Roadside Retail

Disa Rebrands Petrol Stations

2010-07-26T23:37:00.002+01:00

Spanish company Disa (Distribuidora Industrial, S.A) has recently rebranded using the humming bird symbol and yellow and blue flag colours reflecting its origins in the Canary Islands. Previously Disa had run petrol stations under partner brands Cepsa, Repsol YPF, BP or Shell and therefore it's previous black/blue rather industrial looking identity was not very visible. The need to rebrand petrol stations resulted from a ruling from the Spanish Competition Authority. Disa clearly felt that to enter the retail sector a softer approach was more appropriate. The humming bird gathering nectar is a charming metaphor for the refueling process without any reference to the 'Dirty' side of the oil business. By communicating environmentally friendly values in the new identity Disa are obliged to deliver on the promise which the 'Sustainable Development' programme launched by Disa goes some way towards.

Multinational oil companies need a new model to extract more value from their Retail brands

2010-07-19T15:33:00.002+01:00

Location, location, location - the oldest cliché in the book about Retail. Get the right outlet with the right products in the right place and the customers and the profits just roll in! And in the petroleum sector it has to be even truer surely. Right road, right traffic flow, well positioned petrol station - Bingo! Well yes of course location is vital - that's why the real estate costs so much when a site on a busy highway or on a motorway is released or sold. But as every retailer knows the trick is always to maximise the returns - to secure volume and income which exceeds expectations and provides business higher than the "case" assumption (the assumption that underpinned the original investment). This article is about that extra, that bonus level of return that can turn a good site or network into a great one.
One of the basic rules of retail is that it has to be process driven. Securing and maintaining high levels of customer satisfaction does not happen by chance – especially in petroleum retailing. This means that the “offer” has not only to meet the customers’ needs but also to be consistent over time. Any fool can get a consumer to try a product or service once – but to bring them back time and time again you have to repeat the quality, and precisely replicate the purchase experience, every time. This requires performance standards – standards which cover every aspect of the motorist’s visit to the petrol station. Where, as is invariably the case, sites are part of a branded network your standards must cover the network as a whole. Most oil companies have some flagship sites in prime locations on which they lavish special care and attention. There is nothing wrong with this – providing that the minimum standards which apply elsewhere in the network meet, or preferably exceed, customer expectations. Consistency of the marketing offer is vital.
Vertically integrated oil companies, those that operate all the way along the supply chain from the wellhead to the motorist, are driven by processes. Technical and performance standards apply at every step in the chain – so it is not surprising that there is generally, in principle, an acceptance of the need for standards in their retailing operations as well. I say “in principle” advisedly because my personal experience in Shell, and my observation of other oil companies, is that particularly in recent years there is an unwillingness to make the financial commitment in retail that would facilitate the achievement of consistently high levels of customer service. The principal reason for this is that whereas other retailers are customer obsessed – the success of a Wal-Mart or a Tesco is built on the foundation of a fixation with customers – this hardly ever applies to traditional oil companies. This is part of the reason that supermarket and hypermarket chains have made such inroads into petroleum retailing. When the board of a supermarket giant meets virtually every subject discussed is placed in the context of its effect on customer preference and consumer choice. When the boards of Shell or BP or ExxonMobil meet there retail business is low down the agenda – if it is there at all – and the customer rarely gets a look in.

This brings us to the question as to whether retail is or should be a core competence for a vertically integrated oil company. Back in 1996 I moved, with Shell, to the Middle East – based in Dubai. My previous job had been as project manager for the re-imaging of Shell’s more than 40,000 petrol stations around the world – so I considered myself something of an expert on branded retailing in the petroleum sector and I thought also that Shell had created a new, distinctive and customer-driven set of design and operational standards. What immediately surprised me in Dubai is how high the general standards of petroleum retailing were - and all the brands were local brands. For example Emarat, a Dubai company, had a new design and associated forecourt standards which were, frankly, just as good as what we had just developed for Shell. The key point about Emarat is that they are first and foremost a consumer focused marketing company. Of course in a country like the United Arab Emirates, with its huge oil reserves, there are also major upstream companies but the nation’s oil marketing brands are decoupled from their upstream activities. Like Tesco or Wal-Mart, Emarat and their competitors are 100% focused on their motorist and other customers. This I believe is also the model for the future for the multinationals like Shell and BP.

The reality is that the main raison d’être of a vertically integrated oil major these days has to be the upstream. Most of their investment and almost all of their energies are focused on this sector – particularly at Board level. Although the marketing businesses of these companies are large, and their brands have traditionally been strong, whatever advantage there once was has gradually been whittled away by the supermarket chains. The consumer brands are also damaged by completely unrelated issues and problems in the upstream – as BP has recently seen to their cost. So the crucial decision that Shell and BP and the rest must take is whether they do still see marketing, and especially retail, as a core business and if so how they should restructure to give it far more emphasis than it can receive when most of the corporation’s efforts are on the upstream. Core businesses demand the development of distinctive core competences – peripheral businesses, however notionally large, wither on the vine because the core competences are absent or insufficiently developed.

There is a window of opportunity for Shell, BP, ExxonMobil, Chevron, Total etc to focus on what they do best – the upstream – and realise the value of their marketing businesses and brands. There are plenty of models which could be followed to do this of which probably the best would be the one chosen some years ago by British Gas plc when they formed two separate companies, one essentially upstream (BG Group) and the other a marketing business - Centrica. If there is residual value in the brands such as BP, Amoco, Shell, Total, Texaco, Esso, Mobil, Elf and the rest then the creation of dedicated downstream companies to manage these brands entirely separately from the upstream is essential. The question as to whether retail is a core competence would then never need to be asked. Retail would be the main business, the public face and the raison d’être of these new companies – and their management would have to be just as customer obsessed as their supermarket competitors!

Paddy Briggs

July 2010

© Minale Tattersfield

Corporate Social Responsibility - what it really means

2010-06-18T15:29:00.001+01:00

In my previous article in this series I argued strongly that the main determinant of a company's reputation was its behaviour not its rhetoric. The ongoing calamity of BP's Deepwater Horizon continues to put corporate reputation as a subject very much in the spotlight and, hardly surprisingly, many commentators contrast BP's past attempts to claim the moral highground on environmental matters with the stark reality of what is happening in the Gulf of Mexico. The idea that corporations should be "socially responsible" whilst fashionable is not new - and it remains an extremely controversial concept. In this article I will try and delve into what Corporate Social Responsibility (CSR) really means - and argue that all too often CSR has been just a tool of a company's reputation management/Public Relations activities rather than something that sets strict behavioural norms. In all too many cases CSR reports are selective, partial and glossy window-dressing - leading to charges of "Greenwash" - rather than true reflections of a corporation's actual non-financial (Health, Safety, Environment etc.) performance.
It is no exaggeration to say that that over the past two hundred years or so virtually everything that we value - even take for granted - about our way of life has happened because of the operation of regulated free markets. I put the adjective "regulated" in this statement not to over-emphasise the need for laws, rules and controls but to suggest that whilst the principal driver of progress and change has been the action of entrepreneurs and entrepreneurial corporations a measure of regulation has always been necessary. If the first half of the nineteenth century was the age of untrammelled industrial growth the 150 years since then has been no less spectacular - but there has been, as there needed to be, increasing legal restraint on corporate behaviour.

