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KK is Taking Over the Oil Market
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mwanahisa
#21 Posted : Wednesday, July 13, 2011 12:39:56 PM
Rank: Elder

Joined: 6/2/2008
Posts: 1,438
Milken, I appreciate the fact that you have are indeed knowledgeable in this field. But can you elaborate on the comment regarding competitiveness of KK's retail outlets vs Total.

milken wrote:
The most profitable segment is retail i.e. service stations. Total leads here with over 35% share of the fuel business. However with ERC limiting the margins, more cash is being made from non fuel items in the stations such as rent on ATMS, restaurant, shop, service bay etc. Needless said KK stations lack competitiveness in this area. KK may grow but it will be some time before thay threaten Total in the retail segment.
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Gordon Gekko
#22 Posted : Wednesday, July 13, 2011 12:57:53 PM
Rank: Elder

Joined: 5/27/2008
Posts: 3,760
@milken, much appreciate your hard and cold facts, but remember that in this forum anything that disparages KK or r***a will invite venom. Truth told, KK stations are dinghy, nothing like Total but it is till my largest holding.
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milken
#23 Posted : Wednesday, July 13, 2011 1:03:27 PM
Rank: Member

Joined: 4/25/2008
Posts: 192
Location: Nairobi
mwanahisa wrote:
Milken, . But can you elaborate on the comment regarding competitiveness of KK's retail outlets vs Total.


I will look at this from there angles. Location, Presentation and Services.

Location:
Most Total stations are located in choice areas where more money can be made eg South C, Msa road past Imara Daima, Waiyaki way (both sides near Safcom), Arwings Kodhek near Nbi Hosp, Thika Road, Nyeri name it. These locations ensure that the stations move higher volumes, command better rent for Total and allows the company to charge more rent on ATMs, chemists etc. How many strategically located KK stations can you name?

Presentation
The station layout and size of Total station is better than KK. Total prohibits parking of vehicles in stations during business hours making it easy for the motorists to enter the station. Frankly, a number of KK stations eg Jogoo road and park road Ngara are more of parking yards than service stations. The striking red color (read human behavior)makes the station appear neat and clean. Compare KK stations with Total as you drive today

Services
Total stations must have a lube bay, gas and a small shop. Thus motorists will prefer going there so that they can have all the shopping needs attended in one place. The station ceases to be a petrol place but a market where you can withdraw money, fuel, have the car washed as you enjoy some bitings in the restaurant. To tal takes this seriously and has branded the shop, the lube bay and the car wash. Actually as a dealer you pay separate rent for each item (i.e. shop, service bay cas wash e.t.c) which means more money for the company.

From observation, you will see that very few KK stations have other value addition services.

FYI there are some station shops with a monthly turnover of over 5M and 30% margins. Try asking how much a carwash is at a Total Arwings Kodhek of buying bread from any Bonjour shop (it will be 4 bob more than your Kiosk).
Itari muting'oe ihuragwo ngi ni Ngai
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  | | Edit by user: Wednesday, July 13, 2011 1:09 PM | Reason: Not specified
Gordon Gekko
#24 Posted : Wednesday, July 13, 2011 1:47:36 PM
Rank: Elder

Joined: 5/27/2008
Posts: 3,760
SMS received. "Dear kenolkobil client, your K-Card discount for June 2011 has been credited to your K-Card. Once you insert your K-Card to the K-Card PDQ at the service station, you will see an alert on the screen:'Remote top up' . Please input your secret pin no. to down load your discount. D=Good day. K-CARD" NICE
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VituVingiSana
#25 Posted : Wednesday, July 13, 2011 3:10:07 PM
Rank: Chief

Joined: 1/3/2007
Posts: 18,361
Location: Nairobi
milken wrote:
VituVingiSana et al

Total lost market share owing to loss of Agrreko contract not because of KK card.
I did not attribute KK's increased market share due to the K-card which was launched recently. Aggreko sales would be less profitable (margin) vs retail fuel sales. Or so I think.

