International Journal of Management and Strategy

(IJMS) 2012, Vol. No.3, Issue 5, July-Dec.2012

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ISSN: 2231-0703

CONSUMER ATTITUDE AND BEHAVIOR TOWARDS NON -FUEL RETAILING IN

DELHI NCR
Sandhya Rai, Assistant Professor, Institute of Management Studies, Ghaziabad
Dr Atul Razdan, Associate Professor, University of Petroleum and Energy Studies, Dehradun
Dr M.S. Pahwa, Professor, University of Petroleum and Energy Studies, Dehradun

ABSTRACT
Non fuel retailing (NFR) is a relatively new concept in the Indian petro retail industry. It started in
late 90s when Shell started selling fuel at the fully automated petrol pumps and started providing car
wash services and the petro card programmes to its customers. Since then non fuel retailing has changed
a lot. The OMC ( Oil Marketing Companies) has open may NFR services like fast food services,
pharmacy , car wash, grocery, gift shops , convenience store , ATM and many more. Through these
services the companies wants to increase their margins of profits as NFR have more margins than the
fuel services. But in India the revenue from the NFR is just 2% as compare to 12.5% in France and 11%
in Japan. Thus a need to study consumer attitude and behavior towards NFR services is important to
know the cause of this low revenue. The study reveled that 68% people have used one or the other NFR
services and 28 % have never used any NFR service. There are almost 21% people who have used more
than one NFR service. ATM is the most preferred service used by the consumer followed by vehicle
repair and food & refreshment.

Keywords: Non Fuel Retailing (NFR), Oil Marketing Companies (OMC), Consumer

INTRODUCTION
India is one of the fastest growing economies in the world. More than two third of its demand of
petrol is met through import. It is seventh largest importer of the crude oil in the world and fifth
largest consumer of petroleum products. According to Assocham by the year 2012 more than
85% of the need of petrol in India is expected to be met by import. So when the International oil
prices rises there is instant impact on the Indian economy and the prices of all the major items
increases which causes increase in inflation. Oil accounts for 31% of the Indias total import
bill. According to BP, s statistical review of world energy 2011, India consumes 3.9% of the
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(IJMS) 2012, Vol. No.3, Issue 5, July-Dec.2012

http://www.facultyjournal.com/
ISSN: 2231-0703

total world oil. India has almost 40,000 petrol stations out of which approximately

20,000

outlets are owned by IOCL, this number is more than the number of petrol outlets in Canada or
UK. Eighty three percent of the petrol retail market is controlled by public sector oil marketing
companies India Oil Corporation (IOCL), Bharat Petroleum Corporation (BPCL) and Hindustan
petroleum Corporation Ltd.( HPCL). The pie chart given below shows the share of the OMC in
the fuel sale

Fig 1.1 Share of oil marketing companies in domestic retail sales volume (2010)

Source: - PPAC ICICI direct.com research

Petro retailing is one of the largest segments in the organized retailing in India. The OMC are
present almost in every corner of the country. The table given below shows the number of retail
outlets of the major OMC. Together they are having almost 40,000 outlets throughout India
which is a huge potential for NFR.
Table: 1.1 Number of petrol retail outlets of major OMC

Year/Companies

2005-06

2006-07

2007-08

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2008-09

2009-10

2010-11

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(IJMS) 2012, Vol. No.3, Issue 5, July-Dec.2012

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IOCL

11,754

16,607

17,574

18,278

18,643

19,463

HPCL

7,313

7,909

8,329

8,539

9,127

10,212

BPCL

7,332

7,537

8,251

8,402

8,692

9,289

TOTAL

26,399

32,053

34,154

35,219

36,462

38,964

(Source: Annual Report 2010-11, IOCL, BPCL, HPCL)

The beginning of oil and gas industry in India can be traced back to 1867 when first oil well
was stuck at Makum near Margherita in Assam by a group of laborers while laying railway
tracks for the Assam Railway and Trading Co. Oil retailing in India started in the year 1882 by
Standard Oil Company of USA. They used to retail kerosene in the country. In the year 1959,
Indian Oil Ltd. was registered as the first marketing company of India. Initially all the activities
related to the Petroleum Business be it exploration, refining, distribution or selling were strictly
regulated and protected by the government but after April 2002 with the dismantling of APM
(Administered Price Mechanism) private sector companies were also allowed to operate in the
Indian market.

