The 2012 Olympics is finally within touching distance and one company that is fully engaged with the opportunity is BP. Its forecourts up and down the land have been appropriately adorned with Olympic imagery, most notably of the six athlete ambassadors that BP has been supporting on their Olympic journey for the past two years.
Three Olympic athletes heptathlete Jessica Ennis; road cyclist Lizzie Armistead; 110 metre hurdler William Sharman; and three Paralympic athletes wheelchair racer Shelly Woods, long jumper and sprinter Stef Reid; and sprinter and marathon runner Richard Whitehead were chosen by BP on the basis of their great medal potential and personalities.
"They’ve been fantastic ambassadors for BP," confirms Neale Smither, BP’s head of UK retail. "We think they’ve been powerful endorsements for the BP brand, doing promotional work, attending dealer forums and staff engagement sessions."
He views the company’s involvement in the Olympics as helping to put across the message that BP in the UK is investing to be associated with the best, and will represent the best of retail forecourt fuels and convenience.
"BP is very much committed to staying in the UK and to building a strong, leading footprint of fuel and convenience offers," he says. "The news flow fuel prices, companies like Total exiting the market, Coryton could get one to feel quite gloomy. But throughout we’ve remained very positive and continue to believe that the right mix of fuel and convenience on a forecourt is the way to build a strong business into the future.
"We should accept that our core product motor fuel is in long-term decline. But if you have a site that is well located, with the right offers, you can actually access growth in fuel by remaining as others exit."
Quality sites
Smither says he is more concerned about BP’s share of the best quality sites, and less about total market share although he does dispute Catalist’s current estimate that BP has 14.9% share of the fuel market.
"We believe we have 16% share if you include the fuel card business through retail sites so we would still claim to be market leaders. But that is not in itself a number-one priority. What is important is that we have more than 50% of the dealer network of sites that pump above 5mlpa. We are growing our share of the dealer market currently 875 and in particular the higher quality end. We don’t have a refinery in the UK, so the success of our business is not necessarily defined by how much volume we can push and sell.
"What we’re finding is the best route to maximising our profitability and ability to generate the cash required to grow the business, is by focusing on the better-quality sites, because they seem to be more robust against recession and the structural decline that we see in the fuels market in the UK.
"However convenience isn’t in structural decline. We would see the long-term growth rate of forecourt convenience to be somewhere between two and three per cent. So by being well-positioned in that space, you can access some natural market growth."
Smither says that the company’s 300-strong company-owned network has enjoyed strong growth by pursuing a four-strand strategy: quality fuels (Ultimate); good convenience offer (M&S, BP Express, which is currently being evolved as a simplified franchise offer for dealers); well-established loyalty programme (Nectar); and quality coffee/food-to-go proposition (Wild Bean).
"Working with Marks & Spencer (currently on 150 sites) has been a successful partnership that we’re looking to grow," says Smither.
Smither says dealers who pursue a similar strategy have also been successful, and he is absolutely thrilled to have recently signed the entire 12-site business of former Forecourt Trader of the Year, Patrick Sewell (see page 25): "I think the choice is becoming clearer for dealers. They can go with a major brand although those choices are becoming more limited as companies like Total exit; Shell focuses primarily on its company-owned network; and Esso looks to exit from certain geographies."
Brand recognition
The other choice for dealers, says Smither, is to potentially look at some of the newer brands coming into the market, which are more wholesale driven. "Dealers in that situation might get a better price, but they’re not necessarily getting the benefits associated with consumer brand recognition.
"What we know is that when dealers move away from any brand, and put BP on the pole sign, they’re generally seeing volume uplifts."
Fuel brand is important, stresses Smither, but in order to sustain that position, it’s necessary to continue to get the BP message out to the public.
"That’s where the Olympics sponsorship is key, getting BP out into the public domain and continuing to build that brand recognition and preference."
BP decided that it was right, as a big, global corporation, headquartered in London, to be a lead sponsor behind a once-in-a-lifetime event like the Olympics.
"It presents our business with a fantastic opportunity which we’ve tried to translate for our customers and dealers through a number of initiatives," says Smither. "Firstly we are going to be the fuel provider for the entire Games fleet of vehicles a combination of around 5,000 cars and buses which will be driving athletes and officials around during Games time.
"They will be filling up exclusively at our London sites. We have around 50 in the London area which have all been primed to receive the Olympic fleet of cars and buses.
"We’re also supplying fuel to the generators that will fire up the stadiums. Many of the stadiums are not on the grid it’s a big responsibility for us to ensure diesel fuel gets to the stadiums to power the generators so they remain functioning through the Games.