There has always been the same dynamic underway between free-enterprise companies and regulators - mainly governments. The companies from Standard Oil through Philip Morris to Microsoft always argue that any regulation of their freedoms will inhibit their business to the disadvantage of their customers and, most important of all, their shareholders. They harp back, in spirit if not always in rhetoric, to Adam Smith who said:

"Every individual endeavours to employ his capital so that its produce may be of the greatest value. He generally neither intends to promote the public interest, nor knows how much he is promoting it. He intends only his own security, only his own gain... [but] by pursuing his own interest he frequently promotes that of the society more effectually than he really intends to promote it". Adam Smith in "the Wealth of Nations". 1776

The argument of Smith was that the pursuit of self-interest is inevitable and desirable and that an unintended consequence is that society is thereby "effectually" promoted. This theory is a bit like "trickle-down economics" - let us entrepreneurs get on with running businesses and benefits will cascade to all - even the worthy poor. Well not long after Smith his theory was tested as the nineteenth century Industrial revolution took hold in Europe and the United States. Before the century was out a raft of legislation was enacted to restrain industry as it became abundantly clear that whilst industrialisation brought many benefits it brought horrendous unintended consequences as well - from child labour to exploitation of workers to unsafe working conditions and monopoly power - and more. The break-up of the monopolistic Standard Oil in 1911 was amongst the most dramatic of instances where Government saw the need to restrain business in the public interest - but there are hundreds of other examples. It is no exaggeration to say that each successive wave of legislation was resisted by business - and that companies often claimed that self-regulation would be sufficient and that laws were unnecessary. In more modern times we have seen the tobacco industry fighting tooth and nail not to have to restrain the promotion of their brands and products - and we have seen self-interested bodies like the International Advertising Association (IAA) supporting them. To this day the IAA says, in respect of tobacco advertising, that they "…believe in the right to truthfully and responsibly advertise legal products to appropriate audiences and oppose efforts to restrict such advertising." The "Mad Men" live on!

The reason for this lengthy preamble on the history of regulation is to put the modern-day CSR debate into a historical context. There has always been a battle between legislators and businesses and one of the business defences has always been "Trust us - what we do is in the public interest and we accept the responsibility to police ourselves". However that most free-market of all economists, Milton Friedman, poured scorn on the idea that companies could or should be self-regulating over and above their legal obligations. Here is what Friedman said in 1962:

"The doctrine of "social responsibility" [is a] fundamentally subversive doctrine in a free society … in such a society there is one and only one social responsibility of business – to use it resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud." Milton Friedman in "Capitalism and Freedom" 1962

Whatever else he might have been Friedman was no hypocrite and he abhorred obfuscation and window-dressing. Whilst he would no doubt have had no problem with the idea of lobbying to influence legislators he would have resisted any "voluntary codes" and overblown statements of "Business Principles". What, for example, would he have thought of this statement in the 1999 Annual Report of a major American corporation "Our philosophy is not to stand in the way of our employees, so we don't insist on hierarchical approval. We do, however, keep a keen eye on how prudent they are and rigorously evaluate and control the risk involved in each of our activities"? Whilst Friedman might have applauded the broad sentiment he would not of course have condoned any illegal behaviour and lack of internal controls. When the true story of Enron (for this is from their Report) emerged then Friedman's general position was vindicated. Enron did not stay "within the rules of the game" and broke the law in almost everything that they did. Whatever self-policing there was (and most of it was in reality non-existent) failed abysmally.

Enron lied about most things so it is not surprising that they lied about their internal controls. But much less venal companies fall into a similar trap in some of their rhetoric - not least in their so-called commitment to the principles of Sustainable Development. Here, for example, is what Mark Moody-Stuart said on the subject when he was head of Shell: “[Sustainability] is a three-legged stool balanced between economic, environment and social considerations”. This type of rhetoric has been common amongst those who believe that companies' commitments to CSR really are meaningful - it is par for the course. Milton Friedman would have been horrified at the underlying premise of the "three-legged stool" - that there is a precise equivalence between a company's economic driver and its social and environmental behaviours. Note that there has to be equivalence if the metaphor is to work. If one leg is longer than the others the stool is unbalanced and falls over! In reality, as we see time and time again, the economic driver is far, far more important than any incidental social and environmental obligations that a company may propound. The line of questioning that BP CEO Tony Hayward faced recently in the U.S. Congress was substantially about whether cost and profit issues (Economic) had outweighed Environmental considerations in BP's decision making regarding Deepwater Horizon.

So history teaches us that we should be deeply sceptical about any corporation's claim to self-regulation or allusion to "Principles" over and above their legal obligations. Not least because the directors of corporations have a statutory and fiduciary duty always to act in the interest of shareholders - and shareholders interests are monetary above all. A shareholder wants stock prices to perform well and dividends to be good - and that's about it! And the directors want the same thing - their bonuses, stock options and performance-related remuneration rely on it! So the more self-righteous and superior companies seem to be in their CSR statements the more sceptical we should be! Some companies make their position on social responsibility matters crystal clear and with a pleasing lack of hype. The often-vilified Ryanair is one. In their "Code of Ethics" they say:

"Ryanair is committed to conducting business in an ethical fashion that complies with all laws and regulations in the countries in which Ryanair operates. As employees and representatives of Ryanair, we must consider how our actions affect the integrity and credibility of the Company as a whole"
Contrast this frankness (Friedman would have been proud of Ryanair!) with the page after page of "Business Principles" bombast and self-congratulatory hype in the Annual Report of British American Tobacco which includes the following two "core beliefs" (there are a dozen or so more of these platitudes):

• We believe our businesses should uphold high standards of behaviour and integrity.

• We believe that high standards of corporate social responsibility should be promoted within the tobacco industry.

This from a corporation that actively seeks to promote its brands and noxious products wherever it can - especially in the developing world! If ever there was an oxymoronic statement it is the idea of "corporate social responsibility …within the tobacco industry". Mad Men again!

Multinational corporations sometimes claim that their commitments to Corporate Social Responsibility are such that they always apply their own global standards of behaviour - which means that their own CSR standards will override local standards where those local standards are lower. BP, for example, says "We’re proud to set universal standards of behaviour across our entire operation…developing our own set of rigorous guidelines - [which are] often more rigorous than local laws and regulations". Intellectually, of course the logic of this is inescapable. If your CSR commitment is absolute then even if you don't legally need to apply your standards you will do so anyway - because that is what you believe in. Sadly, however, this is all too often a chimera. As The Guardian's environment correspondent John Vidal put it recently in respect of BP's Gulf of Mexico problems "If this accident had occurred in a developing country, say off the west coast of Africa or Indonesia, BP could probably have avoided all publicity and escaped starting a clean-up for many months." Vidal is right. Similarly if Shell had been treating an oil field in the U.S. or Europe in the way that it has its assets in the Niger Delta, where 2,000 major spillage sites have never been cleaned up, then the political and media fallout would be similar to what BP is now struggling with in the United States.

So what does Corporate Social Responsibility really mean? It is not about putting a favourable gloss on a company's activities and drawing a veil over its less salubrious actions. It is not about being a generous donor to charities, however commendable that may be - you cannot buy yourself a good reputation by making donations to good causes. It is not about a re-branding or stakeholder engagement programme - however useful such things may be from time to time. What it is about is first and foremost obeying the law - and then, if you believe it is necessary and in the interests of shareholders, going the extra mile in respect of your health, safety, environment and community relations behaviour (etc.). It means respecting all your stakeholders - especially including those, like suppliers of goods and services and often employees and sub-contractors, over whom you may have the whip hand. These commitments have to be codified, managed, funded and rigorously and consistently applied. In my view there are few if any big companies and perhaps no multinational corporations that have such a commitment and act with such integrity - although some of course are better than others. Which is why it is only by regulation at a national and international level that society at large can be protected - history teaches us nothing less!

Paddy Briggs
June 2010
© Minale Tattersfield

McChange

2010-06-17T12:07:00.001+01:00

Chances are there is a new dark ‘Hunter Green’ McDonalds near you by now. As a response to negative market research, critical city centre planning authorities, declining sales and fierce competition from the likes of Starbucks, the famous bright red frontage has been replaced by green in order to communicate to customers that McDonalds had changed some of its much publicised unethical ways. McDonalds appears now more of a restaurant than the petrol stations they frequently cohabit. The interiors too are less brash and feature modern art and subtle lighting showing that McDonalds understands the masses have become more discerning and sophisticated.

Delivering on the green promise includes a pledge that delivery vehicles run on recycled chip fat, packaging is recyclable and refrigerators run on non-ozone depleting refrigerants. To quote Jamie Oliver, gastro campaigner and entrepreneur ‘Being commercial and caring can work. Actually it’s the future’. Even Greenpeace have praised McDonalds for moving in the right direction (although it’s doubtful the charge of complicity in making the world obese will ever diminish).