Before dismantling of APM, the Indian petroleum market was ruled my public sector oil
marketing companies, there were no competition in terms of price and quality of the product,
they all were selling same product at the same price, customer was indifferent towards them,
and there were no competition in the market. For these OMCs, marketing was just the
strengthening the distribution network and increasing the number of outlets at different
geographic locations in their network. After the APM was dismantled in the April 2002,
government of India allowed FDI up to100% in exploration of oil and natural gas. The private
sector companies who owned and operating refineries with an investment of at least Rs 20
Billion or was in the exploration and production of at least three billion tons of crude oil was
entitled to the marketing rights for the transportation fuel. This fuels up the competition in the
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(IJMS) 2012, Vol. No.3, Issue 5, July-Dec.2012

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ISSN: 2231-0703

oil retailing market. With the entry of private and multinational companies, the national oil
companies have no other options but to compete with these companies and the PSU started
feeling the need to find out the means to attract more and more number of customers towards
themselves by providing facilities like automated fuel filling and petro card and other allied
services which was started by private Oil Marketing Companies (OMC). Increasing oil prices
also forces these companies to look out for some additional source of revenue as they are
restrained from increasing oil prices. Following the trend in the international market these PSU
giants started tying up with various companies to promote forecourt retailing or NFR. The trend
in the international market shows that the most preferred sector is FMCG and Fast food and so
these companies started alliances with various FMCG and fast food giants. BPCL signed up
deals with Mc Donald, Nirula restaurants and started In & Out convenience store at various
petrol pumps. IOCL also started looking forward in NFR and did a partnership with Appllo
pharmacies, Subhiksh, Crossword and Caf Coffee day.
Though globally, the petrol pump base convenience store have developed into a large business
in India OMCs are marking less than 5 % of their revenue from NFR services but globally this
margin is very high. As per the data monitor report non- fuel sales constitute about 40% of the
industry total value in the US market and in France and Japan, the share of non fuel sale is
12.5% and 11% in France and Japan respectively. Hence a need to understand the behavior of
the Indian consumer towards these NFR services arise.
LITERATURE REVIEW
The word retailing has been drawn from the French word Retailer, which means to cut a piece
off. According to Newman and Cullen (2002), retailing is set of activities that make product
and services to final consumer for their own personal or house hold use. It does this by
organizing their availability on a relatively large scale and supplying them to a consumer on a
relatively small scale. According to David (1997) retailing includes all the activities involve in
selling goods or services directly to final consumer for their personal or non business use.
Retailing in its all form and format is one of the most dynamic, challenging and aggressive
industry. Many researches on the retail consumer behavior has been done in the past but there
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(IJMS) 2012, Vol. No.3, Issue 5, July-Dec.2012

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ISSN: 2231-0703

is very little literature exist about the non fuel retailing in India as it is a relatively new concept
in the country. Consumer behavior is defined as the sum of the decision making process and the
physical activity involved in the acquiring, evaluating, using and disposing of goods and
services. According to Peter and Olson, 2008 consumer behavior is defined as the study of
psychological, social and physical action where people buy, use and dispose products, services,
ideas and practices. According to Blackwell, 2001 demographic factors like age, gender,
economic situation etc are also important factors in determining consumer behavior and hence
attitude. An increase in number of working women have made them the first choice for the
companies as women tends to shop more than men. Solomon, 2006 in his research have found
that distribution of wealth determines the buying behavior and buying power. Family structure
also influences consumer behavior (Solomon et al. 2002). According to Blackwell et al. 2001,
Peter and Olson 2008, Armstrong and Kotler, 2007 social class and learning and knowledge
also determine the consumer behavior towards products and services. According to Blackwell et
al. 2001, Chisnall 1995, Consumer Attitude. According to Allport(1967), attitude is a mental or
natural state of readiness, organized through experience, exerting a directive or dynamic
influence upon the individuals response to all objects and situation with which it is related.
According to Hotniar Siringoringo (Consumer Shopping behavior among modern retrial
formats) determinants such as shopping intention, attitude towards retail outlets, and shopping
habits play a very important role on consumer shopping habit, hence retailers should try to build
positive attitude towards their retail.

