Coles Myer - Shell Alliance
May 27 2003 - 3:02AM
UK Regulatory
RNS Number:5372L
Coles Myer Ld
27 May 2003
Tuesday, 27 May 2003
Media Release
Customers the winners from Coles Myer - Shell alliance
Coles Myer Ltd (CML) and Shell today announced a commercial alliance designed to
provide their customers with Australia's biggest and most convenient discount
fuel offer.
The Alliance, when fully rolled-out, will see a CML subsidiary become the
operator of Shell's core retail property network of 584 service stations across
Australia.
Coles Myer will set pump prices as well as offer CML customers fuel discounts.
Both members of the Alliance have a shared interest in maintaining competitive
pump prices as this is critical in driving sales.
The Alliance is planned to begin in July 2003 at more than 150 sites in
Victoria. Given a successful Victorian rollout, the Alliance is expected to be
progressively extended nationwide by mid calendar 2004.
Shell will supply fuel products and service station properties and the sites
will be branded both Coles Express and Shell. CML will purchase the rights to
operate Shell sites from Shell multi-sites franchisees for a total amount less
than $100 million.
Coles Myer Chief Executive Officer John Fletcher said: "We will be offering our
customers a fuel discount when they make purchases over a certain amount at
Coles, Bi-Lo and Liquorland. When the Alliance is fully rolled out, the discount
will be available at a large national network of conveniently located petrol
stations throughout Australia. The vast majority of the stations will be very
close to our supermarkets, offering great convenience for our customers.
"The discount offer for our supermarket customers can be summarised as: high
quality fuel at discount prices from a large number of sites in great
locations," Mr Fletcher said.
The Alliance also creates a significant new business opportunity for Coles Myer
in convenience stores. Mr Fletcher said Coles Myer would be applying its retail
expertise and economies of scale to these operations.
The Alliance will contribute to CML in excess of $3 billion in additional annual
sales when fully rolled out. The combined impact of the new fuel and convenience
store business will be earnings per share positive in the 2004 financial year.
Mr Fletcher said the Alliance gave CML a fast and cost effective fuel rollout
with substantially less investment than if it were starting a greenfields
business.
"Coles Myer's extension into petroleum and convenience store retailing will
complement our existing grocery retail business, create and drive sales, and
reward customers for shopping with us," Mr Fletcher said.
"The Alliance will see the creation of a new petrol and convenience store
division within Coles Myer. The vast majority of the existing franchisees' staff
are expected to become part of that division, providing expertise on the ground
from day one."
Shell Vice President Retail Marketing Asia Pacific/Middle East, Bruce
Rosengarten, said the Alliance brought together Australia's most preferred fuel
brand with one of Australia's largest retailers.
"The Alliance is a great match of retail and petroleum industry expertise - it
will provide a very attractive consumer offer," Mr Rosengarten said.
"We will provide customers with exactly what they want - high quality fuels sold
at competitive prices from convenient locations.
"On full rollout, motorists will have easy access to a broad national network
where more than 80 per cent of Coles and Bi-Lo supermarkets are within 5
kilometres of an Alliance site. In capital cities, the average is 90 per cent.
"Most importantly, these sites are well known to millions of Australians as the
home of highly respected fuel brands including Shell Optimax.
"This Alliance will be a pro-competitive initiative which will extend the
availability of fuel discount offers to more consumers."
Shell Australia Chairman Tim Warren said the Alliance was a leading initiative
for Shell and clearly demonstrated the company's commitment to maintaining a
significant retail presence in Australia.
The Alliance is subject to ACCC approval.
Fact sheets:
1. How will the Alliance work
2. How customers will be the winners
3. How grocery and petrol retailing competition will increase
4. The new Alliance network details
5. What will the sites look like
6. Background on Coles Myer and Shell
----////----
MEDIA ENQUIRIES:
Coles Myer: Scott Whiffin: 03 9829 5548 or 0407 850 709
Shell Australia: Helen Morgner: 03 8823 4070 or 0417 007 344
ANALYST ENQUIRIES:
Coles Myer: Amanda Fischer: 03 9829 4521
Fact Sheet 1
How will the alliance work
* The Alliance between Coles Myer Ltd (CML) and Shell involves a wholly
owned subsidiary of CML becoming the operator of Shell's core retail
property network of 584 service stations.
* CML will purchase the rights to operate Shell sites from multi site
franchisees for a total amount less than $100 million.
* It is planned to commence at more than 150 service stations in Victoria in
July 2003. Given a successful Victorian rollout, a national rollout is
expected to be completed by mid calendar 2004.
* The service stations will be co-branded Coles Express and Shell.
* The CML subsidiary will operate these service stations and directly employ
the service station staff under a newly established Petrol and Convenience
Store Division.
* CML will also introduce a fuel discount offer to its Coles, Bi-Lo and
Liquorland customers that will provide a cents per litre discount off
already competitive pump prices.
* Discounts will be offered to Coles, Bi-Lo and Liquorland customers.