Star Mart Star Man

2010-05-24T12:17:00.005+01:00

Caltex’s Star Mart was in need of refreshment having warn the same red/turquoise wave identity for at least 14 years. The designers Hulsbosch rightly claim that the new logo shows “Warmth, personality and fun” is which is befitting of an offer which makes no great claim over and above providing speedy refreshment for the motorist. But whether the new ‘Star Man’ identity is truly contemporary as declared by the designers remains a question according to comments posted on the Australian media website mumbrella.

If mumbrella’s readers are as we suspect hyper critical graphic designers tired of such a familiar ‘Star Man’ visual pun then no doubt they would explain that using the Caltex star from the symbol and name was too obvious a starting point for the refreshed identity…..which is possibly why the previous designers avoided such a ‘gift’ in order to communicate the innovative nature of the offer in the mid 90’s.

Things have moved on, others are offering equal and superior offers and possibly required more thinking ‘Out the box’….see ‘Picknpay’, ‘On the Run’, ‘Wild Been Café, ‘Mesra’, 'Bonjour', ‘Sainsbury’s Local’, ‘Marks and ‘Spencer Simply Food’ and ‘Tesco Express’.

As ever it’s not what graphic designers think that matters and actual trading figures from 500 Australian sites will determine whether the rest of Caltex’s network in Asia and Africa will see more of the same.

Reputation Management

2010-05-18T15:33:00.002+01:00

The maintenance of a good corporate reputation in today's febrile multimedia age is no easy task - not least because the needs of a company's various stakeholders are all too often contradictory. Investors may seek cost efficiencies which boost earnings and dividends whilst employees seek job security. The need to boost the resource base, especially for oil and gas companies, will often conflict with the needs of local communities and environmentalists. And in some industries, like tobacco, the very nature of the business activity itself can be hard to defend and virtually incapable of being painted in a positive light. So does that mean that there are no firm guidelines that can be established to help companies manage their reputation - is it all too difficult? This article will argue that the reverse is the case - so long as companies understand that brand management and reputation management are the same thing - and so long as they have an imperative to integrate what they say with what they do - and then tell the truth. And as long as they have the confidence not to have their reputation management decisions taken by lawyers!

Let's start with the key premise that there is really no difference between a company's corporate brand and its reputation. This is not semantics - the need to understand this principle is an essential condition before we can go on to put a reputation management plan together. But first lets clarify what we mean by corporate identity or brand. In a company like Unilever the corporate brand is the company name and it is the multitude of product brands that comprise the consumer offer. Lipton and Lux and Persil stand alone as distinctive brands and although there is some measure of endorsement from the Unilever parent brand this is not crucial to the product brands' success. When Unilever experienced some problems with the reformulation of their Persil brand back in the 1990s it did little harm to their corporate brand or to their business performance. It was a costly error - but it was confined to one product line - albeit an important one.

Contrast this with the now largely forgotten furore over Formula Shell back in the 1980s. Formula Shell was launched as being the "first new petrol for fifteen years" and the advertising made extravagant performance claims. However within months of the launch it emerged that in certain vehicles and in certain circumstances the additives in Formula Shell could actually damage a car's engine. In this case there was no possibility of distancing the brand of the corporation from the product brand - they were the same. The revelation that Shell, a company previously believed to be highly technologically advanced, could make such an error damaged Shell's reputation - and not just in respect of product formulations.

In the petroleum sector most companies, and all the multinationals, manage what Wally Olins calls a "Monolithic" brand structure - essentially their corporate identity runs as an identifier through the whole of their vertically integrated business from wellhead to the petrol station. There are some exceptions to this (BP has kept the brand integrity of its Castrol lubricants subsidiary for example) but in the main the monolithic structure prevails. The implications for the company in respect of brand and reputation management are both positive and negative - and need to be understood. On the plus side is the endorsement that the corporate name can give to new products and new ventures. Shell's latest differentiated petrol product Shell V-Power is very definitely a Shell endorsed sub-brand for example - just as Formula Shell once was. On the other hand Shell's overtly corporately branded and largely unsuccessful moves into some renewable energy areas such as "Shell Forestry" and "Shell Solar" were ill advised - at least with hindsight. There was never a satisfactory corporate fit for Shell to be in these businesses and the internal will to make them work never existed. These failures damaged Shell's overall reputation and credibility - something that might not have happened had a less Shell-branded option been pursued. The other real risk for monolithically branded corporations is of course the collateral damage that can be done when one part of the business fails or under-performs - or is perceived to have done so. In Ireland Shell's difficulties with its large Exploration and Production project Corrib in County Mayo led to protests from the local community and from environmental activists - including on the wholly separately managed and unconnected Shell-branded petrol station business. This brings us to BP's brand challenge in the light of the Deepwater Horizon rig disaster.

The Deepwater Horizon tragedy, in which a dozen workers lost their lives and which is causing major environmental damage, will no doubt become a reputation management case study in years to come. If ever there was a case of the need to manage perceptions this is one. The facts of the case will no doubt eventually emerge after the investigative enquiries are completed. But few would disagree that the public perception is one of corporate failure both in respect of the fact that the accident happened at all and in respect of the unedifying initial blame shifting between the various parties involved: BP - the commissioner of the rig, Transocean, its owner and operator and Halliburton who provided, on a sub-contracting basis, some of the rig-based services. It is also necessary in this case, as in so many others, to point the finger at the legal elephant traps that lie in the way of open and truthful disclosure. If BP had acknowledged right from the start what most observers, including the US President, believed - that they, BP, were ultimately responsible for the disaster and its consequences - then the legal penalties could have been punitive. They may still be of course but there is little doubt that as in so many of such cases in modern times the dead hand of the lawyers can be seen to have played a disproportionately strong part. To BP’s credit, current communications at the time of writing this article regarding Deepwater Horizon seem straightforward and truthful.

After Shell's scandalous failure to disclose the truth about their hydrocarbon reserves back in 2004 there is no doubt that virtually no moves are made, and certainly no significant public statements are issued, by the company without the lawyers being central to the process. If you look at Shell's most recent Annual Reports, for example, you will see a document full to the brim with obfuscating legalese - the contrast with the far more open and self-confident Reports of ten or fifteen years ago is marked.

So for a monolithic brand like Shell or BP there is no escaping the fact that problems in one part of the business can damage brand approval in other substantially unconnected parts of the company. Look, for example, at this report from the Daily Mail last year when BP's profits fell. The illustration is of a customer in a petrol station - but in truth BP's retail business had virtually no impact on the profit fall. The problem is that Roadside Retail, for the oil companies with downstream businesses like Shell or BP, is the most visible manifestation of their monolithic corporate brand. And the media will always illustrate stories about almost anything to do with the company with images from a branded petrol station.

In Roadside Retail it is not just the monolithic oil majors who operate in a brand environment in which their Corporate Identity is synonymous with their retailing brand. The same applies to the ever more important hypermarket and supermarket operators - but in these cases the coalescence of brand and reputation is nearly always a benefit. Although on the face of it for Tesco to run a network of petrol stations, previously the preserve of the oil companies, may have initially seemed curious in fact there was an inescapable and consumer-driven logic to the move. The Tesco corporate brand conferred a high degree of respectability - their reputation as a professional company was high. And their retail brand (synonymous, of course, with the corporate brand) was almost unchallenged in their sector. So for Tesco to offer fuels and lubricants on forecourts was credible not because they were an oil company but because they were a multiproduct retailer. Of course they had to understand the special mechanics of running petrol stations - but that was not a problem. And the corporate brand conferred reasons to believe and reasons to prefer from the start.

One of the reasons that reputation management has proved difficult for so many huge corporations is that it is all too often seen as being the same thing as lobbying and PR - especially in the United States. PR is often perceived as being at best just providing a positive gloss on reality, whilst ignoring harder truths, whilst at worst it can be characterised as systematic lying. I would argue that in the same way consumers see through false brand promises stakeholders soon see through mendacious PR and misguided attempts to built reputations through selective and slanted corporate advertising. To build a positive reputation companies must above all do the right things in the right way. Where health and safety is concerned there is no alternative but always to go the extra mile and if a project becomes marginal as a result they must have the courage to walk away. If good behaviour on HSE (etc.) is inculcated into corporate behaviour throughout the company then risks will be reduced substantially. And if the operational risks are reduced then potential damage to corporate reputation is reduced as well. Finally it is essential that reputation management plans, especially when it comes to corporate communications and other stakeholder engagement, tell the truth. The challenge is not to present the company in a positive light and to ignore the negatives. It is to present the company in a positive light because there is a positive story to tell - that it's not just PR hype but that you really can say that everywhere it operates the company "walks the talk".