RESEARCH METHODOLOGY
The study selected Delhi NCR as the area of study which consists of the state of Delhi and the
sister cities Ghaziabad and Noida of Utter Pradesh and Gurgoan and Faridabad of Haryana. The
population under study consists of car users (people who own/ drive cars). Delhi NCR has the
highest number of car per thousand individual in the country it has 84 cars per thousand
individual as compare to the national average of 8 cars per thousand individual ( As per the
report of Govt. of Delhi on environment, 2007)The non probability convenience sampling was
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International Journal of Management and Strategy

(IJMS) 2012, Vol. No.3, Issue 5, July-Dec.2012

http://www.facultyjournal.com/
ISSN: 2231-0703

used to collect the data as it was not possible to include the entire population in the study. A
sample size of 300 was studied to find the behavior of the consumer towards NFR. The
instruments used were a structured questionnaire. A questionnaire survey is cost effective and is
cheaper than the in depth interview. The questionnaire was made up of both open ended and
close ended questions that were self explanatory. Ten postgraduate students were assigned the
task of getting the survey form filled from the sample. In all 275 questionnaire were returned
and all were usable giving a response rate of 91%. The study used both the quantitative and the
qualitative analysis.

RESULTS AND DISCUSSIONS

Of all 275 peoples surveyed, 68% have used one or the other non fuel retail services at the fuel
stations and 32% have not used any services other than getting their vehicle filled with fuel at
the petrol pumps. Thirty seven percent of the people used to get their car filled thrice in a month
and twenty four percent people go more than three times in a month to get their car filled. It has
also been seen that 82% people who went thrice at the petrol pump in a month uses one or the
other NFR services and 30 % of the people who visit more than three times in a month have
used one of the NFR services.
Fig 1.2 Number of times consumer get their tank filled in a month

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(IJMS) 2012, Vol. No.3, Issue 5, July-Dec.2012

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ISSN: 2231-0703

When the consumers were asked to name the service is most frequently used by them, 70%
people says that they uses ATM most of the time, 51% have availed the food services available
at these outlets. The most used NFR service was ATM followed by food and beverage.
Fig 1.3 Percentage of use of services

There were 21% people who have used more than three services. Most of the respondent
surveyed was of the opinion that all the petrol pumps should have neat and clean washrooms.
When consumers were asked to rate the different available NFR services in the market on a
scale of 1-10, where one stand for most preferred and 10 stand for the least preferred, the most
preferred services were vehicle repair and maintenance rated 3, followed by ATM having a
score of 3.3. Food and refreshment have got a score of 3.5.
Table 1.2 Rating of Various NFR services by the consumer
Services
Refreshment

Rating
3.5

Vehicle repair and Maintenance

3.0

Vehicle Accessories

3.8

Medicine
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ISSN: 2231-0703

Convenience store

4.0

ATM

3.3

Extended services

5.6

Courier services

6.3

Ticketing services

6.4

PCO/ Fax/ Xerox

6.6

Book/ Magazine/News Paper

5.9

The correlation analysis between different services shows that there is a positive correlation
between vehicle repair and refreshment services. Also there is a negative correlation between
vehicle repair and ticketing services i.e. those people who give importance to ticketing services
do not give much importance to vehicle repair and maintenance. It is also apparent from the
survey that ATM, Food and refreshment and Vehicle repair and maintenance are the three main
categories

in

which

the

companies

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focus

for

their

future

strategy.