* Both members of the Alliance have a shared interest in maintaining
competitive pump prices - this is critical in driving sales.
* Using its retail expertise, CML will continue to develop a quality
convenience store offer.
* CML will set fuel and shop prices at each of the service stations it
operates.
* Shell will be the exclusive fuel supplier and provide the service station
property.
Fact Sheet 2
How customers will be the winners
When the Alliance is fully rolled out:
* Coles Myer customers will receive a cents per litre discount on fuel
purchased from Alliance sites. Discounts will be offered to Coles, Bi-Lo and
Liquorland customers.
* The discount will apply when customers pass a purchase threshold at Coles,
Bi-Lo and Liquorland and will be redeemable when they produce their docket
at an Alliance service station. (Note: the spend threshold and the size of
the discount may vary.)
* Alliance service stations will be conveniently located - more than 80% of
CML supermarkets (Coles and Bi-Lo) will be within 5km of an Alliance site.
* Alliance customers will benefit from high quality Shell fuels provided at
already competitive pump prices from the conveniently located national
network of 584 service stations.
* The Alliance will provide a comprehensive national network so Coles Myer's
food and liquor customers have the opportunity to receive a discount on fuel
when they travel throughout Australia.
From day one of the Alliance:
* CML customers will have access to highly respected Shell fuel brands
including Shell Optimax at Alliance sites.
* Fly Buys customers will receive Fly Buys points at CML supermarkets
and for fuel and convenience stores purchases at Alliance sites.
* CML will use its retailing experience and economies of scale to provide a
quality convenience store offer.
* Customers will be able to continue to use their Shell Card at Alliance
sites. However, Shell Card customers will not be entitled to receive the CML
fuel discount as they already have a specially contracted fuel price with
Shell which recognises their significant purchase volumes.
Fact Sheet 3
How grocery and petrol retailing competition will increase
* The Alliance will be pro-competitive and extend the availability of fuel
discount offers to more consumers.
* Alliance service stations will continue to have competitive pump prices
which are viewed as critical to attracting and retaining customers.
* A significant additional benefit to consumers is the fuel discount offer
which will be available to Coles, Bi-Lo and Liquorland supermarket
customers.
* Shell's wholesale fuel supply arrangements to other commercial customers
and independent retailers will be unaffected by the Alliance.
* The Alliance will increase competition in the supermarket sector now and
in the future by allowing CML to respond directly to discount fuel programs
operated by other retailers.
Fact Sheet 4
The New Alliance network details
When the Alliance is fully rolled out:
* Accessibility for Coles Myer customers to the discount petrol offer will
be hard to match - it is designed to be the largest and most convenient
discount fuel offer in Australia.
* More than 80% of CML supermarkets (Coles and Bi-Lo) will be within 5
kilometres of an Alliance site. Liquorland customers will also be offered a
discount.
Proposed Alliance site numbers are:
State Coles supermarkets Bi-Lo supermarkets Alliance service
stations
NSW (inc ACT) 143 67 183
NT 4 3 10
QLD 92 35 119
SA 35 40 37
TAS 14 15
VIC 112 48 158
WA 79 62
479 193 584
Fact Sheet 5
WHAT WILL THE SITES LOOK LIKE
(Photograph of service station site)
To download a high resolution image of this photograph go to:
www.shell.com.au/mediareleases
Fact Sheet 6
BACKGROUND ON COLES MYER AND SHELL
The Alliance participants are subsidiaries of Coles Myer Ltd and Shell Australia
Limited respectively.
Coles Myer Ltd. (CML)
Coles Myer operates eight of Australia's favourite retail brands across 1800
stores throughout Australia and New Zealand.
These include traditional department stores (Myer Grace Bros) and discount
department stores (Target and Kmart), supermarkets (Coles and Bi-Lo), liquor
retailing (Liquorland, Vintage Cellars and Quaffers), office supplies
(Officeworks, Viking), direct marketing and electronic retail businesses.
CML, one of Australia's leading retail businesses, trace its origins back to one
of Australia's foremost retailers - G.J. Coles (est. 1914) and the Myer Emporium
(est. 1900). The two companies merged in 1985.
CML employs 164,000 people.
Shell Australia Limited
Shell Australia Limited is a wholly owned subsidiary of the Royal Dutch/Shell
Group of Companies. Shell has operated in Australia since 1901. It directly
employs approximately 2200 people.
Shell operates an upstream oil and gas business, Shell Development Australia
Ltd, as well as a downstream oil products business. Shell's oil products
business includes:
* Refineries at Clyde (NSW) and Geelong (VIC) representing about 25% of
Australia's refining capacity;
* National storage and distribution facilities;
* Commercial marketing activities which supply petroleum products to
commercial end users and more than 1000 wholesalers and independent
retailers;
* A national property network of 584 company-owned or leased retail service
stations which are currently operated under franchise agreements. It is
these service stations that will be the subject of the Alliance.
This information is provided by RNS
The company news service from the London Stock Exchange
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