Paddy Briggs

May 2010

© Minale Tattersfield

Solar Energy Review

2010-05-16T23:55:00.010+01:00

Italy
Agip’s part solar PhotoVoltaic (PV) powered petrol station is a particularly attractive green energy proposition since Italy has moderately high solar radiation but also high energy prices where conventional energy source prices and solar energy prices are roughly equal per kW/hour.

Spain

The Repsol car wash outside Madrid airport features flat plate solar thermal panels which preheat the water used for washing cars. Using this relatively low tech, low cost solar thermal energy collecting device, Repsol are able to save the cost of heating the water by conventional means (electric or gas) and therefore also reduce carbon emissions and as a bonus gain a valuable PR advantage. How simple and effective but also quite obvious for a nation famous for its sunny climate.

Spain have also invested heavily in solar PV as illustrated above with a sophisticated solar tracking device on a Galp petrol station.

Gulf Nations
Gulf nations with plentiful fossil fuel resources and resulting low energy prices have to date seen little motivation to install solar energy despite the highest naturally occurring solar irradiance. Abu Dhabi’s Masdar ‘Sustainable City of the future’ may be an encouraging portent of the future and even the wind turbines at the centre Bahrain’s world trade are a further sign of renewable energy at least entering the consciousness. BP Solar calculated that a solar PV array the size and location of the Arabian peninsular could produce all the world’s energy needs.

China
At first glance it may be surprising to discover that China with an only moderate natural abundance of solar radiation is by far the largest user of solar energy with 60% of world use. Of this amount, the relatively mature and low tech solar thermal variety comprises a large proportion with either flat plate, or evacuated tube collectors becoming a familiar site on Chinese rooftops which provides the ‘Low grade’ energy required to heat water. As an energy hungry nation, China clearly sees solar amongst other renewable energy sources as a valuable component of their overall energy portfolio which saves valuable conventional fossil fuels for power stations producing ‘High grade’ electrical energy for industrial and domestic consumption. China’s commitment to invest £34bn (source Joss Garman - Independent) in clean technologies shows they too take the view expressed by US president Barack Obama’s that ‘The nation that leads the clean energy economy will be the nation that leads the global economy’ Could there be a parallel that the companies that lead with introducing green technologies such as Tescos will also lead their sectors?

UK
Sunnier climes such as Spain or Italy have an annual solar energy density of around 200 w/m2 compared to around half that amount in the UK, nevertheless a domestic solar thermal installation in the UK should be able to provide half the yearly requirement for hot water according to Everest, one of hundreds of accredited solar installers in the UK. The fact that such a well know name as Everest, UK’s largest double glazing provider now offers solar thermal shows this technology has reached a certain level of maturity. Unfortunately solar salesman are gaining a bad reputation for miss-selling by overstating the potential gains.Solar Century may be a more trustworthy port of call being one of the longest established suppliers.

Government encouragement of the renewable electricity generating sector includes a range of guaranteed buy back schemes known as ‘Feed in tariffs’. For example renewable energy supplier Segen, is offering a 3.9 kW system (domestic users may use between 4kW/h and 10 Kw/h per day) comprising a rooftop solar PV array of 22 Sharp 180w panels costing £17,000 fully installed (after a £2,500 government grant and including the reduced 5% rate of VAT). The feed in tariff for renewable energy systems up to 4kW is 36.1p per kWh which Segen calculate would give a return of approximately £1,600 per year guaranteed for 25 years. (Note that the average annual amount of energy produced by a solar PV panel is typically only 10-25% of the ‘Rated’ output of the solar panels which is calculated according to their performance under a standard test irradiance of 1000W/m2 which corresponds to the maximum irradiance expected on a clear day in summer at moderate latitudes).

Germany with a similar sunshine level to the UK has long since been offering feed in tariffs giving it the world’s biggest installed capacity of solar PV with 5.5 GW compared to the UK’s 0.021 GW and a total worldwide total capacity of 14.8GW capacity. The money for these government subsidies is not as free as the energy source itself and has resulted in Spain drastically cutting back their commitment to renewable after perhaps too heavy an initial surge. Greece who are old hands with solar thermal have long since announced the intention of similar government PV/ wind incentives but will no doubt have to review such ideas in the wake of enforced austerity measures. Solar it seems will have to thrive more on its own merit alone helped not so much by governments but rising conventional energy rates.

The future
According to Dr. NJ Ekins-Daulkes physics lecturer at the Grantham Institute for climate change, Imperial college, solar PV technology is likely to continue to improve.

Most of the installed solar PV to date is first generation technology which offers 20% efficiency at a cost of $3.5/W. Costs have come down to around half of what they were 15 years ago but have struggled to reduce at the same rate due to a shortage of microelectronics industry grade silicon and the complexity in making silicon wafers themselves.

Leading second generation ‘Thin film’ technology manufacturers such as First Solar can offer 10% efficiency but at a very attractive cost of $1/W due to a more efficient production process and the use of Cadmium Telluride. The ability to apply the basic semi conductor material to glass, plastic or metal foil offers the possibility of integrating PV into the fabric of a building as opposed to panels ‘planted’ on top.

Third generation PV promises both double the efficiencies and half the cost once satellite grade technology is mass produced which comprises multi junction solar cells which can capture a broader width of light emitted from the sun. The Australian company Solar Systems has produced a concentrated PV system where a lens or mirrors focus light on a small but highly efficient (40%) multi junction PV cell.

Hybrids
Heat reduces the output of Solar PV which was no doubt the driver behind an erstwhile little known hybrid solar panel manufactured by Solarus in Sweden which comprises PV panels with water cooling which outputs both electricity and hot water. Per square meter costs of Solarus panels are competitive with non hybrid varieties. The advantage of the Solarus hybrid is that it can achieve more total energy collection from a given area. The disadvantage of any hybrid system is the added complication and the fact that if one component of the combined system fails the whole system may fail.

It should not be overlooked that PV panels require a significant amount of energy to manufacturer which should ultimately be factored into the actual environmental friendliness of the technology. So too the use of the finite and toxic resource of Cadmium. Fortunately the cadmium for PV comes from the bi product of other mining processes.

Passive Solar
The idea of ‘Bolt-on’ solutions such as solar power and wind power to lower our fossil fuel consumption are attractive to a society that has become dependent upon a ‘Plug and play’ mentality where we can use any energy consuming device anytime day or night. Solar and wind are of course intermittent so the option exists to either store energy via a trans national boarder grid or get used to the idea of managing local consumption in tune with what the elements throw at us.

Much more senbsible would be to rely less on so much ‘Bolt-on’ technology in the first place and rely more on properly designed buildings that did not waste so much heat through the walls, had built-in natural light sources, shade structures for summer or other on ‘Passive’ solar features that may cost no more than an ill considered building to construct but offer huge benefits in terms of running costs.

Solar in Retail
Apart from a few demonstration schemes, retail in general has been slow to see the opportunity of ‘Free’ solar energy that comes with a significant initial investment that depending upon circumstances may not pay back for a number of years. On a positive note major supermarket brands such as Tescos, have made a commitment to solar as part of their plans to decrease their carbon footprint (see Terry Leahy’s environmental credentials) Is it cynism or realism to suggest that the positive PR opportunities associated with environmentally friendly energy sources such as solar are the real drivers of change that tip the economic balance in favour.

The great emotional appeal of John Lewis's new TV commercial

2010-05-02T15:02:00.013+01:00

One of the problems with having spent most of my career in the oil industry is that it was a far too rational world – or liked to think that it was. There were lots of engineers, geologists and accountants to explain to you that managing was about input-process-output. In other words you came to proper business judgments by making sure that you had the right resources (the inputs); handling out them properly (the process) and doing the right thing with the products of all this effort (the outputs). Business was a machine and the better designed and oiled and maintained that machine was the better you would do. But my world, the world of brand management, was less certain – much less actually. In promoting a brand you are only partly appealing to rational man – you are also appealing to emotional man and emotional woman. As David Ogilvy once memorably said “The consumer is not a fool – she is your wife”.