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ISSN: 2231-0703

Correlations

Vehicle

Refreshment

Pearson
Correlation

Vehicle

Pearson

Repair &

Correlation

services

Services

ax/Xer

Magazin

ox

Medici

C-

nt

Maintenance

ne

store

.611(**)

.202

-.080

-.259

-.327

-.469(**)

-.177

.044

-.230

.000

.225

.639

.102

.052

.004

.287

.786

.198

275

275

275

275

275

275

275

275

275

275

.611(**)

.243

.165

-.115

-.369(*)

-.367(*)

-.540(**)

-.167

-.289

.141

.328

.473

.027

.028

.000

.304

.102

275

275

275

275

275

275

275

275

-.315

-.321

-.171

-.046

-.234

Couriers

Books/

Repair &

ATM

PCO/F

Refreshme

Sig. (2-tailed)
N

Extende

Ticketing

Maintenance

Medicine

Sig. (2-tailed)

.000

275

275

Pearson
Correlation

.202

.243

.196

.456(*
*)

c- store

Sig. (2-tailed)

.225

.141

275

275

-.080

.165

Pearson

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.246

.004

.062

.056

.311

.787

.191

275

275

275

275

275

275

275

275

.196

-.011

-.305

-.271

-.366(*)

-.226

-.134

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ISSN: 2231-0703

Correlation

ATM

Sig. (2-tailed)

.639

.328

.246

275

275

275

Pearson
Correlation

.947

.071

.110

.028

.185

.456

275

275

275

275

275

275

275

-.011

.012

.190

-.411(*)

-.125

.040

.944

.268

.010

.443

.823

-.259

-.115

.456(*
*)

Sig. (2-tailed)

.102

.473

.004

.947

275

275

275

275

275

275

275

275

275

275

-.327

-.369(*)

-.315

-.305

.012

.264

.316

-.142

.000

Sig. (2-tailed)

.052

.027

.062

.071

.944

.119

.065

.415

.999

275

275

275

275

275

275

275

275

275

275

-.469(**)

-.367(*)

-.321

-.271

.190

.264

.382(*)

-.024

-.278

Sig. (2-tailed)

.004

.028

.056

.110

.268

.119

.024

.893

.117

275

275

275

275

275

275

275

275

275

275

.316

.382(*)

.215

.081

.065

.024

.194

.652

Extended

Pearson

services

Correlation

Couriers

Pearson

Services

Correlation

Ticketing

Pearson
Correlation

-.177

-.540(**)

-.171

.366(*
)

Sig. (2-tailed)

.287

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.000

.311

.028

.411(*)
.010
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275

275

275

275

275

275

275

275

275

275

.044

-.167

-.046

-.226

-.125

-.142

-.024

.215

-.097

Sig. (2-tailed)

.786

.304

.787

.185

.443

.415

.893

.194

275

275

275

275

275

275

275275

275

275

275

-.230

-.289

-.234

-.134

.040

.000

-.278

.081

-.097

Sig. (2-tailed)

.198

.102

.191

.456

.823

.999

.117

.652

.589

275

275

275

275

275

275

275

275

275

PCO/Fax/Xe

Pearson

rox

Correlation

Books/

Pearson

Magazine

Correlation

.589

** Correlation is significant at the 0.01 level (2-tailed).

* Correlation is significant at the 0.05 level (2-tailed).

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CONCLUSION
From the study it can be seen that though a significant number of people are using NFR services but still they are not purchasing
much from the convenience store, they are using ATM and food and refreshment services most of the time and are not very willing to
buy things from the convenience store, in many cases though certain services were present but the customers were not aware about
the availability and reliability of the services like car wash and availability of spare parts and other vehicle accessories. Many
respondents believe that the items are prices at a premium at these stores so they do not wish to buy things from them. The companies
are required to take measures to make these places more attractive and consumer friendly also measures should be taken to increase
awareness about the availability of different services and facilities. Companies should try to introduce more variant in the food
category.
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ISSN: 2231-0703

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