Major oil companies, suffering weaker demand for fuel during the pandemic, are finding that an uptick in grocery sales at their network of service stations world-wide is helping pick up the revenue slack.
BP and Royal Dutch Shell say the surge in food-and-drink sales means they will expand in the sector, hoping retail can help them offset the falling demand for oil in the longer term, The Wall Street Journal reports.
The long-term trend
- Shell says over the next five years it has plans to add 10,000 retail units to its 45,000-strong world-wide network, giving it a larger number of outlets than either Starbucks or McDonald’s. BP says it plans to add 6,700 outlets to its current 19,000.
- The business model is an attractive one, say experts, because margins tend to be higher on retail compared to fuel, and are more stable because they aren’t subject to the same price volatility as the energy market.
- The companies are also expanding into new revenue streams run out of gas stations – Shell, for example, says it plans to speed up its rollout of parcel collection and home delivery services. BP has partnered with home delivery app Glovo in Spain and Deliveroo in the UK.
“COVID-19 was effectively a dress rehearsal. We already knew there were likely some headwinds coming at fuel demand in future, combustion engines are becoming more efficient and electric vehicles are coming” – Frank Beard, convenience retailing consultant.
Sourced from The Wall Street Journal