The Australian convenience landscape is set for a radical change following the announcement of a strategic 10-year partnership between BP and Woolworths Group, worth nearly $1.8 billion.
Under the new agreement, BP will acquire, rebrand and operate Woolworths’ existing 527 fuel and convenience sites, as well as an additional 16 sites currently under construction.
The $1.77 billion transaction will see the end of the existing Woolworths Caltex alliance, subject to ACCC and Foreign Investment Review Board approval.
Under the transaction, which is expected to be completed over the next 12 months, BP will become the operator of all Woolworths fuel and convenience sites in Australia. The partnership also promises to deliver a fuel and convenience store and loyalty offer which will reinvent convenience with a differentiated offer: ‘Metro at BP’.
BP Downstream chief executive Tufan Erginbilgic said the development of high-quality, differentiated fuel and convenience offers is a key part of BP’s strategy.
“We are excited to be establishing this strategic partnership with Woolworths, one of Australia’s largest supermarket retailers.,” he said.
“Globally we have developed a winning retail formula where we partner with strong local brands, like Marks & Spencer in the UK, to provide our customers with a convenience retail offer that meets the needs of their busy lifestyles.
“The combination of all aspects of this strategic partnership is expected to create significant value for BP.”
The acquired sites will be rebranded and integrated into BP’s existing company-owned and operated network of around 350 fuel and convenience sites. BP will continue to set fuel and convenience store prices at each of the retail fuel sites it operates.
The ‘Metro at BP’ format will initially launch as a pilot program across 16 BP fuel and convenience sites and will include a seasonal selection of ready-to-eat and take home fresh food products. This initial launch will provide both companies with an opportunity to test the offer and generate customer feedback. The second phase of the launch will see a further 200 sites adopt the new format.
BP Australia president Andy Holmes said BP has significantly invested in its fuel and convenience sites across Australia over the past three years.
“The opportunity to grow our retail business and work alongside Woolworths, with their strength in grocery and food innovation, will further enhance our customers’ fuel and convenience retail experience,” Mr Holmes said.
“We enjoy strong, successful commercial partnerships with our many dealers, distributors and suppliers and we look forward to sharing the benefits this transaction brings to us all.
“While Woolworths fuel business has solid foundations, the future combination of BP’s international experience and expertise in fuel and convenience offers with Woolworths high quality food products and loyalty program means that BP expects to realise significant improvements in value.”
Rewards a cornerstone
The development will see Woolworths’ Everyday Rewards loyalty program extended to allow customers to earn rewards points on both fuel and in-store purchases at any BP site in Australia. Additionally, for the first time, Woolworths’ Everyday Rewards cardholders will be able to redeem points at the register as discounts on purchases at BP.
BP will expand the Woolworths’ 4 cent per litre redemption offer to additional BP sites in addition the 527 fuel and convenience sites acquired from Woolworths.