Opportunities in Non Fuel Retailing in India

Abstract

With the dismantling of the administered price mechanism (APM) and opening up of the Indian petro retail market for the private companies, the competition in the oil retail market have heated up. Every company is trying to find out measure to attract and retain the customers. For this, they have introduced many promotional schemes like petro card, loyalty card and other brand building activities. But these activities are not helping them to increase their revenue as the world oil prices are continuously increasing and the companies are restrained from increasing the prices of petrol beyond a certain limit. Also diesel and LPG is still under APM and hence their price is not under the control of oil marketing companies (OMC). The only option left with the oil companies to increase the revenue, so there is need for the search for the allied business or the non fuel retailing (NFR). As these businesses had given very good results in countries like US, Europe, UK, and France, they can help in increasing the revenue of the companies in India also. The organized retail sector is already growing at the rate of 30% per annum. At present, the penetration of NFR is only 4% in India, whereas, in the US, it is 90%. The oil marketing companies (OMC) have their presence in each and every corner of the country and they can harness the advantage of this by tying up with major brands. This paper attempts to indentify the opportunities available in the areas of NFR for oil marketing companies in India.