So it is in the context of these thoughts that I commend to you the latest John Lewis TV Commercial (click on the link). There is nothing at all for rational man here – no reason to believe or hard-nosed benefits. True the tagline at the end is John Lewis’s familiar “Never knowingly undersold” – but this certainly isn’t a price comparison ad. This is 180° opposite from PriceCompare.com and their like (sites that rational man would love). The John Lewis commercial is unashamedly emotional – tugging at the heart strings if you like. It is beautifully conceived, wonderfully executed and totally focused in its target. It is nonsense to criticise the commercial for saying it is middle-class. Of course it is – but that is John Lewis’s customer base! The commercial has a reassuring panoply of images which pretty overtly convey the message that John Lewis will be with you from cradle to… well not quite grave (they don’t have a funeral service) but certainly your twilight years.

Retailing is about delivering fit-for-purpose products at competitive prices in comfortable surroundings and in a customer-responsive way. Retail is detail – always. But it is also about creating subliminal reasons to believe and reasons to prefer – and the John Lewis TV commercial does that with style. Bravo!

Paddy Briggs

© Minale Tattersfield

May 2010

The new world of Marks and Spencer retailing

2010-04-30T11:17:00.002+01:00

I bought a pack of canned draught Guinness in a supermarket this week. Not, I grant you, earth-shattering information usually worthy of sharing with the world. Except when I tell you that the supermarket was a Marks and Spencer food store. M&S is one of the most interesting brand case studies around because, almost uniquely amongst retailers, they only ever in the past sold products under their own brand names. So until recently had I bought a Guinness-type beverage in an M&S shop it would have been rebranded something like “M&S Irish Stout” and there would have been no mention of Guinness (or Murphy’s etc.) anywhere on the bottle or can.

Marks and Spencer built up their market position with a clear and uncomplicated approach to branding – everything in their shops carried the “Marks and Spencer” parent brand and the “St Michael” sub-brand. It was a slightly curious and certainly individualistic brand positioning, but for a hundred years or more it worked well. Things began to change when designer clothing brands became so popular in the High Street and M&S and St Michael started to lose out – notwithstanding the quality of their products. For clothing Marks and Spencer introduced their own proprietary brand names (like “Blue Harbour” and “Per Una”), dropped the outdated “St Michael” completely and tried with some success to compete with the distinctive high street brands like Next. But for their increasingly important food shops everything stayed M&S branded – until now.

Marks and Spencer food stores are gradually introducing famous name food products in these products normal packaging and without any attempt to distinguish (for example) the Marmite in M&S from the Marmite in Tesco just down the road. The logic is clear. If Marmite, or Kellogg’s or Guinness have spent decades building up brand value in their products, and if they support these brands with extensive adverting and promotion, then Marks, as another retailer, can surely have a share of the cake. Why not? And there are good consumer-driven reasons, as well as cost advantages, for this policy as well. As a consumer I know what I will get with Marmite – whereas “Marks and Spencer’s Yeast Extract” would be an unknown quantity! And surely M&S can source the real Marmite rather more cost effectively than if they had to commission a manufacturer to make a similar product for them.

For Roadside Retail there are some talking points arising out of M&S’s new strategy. One of the most interesting is to speculate whether the current imperative by which an Oil company (BP in the M&S case) will continue to be the parent brand on a petrol station with the M&S food store being the franchise brand on a BP site. Why not the other way round? Under this different model Marks and Spencer would own the sites and it would be the M&S brand that would be dominant throughout the site and of course in the roadside signalisation and branding. Then M&S, just as they now do with Marmite and Guinness in the shop, would retail BP branded products (mainly fuel and lubricants) on their forecourts – with appropriate branding and signage. The attraction of this approach is that as income streams are increasingly from the shop rather than the forecourt the M&S brand would confer on the site a quality retail endorsement. But instead of selling their own branded petrol (as Tesco and Sainsbury’s do) they would sell BP petrol – a perceived premium product with a whole serious of potential reasons to believe in it attached. And, just as they do in a food store with a branded food product, M&S would benefit from whatever advertising and promotion BP does for its own branded network and product range as well as from BP’s proud history.

Paddy Briggs April 2010
© Minale Tattersfield

Big isn’t always beautiful when implementing a roadside retail design project

2010-04-19T16:32:00.004+01:00

When I was the project manager for Shell’s global petrol station re-imaging project in the 1990s one of my key tasks was to work with Shell Brazil where we had nearly four thousand Retail outlets. The Brazilians ran one of the most creative and energetic of Shell’s marketing businesses and they were always keen to embrace new opportunities to enhance their already strong competitive position. So when after a couple of year’s work we had codified the design standards in a comprehensive manual it was with eager anticipation that I flew to Rio de Janeiro to see how the company’s first re-imaged site looked.

I was not disappointed - it was a superb upgrade of a fine station situated in the lee of Corcovado hill in one
of the city’s most prestigious districts. The opening was carried out with typical Brazilian style – it was carnival time and wonderfully well done. The following day I had a meeting with Shell Brazil’s retail management and top of my agenda was the implementation programme for their huge network. It transpired that so much energy had been put into the first site that no time at all had been allocated to creating a project management plan for the remaining nearly four thousand! We had to start from scratch to get something in place!

The point of this anecdote is that whereas it is a necessary condition for companies to be creative and have a sensitive feel for new design this right hand side of the brain activity has to be combined with left hand side of the brain organisation and planning – especially when the overall task is complex and extensive. Art and science need to be combined you might say. As we shall see big companies like Shell have a built-in advantage when implementing huge programmes – above all they can get economies of scale from bulk purchasing. But smaller companies can also achieve excellent results because they can be much more hands on a site by site basis and be more flexible in respect of materials and implementation methods. One of the best realisations of petrol station design projects I have seen was in the United Arab Emirates where the two main players across Dubai and the Northern Emirates, Emarat and Eppco, have only around 250 sites between them but they are all sites which are elegant and customer-focused manifestations of the two companies brands. Similarly one of the best implementations of the Shell “Retail Visual Identity” design I saw was in Hong Kong where even though Shell had less than one hundred sites, they not only adhered to the design standards authentically but also by using some innovative materials ideas – mostly locally sourced – kept their costs under control with a site by site approach.

The essential difference is between projects where size demands that they are carried out with a sophisticated project plan and hard-nosed bulk purchasing (like Brazil or Europe for Shell) and smaller scale operations where far greater flexibility in the practical aspects of implementation, like materials choice and sourcing and installation methodology, is desirable. Where these projects co-exist for one brand, usually an international brand with businesses in dozens of countries, then this aspect needs to be understood at any early stage in the design development. There is little point in a designer creating a design element that has to be mass produced in modern factories if some of the implementation areas will have to rely on lower tech and more labour-intensive fabrication methods. Similarly a design element that requires a high degree of hand manufacture or finishing would clearly be unsuitable in projects where tens of thousands of units have to be upgraded.

Even a company as large as Shell can permit and even encourage small scale signage (etc) production in certain markets. I remember seeing exceptionally high quality elements being made in, for example, The Philippines using local materials and highly labour-intensive fabrication methods. Compare this with say Japan and you realise that the challenge is to get the right balance between capital costs and labour costs. In sophisticated markets with a tradition of high tech manufacturing and relatively high labour costs, like Japan, then an upfront investment in scale production equipment is preferable. In less sophisticated economies with lower labour costs, like The Philippines, then a more “craft” based approach is desirable. So long as the end result meets the design standards, is durable and cost efficient then how you actually get there doesn’t matter that much.

