 Global Retailing (Fuels/Convenience)
Jeff
Murphy is founder and principal of The Murphy
Group LLC, which is a privately owned consultancy.
Jeff has over 25 years experience in the global fuels and
convenience retailing business. TMG headquarters is in Northern
Virginia, and its consultants have extensive global knowledge
with hands on business and project experience in over 50 countries.
Jeff has worked around the globe and had leadership positions
across a wide variety of industries and global markets. Services
include assisting both retailers' and suppliers' Marketing
Plan development; providing advice on global, emerging market
prioritization; economic modeling; benchmarking; acquisitions
and asset sales, and market entry strategies.
Web: www.murphygroupllc.com
CLICK HERE TO ASK YOUR QUESTION
Recent Questions:
1)
What type of process should we be using in order to prioritize
which markets to enter?
The methodology we suggest includes a review of the size of
the market, industry growth, an analysis of local competition,
barriers to entry and political risk. Once a decision is made
on capital allocation (core business vs. growth), a prioritization
process of emerging markets could be set in motion. The process
includes a screening of all potential new markets with set
criteria to rank them from most attractive to least desirable.
From this process, additional analysis is needed to form a
short list of potential new entries. Some key questions must
be answered. For example, what would a successful market entry
look like in terms of sales, market share and ROI? What avenues
are available to achieve the requisite critical mass? How
much will it cost over how long a period? What are competitive
strengths and weaknesses? What will be the likely competitor
response? Ultimately, this process will yield a ranking of
investment opportunities, which then must be viewed against
corporate strategies, tolerance for risk, and potential reward.
2) We have a network of about
150 sites in an emerging, major metro area. I see the developments
in other mature markets and am not sure how best to spend
our capital budget earmarked to upgrade our chain. What
considerations should be made for the format convergence
I see taking place in the UK, Australia and USA?
As one views retail convergence developments around the
globe, it makes it even more imperative to have a total
network 'bricks and mortar' plan that optimizes both existing
and future sites. Given an already existing 150-site network,
it is probable that you will have some divest sites, some
invest sites, some 'milk' sites and some that require additional
analysis. Best in class retailers have a consistent value
proposition in relatively new facilities (5 to 7 years average).
Each site should have a 'plan' that will both support the
Brand, and provide attractive economics.
Consider potential partnering with grocers, big box retailers,
or established restaurant networks to complement your site
offering. While partnerships have benefits, they do add
complexity. Beyond economics on new investment, operational
control; revenue and cost sharing; potential brand draw
for each profit center; site selection process; local demographics;
consumer preferences; lot size/parking/facility size, will
have to be addressed to meet the needs of each party.
3) As a high tech supplier with limited
resources, how can we optimally penetrate the global convenience
sector?
We have guided suppliers through an opportunity prioritization
and ultimately develop a strategic architecture that includes
3 to 4 major strategies and supporting tactics that drive
toward the stated goal. In your particular product niche,
we have identified Mexico as an attractive market to deploy
and invest due to limited competition, and your firm's core
competency and technology advantages. The tactical decision
of marketing direct vs. through distributor should be carefully
weighed and include supply chain, trade restrictions, personnel
and ROI analyses. Once that process is completed, optimization
of business development time and expense is often accomplished
through consulting firms/brokers who can facilitate retailer
key contact introduction and assistance throughout implementation
due to familiarity in the industry and the retailers' environments.
4) We are a relatively small
retailer on a global scale, but have above 20% share in
the countries in which we market. What are the global fuels
additivation trends that we should be watching?
Fuel reformulations are being implemented worldwide in order
to assist gasoline and diesel engines meet ever more stringent
environmental air quality standards. In particular, the
move to sulfur-free gasoline and diesel has encouraged growth
in lubricity enhancers for gasoline and diesel, as well
as deposit control additives that have been in the market
for some years. On the horizon, additives such as urea may
be used in conjunction with specific engine exhaust after
treatment equipment.
Additives that improve combustion or efficiency of the engine
have successfully been marketed in recent years. The benefits
of increased engine power or better fuel economy, although
small, are perceptible to some consumers and have been utilized
for differentiation. Economic application of additives will
be set by your demand and availability of facilities.
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