Renewing store formats for a major petrol retailer in Spain
A completely new store format strengthens the consumer proposition, enabling the company to sustainable growth by attracting new customers. The Cepsa case handled by Forma 5 is a good example of this.
Challenge
Cepsa is a major petroleum retailer in Spain and they were experiencing stagnating growth as new store openings were limited due to the company's saturated network. Additionally, Cepsa wanted to take a step further on its sustainable growth in convenience retail by offering a more differentiated value proposition vs the competition to attract new customers based on customer preferences. Moreover, Cepsa had identified several challenges and opportunities within their category management department. The client sought assistance from Forma 5 to create a new shop format, find opportunities in category management, and specifically examine their trade marketing process.
Discovery
To explore potential options, Forma 5 utilized their methodology called "The Machine Room." The Forma 5 team closely collaborated with the client on comprehensive research and insight generation. Building on the opportunities uncovered, the team assisted the client in defining the scope of a new store format with targeted customer value propositions. Additionally, based on the findings, there was a need to redefine the category management approach and find new partners across various parts of the value chain. In trade marketing, the insight phase identified several good opportunities to grow their business. The project was divided into three workstreams.
1.New shop format:
New concept fixtures.
New modular based cashier.
Building clear destinations in the customer journey inside the shop.
New floorplan.
Optimize assortment and planogram.
New partner setup
2.New Category Management strategies
Higher focus on key categories
Create partnerships with new suppliers
New product offers, reduction of Sku’s
Full merchandising step up program.
Impact
The client successfully piloted the new store concepts at 10 sites in Autumn 2023. The new formats showed sales increases ranging from 10 to 20 percent, with a significant margin lift for both shop total and prioritized categories.
Finding the right partnerships for equipment in the new shop format led to significant cost reductions and shorter lead times for installations compared to their previous suppliers.
Cepsa has now defined an aggressive rollout plan for the new concept over the next three years.
Based on the category management workstream, the team has devised a new category strategy for each key category. The revamped product offering resulted in a 30% reduction in the number of SKUs in the shop. Despite this reduction, they achieved significant sales growth by emphasizing top-selling products and key categories. The category team promptly implemented the agreed-upon changes, ushering in a completely new way of working within the team.
For trade marketing, the new actions in Cepsa’s strategy have resulted in significant improvements. The updated campaign hierarchy ensures streamlined marketing efforts, enhancing consistency and effectiveness. An optimized promotion and activity calendar maximizes the impact of promotional activities. Establishing new strategic partnerships within the industry has unlocked growth opportunities, exemplified by collaborative joint marketing approaches. This has fostered increased funding from partners to Cepsa, leading to higher sales for both parties