The adage that “All Markets are Local” applies to most things in a marketing business – including to some extent procurement - the challenge is to make the right judgment about the “extent”. There is little point in exporting factory-built components around the world if some countries can achieve the same quality, at lower cost, using local suppliers and methods. On the other hand concentrating production to a relatively small number of suppliers in Europe proved, for Shell at any rate, to be advantageous both in respect of consistency of quality and cost – the economies of scale were considerable. A small and highly skilled team was set up by Shell in the mid 1990s to manage procurement across twenty-five countries in Europe and for more than 12,000 petrol stations. The key to the success of this project, which achieved cost savings of around 40% compared with original estimates and delivered exceptional quality components, was commitment from the top. Not only did the senior Shell management in Europe support the project but they also allocated very senior and experienced executives to run it. That decision ensured both highly competent management and, crucially, that the exercise would in the end have credibility with the top brass in the European operating companies. This did not come easily as there was then a tradition of local autonomy in Shell and in some cases country managers took delight in doing their own thing – even if the end results cost more and were of inferior quality. A strong dose of dirigisme from the centre was necessary to achieve “buy in”! One of the key early decisions in Europe was to divide the elements of the re-imaging programme into separate parts and to use industrial manufacturing methods, not necessarily by traditional signage companies, where appropriate. It was also decided not to allocate any of the components to just one supplier – the size of the project required this for both security of supply and logistical reasons.

A roadside retail re-imaging programme is one of the most significant strategic investments that any brand can make – but it is not to be undertaken lightly. As we have seen it is essential that elegant and customer-driven design solutions are, as far as possible, “future-proofed” in visual terms – we are not talking “fashion” here! But it is also essential that the implementational and economic aspects of the project are considered from the start. Prototyping should reveal design flaws which can be both aesthetic and practical – a design solution might be rejected in consumer research or it may turn out that a particular element just cannot be built at an acceptable price. Whether the project is on the huge scale of a multinational brand or is much smaller in scope, perhaps only in one country, communication between those who create the design and those who will have to build and install it should start almost on day one of the project.

Paddy Briggs
April 2010 © Minale Tattersfield

Austerity Brands

2010-04-05T09:41:00.011+01:00

Owning the premium sector in prosperous times has been good business for Shell whose branded fuel ‘V-power’ is the fuel of choice for drivers who aspire to the F1 Ferrari dream. In times of austerity however real world realities set in and have resulted in the new ‘Fuel Save’ 95 petrol grade.

Look at how discount grocers Lidl and Aldi have grown in times of recession with low cost own branded products it becomes clear that Shell’s strategy with Save’95 makes total sense. If Lidl and Aldi are role models then will we see their trademark austere exterior and interior designs being applied to other familiar roadside brands? Will Mercedes and BMW drivers accept such an imposition? According to Lidl UK director Martin Bailie as reported in FreshPlaza.com such ABC1 customers are a growing market segment for discounters whose associated brand stigma ‘has all but disappeared’.

Will we see the rebirth of the failed Save brand of petrol stations and Price Watch initiatives?
Ask any of the petrol retailers at the March 2010 PetroForum in Kuala Lumpur you would find that achieving lower running costs was no 1 on their agenda. General Abd el Salam chairman of Watania Petroleum in Egypt for example explained that any incremental improvements to a petrol station design could not exceed his existing budget. SeaOil too in the Philippines were preoccupied by the impossible task of how to apply their canopy decoration to galvanised steel sheet as opposed to the silky finish that can be achieved with an Aluminium Composite Material.

It’s not just the fuel and grocery market where we are seeing the save mentality, for example KFC’s budget $9.99 meal deals for four proves ‘Food to go’ is very much in line.

This is not to say that the premium sector is dead. Mid to premium grocer Waitrose in the UK is bucking the downmarket trend but perhaps it’s a market reversal that sees the saver sector grow to become the overwhelming market segment and mid to premium shrink to a niche….and as a significant footnote, not all markets are creating austerity brands as its the more mature markets that have been most hit by the current recession.

Architect designed petrol stations

2010-03-31T16:35:00.061+01:00

If a petrol station can ever be said to respect its location Iseppi-Kurath’s award winning design surely does with the irregular angularity mirroring the mountainous Swiss backdrop. But why no branding apart from the station name and a red stripe on the pump? No doubt the tough Swiss planning laws would have played their part but a distinct lack of branding inside too suggests it's more to do with the architect's disdain with such 'Ephemera'.

Why taint such a crafted building with tawdry graphics? If that was in Iseppi-Kurath’s mind then surely provide us with more to please our senses than such utilitarian materials as profiled steel sheet. Is such 'purity’ honesty or just plain ugly? Is the interior restaurant spartan minimalism or just one level above institutional?

The world certainly does not have to be painted McDonalds red or Shell yellow to be beautiful but in rejecting retail vernacular at least engage with the customer through thoughtful ergonomic considerations, imposing lighting, and sensual materials. Why is the utopian world architects would have us live in so devoid of texture? Is architectural utopianism another word for elitism and snobbery? Do architect’s balk at graphics because it is unashamedly mass market?

The great contemporary architects Calitrava and Foster have both designed a petrol station but neither would lower themselves to apply graphics. At least Foster applied colour in an ingenious way for Repsol’s mushroom canopies but Calitrva only gave us pointless and gratuitous arches superimposed on to a regular petrol station that serve no function than to waste material and money, a familiar criticism of Calitrava’s work. Come on guys, cannot graphic design live elsewhere than the printed and virtual world?

Texaco’s highway site outside Antwerp and BP’s ‘Eco’ site in Los Angeles are further examples of noteworthy architect designed petrol stations that have sought to push the boundaries of accepted physical forms but totally reject branding in favour of silver /grey.

The counter argument is that great buildings do not need graphics, they speak for themselves. A well designed building is a collaboration of form and function and should to an extent express to the user how to interact with the building, where to enter, where to exit where to circulate and so on. But here’s the key, a well designed building is here to last, a 100 years or more, a good 50 more years more than the most robust petrol station that will be outdated technology and fashion wise before the steel rusts away or the plastic disintegrates.

So are petrol stations buildings at all? Perhaps petrol stations are just a three dimensional sign to which you just apply a logo and coloured stripe. This would explain why petrol stations were predominantly 2 dimensionally 'designed' by graphic designers and they all looked very much the same which is no doubt why architects saw it as their duty to redefine petrol stations according to their own sensibilities. More accurately petrol stations are mass produced lego sets to suit different site sizes so in some ways they are more akin to the cars that visit the petrol station rather than a conventional building. It's no surprise therefore neither graphic designers nor architects design the most successful of the current petrol station designs but product designers who have the most appropriate skill set.

Total Relais Moto

2010-03-31T10:49:00.036+01:00

Total’s latest motorbike dedicated stations have many features that should please all 2 wheel users including a wash feature that gets into the wheel’s spokes. Should appeal especially to Parisians, Romans and all over Asia.

Just Look for the Star?

2010-03-27T23:30:00.016Z

The black colour statement at the Texaco stations of the 70’s and 80’s has all but disappeared with the last 2 reimaging programmes which have sought to diminish black in favour of red, possibly in response to market research that tends to equate black within the oil industry as a non environmentally friendly colour. Consequently the new Texaco stations that are being rolled out may be confused for red Esso/Exxon petrol stations. Architectural features of the new Texaco design match sister brand Chevron allowing savings in terms of rationalising components and maybe set the stage for Texaco disappearing altogether in favour of Chevron?

Coincidently, Chevron Texaco’s strategy of sharing is also apparent with their competitor Exxon Mobil whose two brands are architecturally identical except that Esso is red and Mobil is blue. Esso/Exxon also share the same ‘On the Run’ C-store which clearly adopts the philosophy ‘Why go to the bother of creating 2 C-store brands when 1 will do it better’ Which incidentally begs the question, ‘Why maintain 2 or 3 petrol station brands when 1 will do it better?’ With cost cutting the name of the game in petrol retail now perhaps we shall see more brands culled within the foreseeable future.

The new Texaco image is clearly more modern and retail but more visually fussy than the previous designs. The canopy fascia is internally illuminated which will increase energy and maintenance costs unless LEDs are used as a light source.

Surprisingly the Texaco star does not feature as strongly as previous designs on the spreader given Texaco’s slogans ‘Just look for the star’ and ‘Trust your car to the star’. More so since Caltex the other Chevron Texaco brand located in Asian markets features the angularity of the star to great effect on its stations and within the C-store name ‘Star Mart’.

