The hunt for convenience in Russian retail has seen a significant uptick in the role played by mini markets at the country’s fuel stations in recent years.
Higher rates of car ownership, higher disposable incomes, more travel, more commuting from suburbs to cities, and more freight have all combined to create a boost for non-fuel sales at the country’s sprawling network of fuel stations.
In fact, fuel stations now contribute around 3% of nationwide tobacco sales and up to 1% in other leading non-fuel categories (confectionery, soft drinks and cupboard staples, such as tea & coffee, some of the most popular buys).
Major station operators have responded with boosts to their non-fuel ranges. Rosneft, the country’s largest network operator, has said replenishing its non-fuel offer with a more diverse product mix has seen revenue steadily rise, with plans to proactively promote products via its customer mobile app. It also has plans to sell 45 million cups of coffee across its network as it capitalises on the takeaway trend.
Lukoil too, with a network of some 5,000+ fuel stations, has plans to prioritize sales of high margin coffee and food-on-the-go, boosting the inventory of its most popular non-fuel products and establishing more concrete partnerships with fmcg suppliers.
And at Gazprom Neft, with 1,209 stations across Russian, more than 80% of station maintenance costs are now covered by rising revenues from non-fuel sales, say the company.
It’s a channel that manufacturers can therefore no longer afford to overlook and to capitalise on this emerging opportunity a granular insight into what works and what doesn’t in the channel is crucial. Broad brush market monitoring simply won’t cut it.
Even at a global level buying behaviour can swing significantly between a 150,000sq.ft hypermarket and a 15,000 sq. ft fuel station: the performances of categories, brands and price points all liable to vary as shoppers browse with different mindsets, motivations and available time. But in Russia, where the channel is nascent and the consumer base geographically and demographically diverse, those swings are liable to be larger and less predictable.
Take the energy drink category in Moscow. Data shows that though PepsiCo’s Adrenaline Rush holds a significant leadership position across the majority of retail channels in the city, Red Bull is the clear leader in value and volume across its fuel stations. The PepsiCo brand has twice as many SKUs on offer compared to Red Bull in classic channels but on fuel stations this dynamic has flipped, with Red Bull having 1.7 times more SKUs for sale in Moscow’s fuel stations. What’s more it manages to maintain that market share while charging around 6% more per unit.
To understand that sort of subtle dynamic it isn’t enough to rely on broad retail sales data that fails to capture the subtleties of the fuel station market and its contrasts with other retail channels. Data and insight need to capture the nuances of what’s happening at the ground level.
Current marketing monitoring solutions often fall short on providing manufacturers with this sort of insight. Typically field collected studies commissioned by companies can lack hard data, zero in on a moment in time and focus on display rather than purchase behaviour. Other solutions lack flexibility and the granularity of localised performance data: both required by suppliers requiring a read on this sprawling retail channel.
A Data-driven Approach
An innovative approach taken by RI uses new and unique data sources to plug that gap though.
By making use of OFD data - derived from multiple sources including First CRF and OFD-I - available in the Russian market, RI has harnessed data that provides suppliers an unprecedented overview of this fast-growing channel and how best to capitalise. By aggregating full granularity sales figures from a number of OFD data partners RI can provide insight on performance across 5,000 fuel stations with mini markets in Russia – that’s behind only Magnit, X5 and Dixy/ Bistol / K&B in terms of the scale of retail outlets covered.
“OFD data is the most complete, reliable, timely and granular data set on sales in Russia,” sums up Sales Director at RI Danny Eldridge. “It contains every ‘line item’ of sales for every retail outlet in Russia and is possible to access, with some outlet level aggregations, at SKU level across the entire category and entire country.”
Borne from a recent move by tax authorities to track sales from every commercial enterprise in Russia, this OFD data does away with broad strokes. All sales data, in real time, is gathered and processed by firms working on behalf of government, of which the five leading operators process more than 85%. RI is able to access data from these top firms and use its global expertise “to create useful, timely and valued outputs for manufacturer clients,” adds Eldridge.
Already major manufacturers are reaping the rewards of using OFD data. Ongoing projects led by RI include work with a major premium spirits company to create a pricing strategy that reflects the variations in buying behaviour across different channels, and work with a leading tobacco company to track the launch of a new alternative smoking product.
The rewards of manufacturers tapping into this sort of granular insight is already becoming clear. When Kellogg’s sought to boost profitability across some of its key food products in 2019 it turned to OFD data to analyse the link between price and performance of one of its core SKUs: Pringles.
Ranked as the second highest selling potato chip in Russia and already growing at double-digit rates the team sought to compare sales of the product across hypermarkets, supermarkets and convenience outlets. To do so they analysed 170,000 checks from 14,000 outlets spanning 18 months, building up an extensive picture of the optimum price in each channel. The data highlighted that shoppers browsing small convenience outlets were happy to part with more cash for a tub of Pringles, compared to those in hypermarkets: an opportunity to boost margin the manufacturer may otherwise have missed.
That OFD data provided “precise recommendations on the optimal price level with details on sales channels made it possible to make informed decisions on both regular and promotional prices,” said a Kellogg’s executive.
Better Insight, Better Results
With RI’s analytics, manufacturers will have all the insights they need to understand the challenges and opportunities of the fuel station channel in Russia, with OFD data and expert analysis spanning market share, sales, distribution, pricing and range analytics. As standard, this solution provides data on a weekly or monthly basis, available just one to two days after the end of the period, with breakdowns by postcode (exact stores are restricted from identification).
Armed with this insight suppliers will be equipped with all they need to create a strategy built for success on Russia’s forecourts.