Do I Stay Branded?

Do I Stay Branded?
Since exiting Retail, Major Oil (or Big Oil) has faced a number of Brand Conversions within their existing footprint.
NACSOnline states, “Large, integrated oil companies, especially since 2007, have exited the retail business to focus more on resource production and refining operations. ExxonMobil, Shell, BP and ConocoPhillips have either begun or completed the process of selling off all of their directly operated facilities.”
Of the 150,000+ convenience stores selling fuels, 0.2% are owned by one of the major oil companies as of 2014 reports. This research provides the level of detail needed to ask relevant questions: What brand do I choose? Do I even stay branded?
In a typical Jobber/Marketer or Retail environment, each Brand Agreement is coupled with a Motor Fuels Supply Agreement ranging from five to ten years, obligating each site to sell a minimum volume of fuel at each location. This minimum is tied to a contractual incentive package that likely contains extensive capital on behalf of each Brand. In other words, and the decision to brand your site requires a deeper dive into the opportunity and obstacles.
What You Need to Know
When deciding whether to switch brands or go unbranded, you should consult or compile a detailed geographic market survey. Know your competition. Know your captive audience. Assess your current brand performance, gallons sold, year over year in parallel to the brand initiatives presented before you.
Most importantly, know what brands are around you. Most Branded Territory Managers will not brand another station within two miles of a current or prospective location. Site operators should know each Brand’s requirements. Although there are circumstantial deals within the branded asset space, each Major Oil brand has minimum requirements (around building type, C-store square footage, monthly gallons, etc.) to Brand a particular location.
Following a market survey, it’s best to familiarize yourself with each brand’s current offer. Brand Incentives can range from a cents per gallon rebate off gallons sold, to a capital investment allowance, to a new price sign, etc. Although each site operator is different, your decision to switch Brands may be alleviated due to the nature of the offer sheet from your Jobber/Marketer on behalf of Major Oil. Each site should evaluate Brand Standards to ensure that each Oil Company’s initiatives are attainable and maintainable.
The Unbranded Space
Natural progression within the industry typically explores all Major Oil Brand Offers, then evaluates the potential of becoming an “unbranded” fuel location. Of the 150,000 plus fueling stations, roughly 50% have a major oil company brand. The remaining 50% are “unbranded.”
If you are not a large or mid-sized regional retailer, becoming an unbranded location is a large step away from the norm, and requires sophistication on behalf of you and/or your Supplier to be profitable and sustainable in the marketplace. By becoming an unbranded location, you lose name recognition and attractiveness, support from Major Oil representatives and large incentive packages. That said, there are advantages to becoming unbranded.
Within the unbranded space, Suppliers typically present less stringent regulations. Although regional Jobbers/Marketers have developed very sophisticated “unbranded” Brands through their organizations, the mantra is to allow each individual operator to be their own business, under their own mandates, while purchasing lower cost fuel.
It is no longer a secret that unbranded fueling locations typically have lower gas prices than Major Oil supplied locations. Depending on your geographic market, an unbranded location could be getting a 7-8 cent price break off unleaded gas. This sounds great, but you have to counterbalance the needs of your small business organization in areas such as payments, technology and marketing. If you rely more heavily on the support of your Supplier than your Brand, this may be the right choice for you.
Making the Choice
It’s your professional choice whether you want to stay Branded, switch Brands or become Unbranded. Still, you, as the site operator, need to do your due diligence to understand specific business needs across organization verticals in making this decision. Understand your working capital relative to the ever-changing market moves and initiatives. Understand the geographic implications from switching Brands or going Unbranded. Know your customer. Know your footprint. At the end of the day, make the right business decision, not the personal decision.
For further information, contact Jon at [email protected].

Verified by MonsterInsights