(Old texaco black image)

Ironically while Texaco are moving away from black, other food retailers such as Marks and Spencers are seeing black’s virtues as providing both a contrast with the colour of the merchandise and background for graphics. Black floors however are problematic in that they tend to soak up light that is normally bounced back up.

The top photograph probably features a dealer owned site but what happened to 'Start Mart' which led the way in convenince retailing in the early 90's? If Texaco and Caltex will ultimately morph to Chevron then perhaps there will be no point looking for the star any more.

How to treat a damaged retail banking brand - the RBS dilemma

2010-03-23T12:58:00.033Z

Brand issues should play a big part in Royal Bank of Scotland recovery plans.

Britain’s largest casualty of the international turmoil in the banking sector was the Royal Bank of Scotland Group (RBS) which only survives at all because it has been bailed out by the British taxpayer with Government ownership now at 84%.

The grotesque mismanagement of this huge concern by its discredited CEO Sir Fred Goodwin and his cohorts is one of the business scandals of modern times – but what can be rescued from this modern day bonfire of the vanities? I’ll leave others more qualified than I am to look at the financials of the RBS mess. But in Brand terms there is both a serious problem, but also an opportunity.
The problem is that the RBS brand is probably fatally damaged. True it may be possible if the RBS Group gets back on an even keel for its retail subsidiary of the same name eventually to re-establish itself as a valued brand in the eyes of the consumer. But that will take time and some smart brand and reputation management. RBS may eventually recover its brand equity – but it will take many years for it to do so.

The opportunity comes from the fact that one of the earlier acquisitions in RBS’s shopping spree was the old established British Bank “National Westminster” (NatWest). NatWest has a network of over 1,500 branches in the United Kingdom and more than 7.5 million personal customers and 850,000 small business accounts. It is a significant player in British retail banking and, more importantly, it has a brand identity and reputation undamaged by the turmoil and reputation disaster of its RBS parent. It could be and perhaps should be cut adrift from RBS and allowed to be re-established as a strong principally retail bank unsullied by the RBS disaster.

The new management of RBS, including its majority shareholder the British Government, should see the separate stockmarket floating of NatWest as a real opportunity to start the long process of returning RBS to the private sector. In doing so there is also an added benefit to accrue by ensuring the newly independent again NatWest can be established as a truly sound enterprise, unblemished by any residue of toxic debt and unsullied by any other uncommercial liabilities. There is no reason why the relative strength of the NatWest brand shouldn’t deliver shareholder value in excess of its fixed assets value – the classic definition of a strong brand.

Paddy Briggs
March 2010 © Minale Tattersfield

Brands that endure…When to revolutionise and when to evolve

2010-03-18T11:50:00.030Z

In the twenty-first century we are accustomed to the idea that many products, as distinct from brands, have very short life cycles. Take for example the car shown right in the photograph. It is a BMW (the “parent” brand) 3-Series (the “sub-brand”) from around 1975. If we compare this vehicle with the latest version of the same brand, shown on the left, about the only point of recognition is the BMW logo on the bonnet. We find nothing unusual or exceptional about the evolution of a product over thirty years with that product retaining, over all of this time, exactly the same brand descriptor. There have been five different versions of the BMW 3-Series since 1975 each of which was an evolutionary leap forward from its predecessor but all of which have been aimed at precisely the same target market – the successful professional who wants a combination of performance, comfort and prestige. The product life-cycle is about six years – the brand life-cycle much, much longer than that. Each successive iteration of the 3-Series brand offered the consumer new benefits - both practical and emotional - it is never enough just to update the features of a brand, the styling for example. What BMW offer every six years or so are benefit enhancements which give the consumer more – the cars become safer, more economical and easier to drive as well as conferring more self-esteem on the buyer from their appearance and their novelty.

Petrol retailing

The extent to which brands should change, and the ideal frequency of change, varies considerably with the product category. In the petrol retailing sector a major brand relaunch for an established brand every twenty years or so seems to be the norm with a less radical refresh every 10 years or so. This is a very long cycle compared with consumer durables or fast moving consumer goods (FMCG) brands – a reflection mainly of the substantial costs involved in the re-imaging of thousands of

petrol stations across many national networks. But whilst the timescale may be very different from durables and FMCG brands the principles are the same. If a brand radically changes the appearance of its networks these changes must be consumer driven and provide the motorist with real benefits. I was the global project manager for Shell’s new “Retail Visual Identity” (RVI) project in the early 1990s – the scale was enormous with more than 40,000 petrol stations in over 120 countries. Research around the world told us that Shell’s image was becoming dated compared with our main competitors (see brand map) – but also that we had, at that time anyway, an enviably high rating on the “hostile/friendly” axis. BP had recently updated their networks with a new image that was a step change from every other design in the market – and it was working. The time was right for Shell to change as well. Crucial to the design brief, its development and its execution was to ensure not only that the new design offered real consumer benefits but that it was as far as possible “future proofed”. No brand, least of all a major oil company brand, wants to go through a billion dollar re-imaging campaign too frequently! In fact the new identity endured well and it is still at the heart of Shell’s offer to the customer – the recent changes that have been made to the original design have been evolutionary and have built on that major change that we introduced back in the 1990s. But whilst that original new design solution worked, taking Shell towards the “modern” end of the “modern/traditional” axis on the brand map without foregoing any of the “friendly” characteristics, the changes were not cosmetic. Every element of the redesign, from the improved lighting and signage to the ergonomics of the pump island, was consumer driven and based on research.

Evolution of logos and brand symbols

In the popular press the change of a brand’s logo, symbol or emblem can often be headline news – usually accompanied by a “shock horror” story about the cost – especially how much the designer was paid! When, a few years ago now, the symbol for the London Olympics was announced it caused a furore – and rightly so. The furore was justified not just because the logo was demonstrably unfit for purpose but because investigations revealed that there had been no proper quantitative research into it - and no comparative consumer research (comparing one design with alternatives) either. This was a major error because research not only helps you get the right outcome in such a project but statistically significant results are a neat way of disarming tabloid press critics! When BP changed their symbol from the latest version of their traditional shield (introduced in 1989) to a new abstract design in 2001 it was not universally welcomed - but there was no doubt that BP had done their homework, that behind the logo change there was a clear strategy and that a major change was competitively necessary. Sometimes logos evolve very gradually over time – the Shell emblem is a classic example of this. Sometimes, however, as was the case for BP, a much more dramatic change is necessary – and the only way to find out what to do is to carry out rigorous consumer research and to be clear about your strategic brand objectives. A mistake could be very costly indeed!

The super value of design innovation

The American business guru Dan Pink recently said that “…the most important thing in design is empathy: the ability to understand some thing from the other person’s perspective”. He also said “…we have to meet a new emphasis on improving experiences instead of objects, and we need to improve the flow of interactions between customers and service providers.” Anyone involved in managing brand change over time, especially in the service sector, would be well advised to think about Mr Pink’s words. We are quite used to the idea that consumer durables improve all the time and that the life cycle of a product/brand like Apple’s iPod is measured in months rather than years. I recently asked a senior marketer from one of the big mobile phone companies how long the cycle was for his products and he said “…around four months”. He did not say that all of the implied changes were purely consumer driven – technological advances and the need to respond to competitors’ innovations are obviously also crucial. But he did say, as Mr Pink would no doubt hope, that it was the customer’s perspectives – his/her needs and wants – which are at the heart of the process.

So the simple answer to the question as to when brands should change and whether such change should be revolutionary or evolutionary is to listen to what our customers tell us – and hopefully they will tell us before they leave us and go to the competition!

Shell, in the example I have given, was a tad reactive – it was BP’s changes which were the original stimulus rather than initially the analysis of research. Today it seems to me that the petroleum sector is crying out again for a renewed “emphasis on improving experiences” as Dan Pink calls it.

