Stakeholder-led Retailer G500 Taking Strides in Market GrowthBy Peter Appleby | Wed, 09/09/2020 - 14:20
Q: How has G500 consolidated its presence in Mexico’s retail market today?
A: G500 was founded by a group of gas station owners with a great deal of potential who predicted they would have to compete with the world’s major oil and gas brands. Having worked in Mexico for many years, they knew the Mexican consumer very well. Nevertheless, they needed a fuel supplier. Soon after, an agreement was made with multinational company Glencore, and together G500 was created. Today, G500 celebrated its 3rd anniversary. It is a fresh brand in the Mexican market, considered a young brand that is different from all others in the country. We have a very clear positioning in the center and south of the country, and we also have a few locations in the north. Today, we have over 470 service stations across Mexico. Last year, we saw the worst storage crisis in the country’s history and today we are faced with the COVID-19 pandemic. Despite these difficult times, our plans have not shifted. We continue to grow and have consolidated our presence in many areas of the country, including Mexico City, Queretaro, Michoacán, Villahermosa and Coahuila, where we have a strong presence. Our goal is to integrate our station network by bringing in more associates. We believe G500 is the most attractive brand for an independent gas station. Under the G500 brand, station owners become part of growing company, which is a unique value we offer.
Q: How does G500 adapt its value proposition to consumers in remote regions of the country?
A: Since no area in Mexico is the same, we have an umbrella value offering. This includes both functional and emotional elements. At all our sites across the country, we offer G-Boost, which is an additive that helps improve the functionality of the engine. Many retailers offer additives, but G-Boost is the only additive available in Mexico that has top-tier international certification. This allows us to tell consumers with certainty that our additive is guaranteed to protect their engines.
We are aligned with Club Premier and offer a series of other benefits that add value for the client. We are aware that most of the valued aspects of a brand for a client are not only the practical elements of consumption but also the emotional aspects, like feeling secure and comfortable in a retail site.
That said, we also mold our offers regionally. For example, in the north of the country where baseball is very popular, we offer benefits connected to the sport and local teams. In other regions, we have benefits connected to the national soccer team. Wherever our locations are, we look to connect with the local consumer so that they are satisfied.
We carry out a thorough study every year of our consumers, as well as people traveling with our direct client. We have found that our portfolio is broad, ranging from families to taxi drivers to truck drivers, and for each of these groups we offer specific benefits. These benefits are shaped to reflect the interests of each group, which has worked very well.
Q: How has the pandemic changed expectations for the station of the future?
A: One of our driving strengths is our ability to adapt. For example, during this pandemic we have not had to stop working because we are considered an essential activity. However, overnight, we implemented the use of face masks and we put in place methods for sanitizing our premises. We believe these small changes make a major difference for the customer.
For the service station of the future, we expect technology to play an enormous role. This role is being propelled at greater speed by the pandemic. Although a large proportion of our client base uses cash at our service stations, payments will be changed by technology and digitalization and this requires a change in regulation on the use of cellphones at a gas station.
The evolution of energy consumption in vehicles will also play an important role in the future. We are carrying out tests at G500 stations now ahead of the development of this market. There is a similar situation with other alternative fuel sources. This allows us to look ahead and focus our CAPEX investments to facilitate the life of the consumer of the present and the future.
The COVID-19 pandemic has opened the door to a major opportunity for us. Short journeys, for example between Mexico City and Acapulco or Mexico City and Veracruz, were considered popular flight routes. Nevertheless, due to the elevated concern around flying and the virus, more people will be traveling by car. The situation is similar for public transport: those who are able to drive their own cars rather than use public transport will do so.
Q: How does G500 approach independent gas station owners to reflag under the G500 brand?
A: Our strategy is very different from our competitors. The change of flagging does not simply mean a change of brand. It used to be that stations would pay their franchise rights for PEMEX to have regulated sales and you had little to no interaction with the company. With G500, station owners are owners of the business: one half of our stockholders are gas station owners while Glencore holds the other 50 percent of our shares. For every peso that the G500 network earns, each retailer will benefit. We are already the most recognized non-PEMEX brand here and believe our market share will grow. As our station network grows, so does the value of the company, meaning the value of our shares rises. This is a strong selling point, as is the fact that retailers will see an increase in customers, a differentiated gasoline mix, certification, links to the national soccer team and baseball teams, among other benefits.
Q: How did G500 react to the economic restrictions imposed to fight COVID-19?
A: The impact hit us hard and we saw sales volumes fall by an average of 70 percent. In high-income areas, which include parts of Mexico City, sales fell by up to 90 percent, whereas in middle- and working-class areas, the drop tended to be around 15 percent.
We are extremely adaptable. We adapted our marketing efforts with the baseball league and teams, and with the Mexican soccer team in order to focus all of our attention on our retail network, our employees and of course, the promotion of G500 through social networks with special focus on our consumers. We wanted to remind consumers of the steps they should take to secure their own mental and physical health and to ensure that they did not forget about us. We began offering events, like a weekly yoga class, through social media networks. We also provided entertainment for children and held competitions. We made sure we were close to our clients.
Now, mobility is beginning to increase, although at different stages depending on the state. We are beginning to promote ourselves again and communicating the values that characterize G500 as a Mexican brand. We are impressing upon our customers that we will protect them when they are on our premises.
Q: What are the company’s major goals for the next 12 months?
A: If the pandemic had not arrived, today G500 would have 500 stations nationwide. So, this will be target for the rest of the year, though we understand progress toward this goal will be slow. We also plan to continue our efforts to meet the NOM-005-SCFI-2017 regulation and others coming into force this year.
Another very important goal is to guarantee that each of our gas stations is compliant with regulation for pumped fuel measurement. This links to a broader point, which is ensuring that G500 is in partnership with authorities like CRE and ASEA. Sustainability will also be key in the future for G500. As a retailer, it is a responsibility we own.
In regard to price, we are still in the process of being authorized as a franchise and our gas stations do not need to comply with a price point for the fuel sold. Each sets its own price conforming to the moment in the market. We are preparing for the moment when we become a franchise so that we can internally recommend prices. But that is what it will be – a recommendation. We will not impose anything on our stakeholders, but we will work accordingly to our recent recognition by PROFECO and the federal government as a consumer allies, we are proud of that and we will continue to work for our clients aligned to our motto “Juega Limpio”.
G500 was born from the partnership between a large group of Mexican gas station owners and Swiss multinational, Glencore. G500 prides itself on its knowledge of the Mexican consumer and will own 500 stations by the end of the year