Pick n Pay, BP in fuel retail venture

22 October 2008

South African food retailer Pick n Pay has teamed up with multinational petroleum company BP in a pilot programme which, if successful, could change the face of both petroleum retailing and convenience shopping in the country.

While agreements between fuel and convenience retailers are not new in South Africa, the new venture will see Pick n Pay not only selling convenience goods on the service station forecourt, but also fuel. As part of the agreement between the two companies, BP will act as landlords and fuel wholesalers, with Pick n Pay acting as the franchisee.

The two companies, which signed a memorandum of understanding in July, will open two pilot sites in the Western Cape by the end of 2008.

Convenience retailing

Roll-out will be dependent on success of the model, but both companies are confident the joint venture will bring multiple benefits not only to the two companies, but also to South African customers increasingly pressed for time and in search of efficient and affordable convenience retailing.

The roll-out would involve further expansion concentrated on BP’s top national sites, with the existing BP Express stores being phased out. The new convenience stores will be known as Pick n Pay Express, and will stock just over 1 500 lines, staying open 24/7.

“This is one of the most exciting retail initiatives in which Pick n Pay has become involved in many years, and will be an important part of our plans to increase our convenience offering to our customers, which is an area of great potential growth,” Pick n Pay CEO Nick Badminton said in a statement this week.

“Our research has shown that our shoppers want more convenience, both in terms of ease of shopping and location – and Pick n Pay Express, in conjunction with our other small store formats, will give them just that.

Discounted diesel

As part of their efforts to lure more customers, the Pick n Pay Express stores will sell diesel at discounted prices. According to the retailer, Pick n Pay chairman Raymond Ackerman has for decades promoted the idea of selling discounted fuel.

As petrol is regulated by the government, it will continue to be sold at the prevailing price until such a time as the government loosens its control on fixed prices.

“BP is South Africa’s most admired fuel retailer, and by entering into a partnership with them, we will be able to offer our customers the essentials they need, where they need them – in a one-stop offering,” Badminton said.

“And in these times of skyrocketing fuel prices, we believe that motorists will leap at the opportunity to buy discounted diesel.”

Focus on fuel

BP South Africa chief executive Sipho Maseko said that the partnership with Pick n Pay would enable BP to expand their convenience offering while focusing on BP’s core function as a leading fuel retailer in South Africa.

“In addition, our agreement paves the way for extensive enterprise development through the building up of existing and new franchisees, particularly in small and medium-sized business development, and it holds great promise for the advancement of black economic empowerment,” he said.

“This agreement, therefore, represents a win-win situation for all stakeholders – Pick n Pay and BP can maximise their business opportunities, consumers benefit in terms of convenience and fuel prices, and entrepreneurial development gets a welcome shot in the arm.”

SAinfo reporter

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