There are some positive signs – such as BP’s “Wild Bean Café” – a response to the Starbucks/Costa Coffee/Caffè Nero coffee shop revolution. This is a rare serious attempt by an oil company to create its own proprietary in-house food/refreshment brand. It is the kind of “out of the box” thinking that Wild Bean Café represents which can rejuvenate brands by improving the customer experience. Above all marketers, and especially oil companies, need to spend less time examining balance sheets and P&L accounts and much more time listening to customers and trying to meet their needs. If they do this, and innovate in design terms at the same time providing valued benefits to meet identified customer needs, then their brands will prosper – and the bottom line will take care of itself!

Nice LED lights but............

2010-03-16T19:02:00.008Z

LED lights promise significant energy savings.....but not if you leave them on during the day! Seems an obvious statement but that's exactly what the filling station in the photo is doing despite what seems to be a light sensing device below the fitting which should automatically switch off the lights when dawn arrives. Presumably there is a manual override allowing staff to manually switch off the automatic controls or the controls are wrongly set...all of which begs the question should staff have full edit control of the building management system (BMS)

On a more positive note, the LED canopy lights do a great job at night proving that LED lights seemed to have made the jump from neon replacement light lines for decorative purposes to full blown task lighting. There are now LED fluorescent replacements from the likes of Argonic. There are LED halogen replacements from the likes of AlphaLED and there are LED metal halide replacements from the likes of Philips. Despite a generally higher initial capital cost, lifetime costs should be much lower due to lower energy consumption (depending on light source to be replaced) which fits nicely with the company Corporate Social Responsibility commitments (if linked to automatic controls) cost savings should result from not only lower energy costs but lower maintenance costs too due the long life characteristics of LED.

In-house or Outsourced Project Management?

2010-03-10T10:00:00.007Z

If outsourcing’s prime function is to increase efficiency by enabling a business to focus on core competence then it would be clear why a food business may for example outsource the management of constructing their restaurants / stores. By the same token if an oil company is at its core, an organisation that manages and invests in sophisticated physical assets and processes then why would the construction of filling stations be outsourced as it is surely a core competence?

The fact that filling stations are customer facing and refining /extraction are business to business should not make any difference. It may also be said that retail may comprise just a small fraction of an oil companies revenues but surely the managing of an up to $400-700 million per annum budget to build and refurbish sites is a significant investment by anyone’s standards, especially when the retail outlets in question are the most visible manifestation of the brand.

Nevertheless BP who have led the oil retail industry in both architectural standards and business practices since the Horizon reimaging of 1987 are a noteable example of outsourcing the project management of constructing and refurbishing filling stations. The particular outsourcing model chosen by BP is perhaps the key of its success since the ‘Global Alliance’ between itself and Bovis Lendlease is a hybrid where staff are seconded or reassigned to eachother’s organisation to ensure smooth running and knowledge sharing. New build costs reduction by 25% and reduction of time on site are just two examples of the success of the Global Alliance since its inception in 1997 which spans 10,000 sites in 14 countries.

Ironically, businesses one thinks as focused on food such as Tescos opt primarily for in house project management of the construction and refurbishment of outlets. Perhaps, managing costs is Tescos core competence rather than exclusively food.

Sir Terry Leahy's Environmental Credentials

2010-03-08T12:35:00.067Z

Sir Terry Leahy, environmentalist extraordinaire or tough CEO of a global fortune 500 company driven by increasing shareholder value? Listen to Sir Terry's speech at the Politics of Cimate Change Conference ahead of the Compenhagen Earth summit in Nov 09 you may think the former option. Look at Sir Terry's track record at managing cost at Tesco you would think the second.

Could it be that the two versions are compatable and that because Sir Terry is watching the bottom line in everything Tesco does the environmental measures Sir Terry has initiated such as Eco-stores are more relevant? For if Eco-stores are just a marketing stunt then it will provoke a backlash from the very consumers Sir Terry is wooing, but if Eco-stores are a real step towards a more sustainable future then the influence this will have on a still sceptical business world will be massive.

If you believe that it's corporations and not governments that wield the biggest power to change our world to towards the goal of sustainability then perhaps it's the influence within the reatil sectior which is Sir Terry's biggest achievement. The message is clear 'If Tescos of all companies thinks green makes economic sense then so should we'

It must be said that Tesco's target of a zero carbon business by 2050 is sufficiently far away to not put too much pressure on Sir Terry to deliver on the promise but if the seed Sir Terry is sewing in the business world at large grows to become a 'race for green' then we may see substantive change sooner than the cynics or even Tescos themselves had foretold.

Roll on Spring!

2010-03-05T11:32:00.019Z

Photo courtesy of Reuters / South China Morning Post.

At first glance it looks like an exceptionally heavy snow fall has initiated the collapse of a Petro China canopy. On closer inspection it does seem surprising that the column bases have apparently sheared from their footings. Further it appears from the photograph that there were orginally only four columns making the span between columns around 12 metres which seems quite optimistic for a lightweight spaceframe structure.

source from: XIAMEN
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Ecosheet

2010-03-05T10:38:00.007Z

Ecosheet is a new UK manufactured product that claims to be a recycled alternative to plywood or foam board for use in exterior applications in the building and sign industry. Interior use approval is awaited. Available currently in black 8’ x 4’ x 18mm panels Ecosheets are made from 100% recycled plastic that would otherwise go to landfill. Plastic waste is ground into fine particles and then remoulded into sheet. The surface can be easily painted or otherwise decorated.

For a proven interior recycled panel material, Dufaylite has existed since 1955. The strong but light honeycomb sandwich panel is made from recycled paper

What others say:
greenwisebusiness

Pretty logo

2010-03-04T10:09:00.015Z

The new Statoil identity is certainly ‘Pretty’ and an expression of modernity but why is it only corporate business to business users get to see it? Why is it retail customers who are by far the biggest audience have to put up with the old oil drop that says ‘We are an old fashioned, uncaring oil company’? Logic would point more to the reverse, i.e. ever more demanding retail customers are according to market research and actual trading figures choosing to place their custom with brands more aligned with their own values.

No doubt there are many compelling reasons to update the corporate identity of Statoil, to herald the dropping of Hydro from the name, to galvanise the workforce, to communicate dynamism to investors and so on but as Statoil admit, it is the $100,000,000 required to change the retail identity applied to 2000 filling stations that is the real problem. If that is the case then a Statoil may have been better advised to opt for BP’s strategy when changing from the shield to the helios sun symbol where expensive physical changes to the retail outlets was minimised in some cases to just changing the logo panels and not the fascias. This option is not immediately open to Statoil since the new identity is a pink / red colour which is totally at odds with the orange blue existing colour palette.

What others say:
andrewkeir
dianhasan

Roadside Retail is Born

2010-02-27T22:47:00.001Z

Petrol Station Design has been totally revamped and relaunched as Roadside Retail in order to capture the monumental changes within the industry over the last ten years, namely food overtaking fuel as the primary mission for customers and food providing the primary revenue generator in many markets. Further, petrol / diesel is no longer the sole fuel source on sale with bio fuels entering the market, electric hybrid cars common place and hydrogen around the corner.

Roadside Retail is on the one hand an overgrown Minale Tattersfield blog but on the other a shared on line resource for all industry practioners ranging from brand managers to designers to engineers, project managers and store managers. Content will primarily be sourced from Minale Tattersfield archives but key topics from others are included and will eventually form the greater proportion.

The Russians are coming?

2010-02-27T22:46:00.032Z

Lukoil USA

Is it sinister that Russian oil companies are expanding westwards or are they merely following the same business model as their western counterparts BP, Shell and Esso? When Minale Tattersfield redesigned the Lukoil retail identity in 1999 it was implicit that it should have international appeal, be customercentric and be able to compete with the best of the west. So too when the same agency designed retail identities for Rosneft and Gazprom Neft. If that's sinister then so too are all the multi national western oil companies. According to Minale Tattersfield's David Davis, creative director for all three programmes, 'We as consumers can vote with our feet. If we approve of what oil companies serve up both in decorative and more substantive terms, then we should give them our custom. Is that not true democracy?'

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Honda Begins Operation of New Solar Hydrogen Station

2010-02-26T14:00:00.003Z

Honda began operation of a next generation solar hydrogen station prototype at the Los Angeles Center of Honda R&D Americas, Inc., intended for ultimate use as a home refueling appliance capable of an overnight refill of fuel cell electric vehicles.

source from: Honda
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