Friday, June 20, 2008

Exxon Mobil Selling Gas Stations

News reports indicate that Exxon Mobil plans to sell its 2,200 company-owned gas stations over the next few years. The articles suggest that, despite high gas prices, the company does not make sufficient margins in gas retailing, because the business is highly competitive. While that may be true, there is a larger strategic issue at play here. The company simply recognizes that the case for forward integration into gas retailing simply is not a strong one. That is why most of the Exxon Mobil gas stations around the United States already were operated by distributors, rather than being company-owned.

Apple owns its retail stores because it wants to control the consumer purchasing experience, gather critical marketplace information, and further enhance its product differentiation. Exxon Mobil has no such powerful rationale for forward integrating into retail gas operations. They can accomplish their goals by licensing their brand to distributors who own and operate the locations. Let those who are more adept at operating these businesses do so... after all, gas retailing is about much more than fuel these days. The business is much more about operating convenience stores profitably than it is about pumping gas.