Market share in itself does not lead to profits since one may have to sacrifice the margins in order to sell more. Agreed. This is why I like KK's foreign adventures + other lines of business

Cards do not make that much cash for the OMC since most organizations buying will insist on discounts owing to the huge volume of business. However, when the same organization agrees to buy lubes from you and LPG for staff (you start a scheme) the OMC recoups the lower margins.

The most profitable segment is retail i.e. service stations. Total leads here with over 35% share of the fuel business. However with ERC limiting the margins, more cash is being made from non fuel items in the stations such as rent on ATMS, restaurant, shop, service bay etc. Needless said KK stations lack competitiveness in this area. KK may grow but it will be some time before thay threaten Total in the retail segment. How many stations does Total have vs KK? Also some areas see higher volumes but this depends on many other factors

Additionally there is no rule limiting one's market share (Total and Shell have at point in the recent past each controlled in excess of 30% of the market share) Might be but when acquisitions take place 'market share' is used to force sale of locations. Agip by Shell. Caltex by Total

Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
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VituVingiSana
#26 Posted : Wednesday, July 13, 2011 3:13:10 PM
Rank: Chief

Joined: 1/3/2007
Posts: 18,361
Location: Nairobi
Gordon Gekko wrote:
@milken, much appreciate your hard and cold facts, but remember that in this forum anything that disparages KK or r***a will invite venom. Truth told, KK stations are dinghy, nothing like Total but it is till my largest holding.

It's dingy not dinghy (a type of boat) d'oh!
And true!!! Total portrays a cleaner image vs KK though I like the new designs. KK needs to force its dealers to upgrade the locations/stores. Of course, with low margins (3%) many dealers have no incentive to expand fuel sales.
Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
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Gordon Gekko
#27 Posted : Wednesday, July 13, 2011 4:15:13 PM
Rank: Elder

Joined: 5/27/2008
Posts: 3,760
@VituVingiSana, thanks. you know English came on a dinghy!!! Meanwhile KK says that petrol prices will go up by ksh 2.46 tomorrow.
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VituVingiSana
#28 Posted : Wednesday, July 13, 2011 4:45:57 PM
Rank: Chief

Joined: 1/3/2007
Posts: 18,361
Location: Nairobi
Gordon Gekko wrote:
@VituVingiSana, thanks. you know English came on a dinghy!!! Meanwhile KK says that petrol prices will go up by ksh 2.46 tomorrow.
If they had come on dinghies, they would have never managed to conquer Kenya but they came on ships that bombed the crap out of the Sultan of Zanzibar in 17 mins! The shortest war in history.
Saw the announcement & whereas ERC/kiraitu/nyoike will blow hot air... KK is right, the KES has jumped off a cliff. Just slower than Uganda Shilling!
Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
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milken
#29 Posted : Wednesday, July 13, 2011 5:49:05 PM
Rank: Member

Joined: 4/25/2008
Posts: 192
Location: Nairobi
Gordon Gekko wrote:
@VituVingiSana, thanks. you know English came on a dinghy!!! Meanwhile KK says that petrol prices will go up by ksh 2.46 tomorrow.


Can't go that high. Wanna bet?
Itari muting'oe ihuragwo ngi ni Ngai
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milken
#30 Posted : Wednesday, July 13, 2011 5:52:10 PM
Rank: Member

Joined: 4/25/2008
Posts: 192
Location: Nairobi
[quote=VituVingiSana]How many stations does Total have vs KK? Also some areas see higher volumes but this depends on many other factors

Actually when you include Timesavers (those stations in a container) they might be at par. However, what volumes do the stations make? Just look around in Nairobi and upcountry and you will see the volumes Total stations do compared to KK. Total has more than 20 stations that do 300M3 while KK has less than 10 of those.
Itari muting'oe ihuragwo ngi ni Ngai
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