"We’re also using the Olympics to showcase BP’s position as a leading fuels supplier with a ’BP Fuelling the Future’ project at our Hammersmith site. It is not only an example of what a modern BP site of today looks like, but the types of fuel products we could expect to be seeing on BP sites in the future.
"They will be advanced biofuel-friendly products but are a glimpse into the future, as opposed to us being ready to launch them.
Increased awareness
"We hope dealers will benefit from raised/increased awareness around the quality of BP products, which will continue to persuade customers to come to BP-branded sites."
It is intended that the exposure gained by the Olympic sponsorship by focusing on BP as a quality fuels provider will continue into next year and the arrival of the new E10 fuel, and the confusion that might bring to motorists.
"BP is developing a strategy around the launch of E10 for our dealers to make sure they are well placed to respond when the product starts appearing in the UK market, and we go through a period of uncertainty for consumers," explains Smither.
Meanwhile, with its truck fleet, and 70% of its national network adorned with Olympic branding, BP is building engagement with its retailers and customers in the run-up to the event which runs from July 27 to August 12.
BP sites are also running an Olympic medallions collection promotion featuring 12 Olympic legends, with proceeds going to the British Olympic Association.
As Smither reflects on the coming weeks and months, he is very clear about his vision of the future for the BP network that a customer should have a similar set of expectations at whatever site they visit in the UK, whether it is owned by BP or a dealer partner.
"BP will continue to focus on those dealers and sites which we think are in the best locations, and are the best-operated sites with the four key propositions, because our vision is to create a national network of co-owned and dealer-owned sites which presents itself in a consistent high-quality fashion to consumers.
"We think Olympic fever is coming. BP is now well-placed with its brand presentation of the Olympics on our sites, on our trucks, and in the media, to associate BP with this once-in-a-lifetime event, and we think that will further help to build and enhance the power of the brand in the UK.
"Our hope is dealers will see the benefit of this association through stronger sales, not only now but going forward on their BP-branded sites."
Dealer views
Nick Lloyd, managing director, Symonds Forecourts
"All of our BP sites are getting the Olympics message out there and the closer we get to the Olympics the more important it will become. The flag scheme is really eye catching. From a point of difference perspective, it gives us something to shout about we’ve got the Olympics represented with BP. When you drive past other brand sites, there’s not a lot going on. The BP image looks very strong, very professional and it gives people another reason to pop in and see what’s happening.
"The medals promotion has been slightly disappointing. We’ve been trying to up-sell but unfortunately it hasn’t captured people’s imaginations. We’ve had a lot going on at the same with the Euros so it’s still quite early for the Olympics. There are 12 medals to collect and we’re on the fifth week but I think we’ve only sold about 20% of what we originally estimated, which is disappointing. Collectors schemes have always been good but we’ve got lots of stock left. It’s the timing issue, which is a challenge for retailers. Customers are just not in the Olympics mode yet. BP has recognised that we’re overstocked and are trying to find a solution for dealers. I think they are looking at doing something like a booklet of all 12 medals.
"The only dark side of the Olympics is what’s going to happen when the hours change for big stores on Sundays from July 22 to September 9. That’s going to be our biggest threat this summer. We’re looking at what we can do to maintain trade during that period because Sundays are our most profitable day of the week. The BP will activity will help because it’s so eye-catching and will make people stop and look at us."
Jonathan James, director, James Graven & Sons
"It’s to be celebrated that BP has got involved in the Olympics as much as it has. We’ve got all the banners and flags, which make the forecourt look lovely and very striking. The general feedback from customers has been good. The banners are certainly noticeable. Sales of the medals are ticking over they’re not flying out but the staff are getting behind it and upselling them. We’ve got far more stock than we need it’s like Royal Mint in the stockroom!
"The problem with the Olympics is it’s at the end of an incredibly busy summer anyway, but now its time has come. Everyone celebrated the Jubilee, and now England is out of the Euros, we’ve parked those bits, so now everyone can concentrate on the Olympics."
John Mason, managing director, Peregrine Retail
"The outside point-of-sale is very good. The flags and big banners have added some interest to the site and some interest in the Olympics. From that perspective it’s been worthwhile. We’ve also been sent an awful lot of products to sell the medals and die-cast models of things like a London Bus.
"We’ve only sold about a quarter of what BP sent, which was a bit below my expectation, but we were sent quite a lot. I can’t see many people wanting to spend £2 on a medal or investing in a collection and I don’t think the prizes on offer have caught too many people’s imaginations. We don’t get charged until they reconcile what we’ve sold against what we were sent."
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