BP Japan expanding service station network

Despite the extreme competition facing Japan's retail sector, BP Amoco PLC's Japanese affiliate says it is still on course to have a network of 100-120 self-service stations up and running over the next 3-5 years. The British oil major, which 2 years ago became the first foreign firm to enter the Japanese retail sector in 50 years, has 9 self-service stations operating mainly in Gunma prefecture to the north of Tokyo and is looking to open a further 10-15 such outlets by the end of this year.


TOKYO�Despite the extreme competition facing Japan's retail sector, BP Amoco PLC's Japanese affiliate says it is still on course to have a network of 100-120 self-service stations up and running over the next 3-5 years. The British oil major, which 2 years ago became the first foreign firm to enter the Japanese retail sector in 50 years, has 9 self-service stations operating mainly in Gunma prefecture to the north of Tokyo and is looking to open a further 10-15 such outlets by the end of this year.

Although he would not give any figures, Gordon Souter, president of BP Japan, told OGJ, "We are liking the results we have seen so far, and we are hitting the sales targets we set ourselves." This is in spite of intense competition at the retail level (it is estimated that up to 40% of the country's pumps eventually will have to be shut down).

Souter says his company's success is due to the fact that BP has targeted a particular, and as yet largely untapped, segment of the market�self-service stations at hypermarkets in suburban areas. "Our strategy is based on setting up outlets that are highly profitable because they are based on big sales volumes and relatively low running costs. We are not interested in trying to compete with the typical small urban outlets," he explained.

Both self-service pumps and suburban hypermarkets are fairly new concepts in Japan. There are only about 150 self-service stations in the whole of the country.

BP has linked up with Iseya Kosan, a supermarket chain aggressively expanding into the hypermarket. Although Souter says that BP is very happy with its partnership with Iseya Kosan, he did not rule out the possibility of linking up with other local medium-sized supermarket chains. "We are looking at all opportunities, as are the retailers themselves."

Souter said that there are few signs as yet of Japanese oil companies following BP's example in spite of the apparent success of its strategy. Analysts say that BP has a distinct advantage because, unlike its competitors, it does not have outlets that it has to worry about damaging by adopting its self-service strategy.

Souter admits that, with just 100-120 outlets in Japan, BP will never become a major player in the Japanese retail market, "But that is not our intention. Our aim is big profits, not big market share. We are also serving as a catalyst for change in a market that is not exactly renowned for innovation."

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