The main difference between vendors’ own developments for coffee equipment from IT solutions for integrated telemetry facilities is that in the former case the flow of information applies only to a particular coffee machine, while in the latter it is a part of the unified equipment management system, personnel of points of sale, service companies and suppliers of consumables materials.
Judging by the description, the development is multifunctional, but the possibility of its integration into complete systems of telemetry of potential customers are not reflected in this publication.