BP, Pick n Pay in petrol pilot scheme

While a formal agreement between fuel and convenience retailers is not new to South Africa, what is different about this agreement is that Pick n Pay will not only retail convenience goods on the service station forecourt, but will also retail fuel.

BP will act as landlords and as fuel wholesalers, with Pick n Pay as the franchisee.

The two companies, which signed a memorandum of understanding in July, will open two pilot sites in the Cape by the end of 2008.

The companies said rollout will be dependent on success of the model, but both companies are confident the joint venture will bring multiple benefits not only to the two companies, but also to customers.

The rollout would involve further expansion concentrated on BP's top national sites, with the existing BP Express stores being phased out.

Diesel will be discounted from the first day of trading.

Petrol, which remains strictly regulated by government, will be sold at the prevailing price until such time as government loosens its control on fixed prices.

The new convenience stores will be known as Pick n Pay Express, and will stock just over 1 500 lines, staying open 24/7.

In terms of the agreement between the companies, which involves both existing and potential new sites, BP is to act as landlord and fuel supplier, and Pick n Pay is to act as the tenant, operating both the forecourt and the on-site Pick n Pay Express convenience store.

Where an existing BP franchisee has tenancy, the franchise agreement will, by agreement be converted to a Pick n Pay Express franchise.

Pick n Pay Express stores are intended to replace the current BP Express stores, offering a range of Pick n Pay fresh and convenience items, specifically identified to meet the needs of convenience shoppers, including a Wild Bean Café.

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