The Hindu Business Line : IOC non-fuel retail initiatives gather pace

Chennai April 23 The Rs 2,00,000-crore Indian Oil Corporation is driving full speed ahead in pursuit of its non-fuel retailing ambitions. Even as Technopak India, the consultant appointed to suggest a strategy for its entry into non-fuel retailing, prepares to submit its report by this month-end, IndianOil has tied up with the Future Group (formerly Pantaloon) to set up ServoXpress shops in the latter's existing and upcoming malls.

The ServoXpress outlets will offer services such as battery/oil check, oil and coolant change, tyre pressure check, A/C service, vacuum cleaning, perfuming, upholstery cleaning and polishing.

Simultaneously, the company has also started leveraging its 5,000-strong cooking gas distributor base to sell products such as rubber hoses, gas stoves, kitchen equipment, water filters and fire retardants to its 4.5 lakh Indane customers. Revenues from such sales, mainly sign-up fees from the dealer plus margin on the products sold, added up to Rs 180 crore in 2006-07, and IndianOil is seeking to double that this year and take it to Rs 1,000 crore in three to four years' time.

The Future Group alliance will initially begin with four cities — Vadodara, Hyderabad, Pune and Bangalore — apart from Mumbai, where the first such outlet was inaugurated last week in the Orchid City Centre mall. Even as IndianOil sets up its outlets in malls belonging to the Future Group, the latter will set up its Food Bazaar and convenience stores in selected retail outlets belonging to IndianOil.

Mr G.C. Daga, Director (Marketing), IndianOil, told Business Line that the revenue-sharing model was yet to be finalised. "We are still in the initial stages and working out different business models based on space available. We are looking at the overall experience and will get into it (revenue sharing) in due course."

Future Group has already commenced cross-promotional offers with ServoXpress; it will offer a Rs 50-coupon that can be exchanged at the ServoXpress outlet on its mall premises to every customer who spends Rs 750 in its mall.

Meanwhile, the consultants, Technopak India, are expected to chalk out a business model for non-fuel retailing in their report. "We expect to start structured non-fuel retailing activities at our retail outlets based on the report from later this year," Mr Daga said.

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