MOL Group, an integrated, international oil and gas company, headquartered in Budapest, Hungary, is on a journey to transform its Consumer Services business from a traditional fuel retailer to a consumer goods company. “We recognize that purely fuel is not the future anymore,” stated Bence Biro, head of retail operations at MOL Group. “We have realized that the future lies in a more sophisticated model.”

MOL Group’s Consumer Services division operates almost 2,000 service stations in 10 countries in Central and Eastern Europe.

Crucially, MOL Group is driving its own destiny in this respect, rather than electing to partner with international brands like its big oil rivals. “We decided not to do that as we really want to become a consumer goods retailer by building our own capabilities,” Biro explained. “We want to become consumer driven and understand how to create the best customer experience,” he said.

Revolutionizing Transport

Step one is transforming transportation in the region, and it spans several touchpoints. First up is the acknowledgement that while there will be growing demand for fossil fuels over the next five years, it will lessen. The demand for kilometers (or mileage) will remain and even increase, however, and will be served by alternative fuels to compensate for the fossil fuel loss.

Biro expects those alternative fuels to be mainly electric but also anticipates CNG and hydrogen. MOL Group is hedging its bets on the former. To meet the growing demand for electric it is investing in EV chargers on its forecourts under the “Plugee” brand. Thirty-three were deployed in 2018, with 100 planned for 2019 and a total of 700 by 2021.

We recognize that purely fuel is not the future anymore.

The investment means MOL Group will be the leader in on-the-go charging in the market. The rollout is deliberately staggered to ensure the latest charging technology is installed each time, rather than be out of date, Biro explains.

The European Union also provides funding for deploying 252 EV chargers across the region, which will be implemented by the NEXT-E consortium that MOL Group participates in, Biro added. “We want to connect with future customers who don’t want to own their own cars; they want to share,” Biro says. The EV cars are charged at MOL’s own stations, further closing the loop, and the company is aiming to gradually create a fully electric fleet.

But it doesn’t stop there. Biro revealed that MOL Group has recently acquired a company that is a specialist in assembling buses. “The best sharing economy is public transport,” he explained. “In order to get closer to customers we need to know how to manage shared transportation, so we are learning how to take our share of public transport as a means of travel, as well.”

We are on this journey to become a consumer goods retailer and the first choice for customers on the move.

The business also has founded a fleet management company to manage the MOL Limo service, MOL Group company cars plus car fleets for other local companies. “Now we have a car-sharing platform, e-chargers and service stations where customers can recharge their vehicles plus fleets, so we have cars in our hands,” Biro said. That perfectly positions the company to be equipped with the right systems to operate self-driving cars in the future, he maintained.

Consumer Goods Focus

Phase two of the strategy is the evolution to a consumer goods company with the expansion of the Fresh Corner coffee shop/convenience format. The concept was launched in 2015 in Budapest, Hungary, with a couple of stores at service stations selling coffee, burgers, hot dogs and fresh sandwiches. The ambience of the stores is more akin to a coffee shop versus gas station, Biro said.

MOL Group has subsequently decided to roll out the concept across its network, and there are now 700 Fresh Corner stores at the service stations, with a target for 1,250 out of the 2,000-strong chain by the end of 2021.

Fresh Corner wants to be the first choice in the on-the-go segment with a quality fresh food and drink offer. Coffee, in particular, has been a standout success. There are more than 20 types of coffee on offer, ranging from a full barista experience to self-service but still focusing on fresh coffee and milk. “Quality coffee experience is the main target,” Biro said.

Fresh Corner has performed so well that the brand has stepped out of the normal service station environment and opened a stand-alone, non-fuel store in Budapest (a downtown coffee shop) plus a kiosk in Prague, Czech Republic. “We truly believe in the success of the Fresh Corner brand,” Biro said, who adds that the “downtown” concept that’s been successfully piloted in the Hungarian capital may be expanded in the future.

Now, in a further development, MOL Group has designed mobile Fresh Corner solutions, such as a food truck selling fresh food and coffee, and it has launched a “tuk tuk” motorcycle providing quality coffee.

MOL Group’s confidence and ambition in the Fresh Corner concept means taking control of the entire value chain. It already produces its own bottled water and plans a similar move with coffee, perhaps investing in its own roaster to close the loop in the supply chain. The introduction of private labels in some grocery categories is also on the cards, Biro said.

“We are on this journey to become a consumer goods retailer and the first choice for customers on the move,” he said, adding that the SpaceMan assortment and space optimization software solution is being implemented in all 2,000 service stations to drive performance-based shelf management.

Digitization

The third leg of MOL Group’s transformation strategy concerns the digitization of its operations and, in particular, the customer interaction.

Biro revealed the company is currently running a pilot at 15 stations in Hungary for a click-and-collect solution whereby internal customers order food and drink via their mobile phone and collect their order when they arrive at the specific service station location.

A payment solution will be added to the mix. Click and collect is a new consumer habit, and MOL Group wants to know as much about its customers as possible.

In-store, meanwhile, LED screens have been introduced (with central content management capabilities) to manage prices and promotions. Some of them also are connected to sensors to recognize the exterior weather conditions and so, if it is sunny, they will promote cold drinks, but if it’s cold and raining, will promote coffee or hot chocolate.

“We are working on the digitization process and making the right steps,” Biro said. “We are not doing it only because of learning curves but that it’s significant to the business model.”

MOL Group is making the right noises, it seems. Consumer Services earnings before interest, taxes, depreciation and amoritization, or Ebitda, reached USD $423 million in 2018, representing 18% growth on the previous year, driven by the dynamic expansion of non-fuel margin but supported by healthy fuel market trends.

The non-fuel margin per site grew by 15% year-on-year. “The strategy is paying off,” Biro said. Consumer insights also revealed that the MOL Group and its Fresh Corner brand score is increasing, too, and has been supported by TV and radio campaigns, which will continue in 2019.

We offer high-quality coffee, food and drinks but in the right atmosphere and with service so that customers really do return.

Final Transformation

There’s clearly an appetite for the MOL Group strategy. It’s winning first mover advantage with the car-sharing offer in the region, and there’s a definite uptake for convenience in Central and Eastern Europe. But it demands a fresh mindset in terms of customer service, Biro added.

In response, MOL Group has introduced a training program named “Smile” for its 15,000 employees, which is geared to improved customer service. “It’s a big part of the transformation, which customers have not been used to before,” he said. “Now we offer high-quality coffee, food and drinks but in the right atmosphere and with service so that customers really do return.”

Biro revealed that the business wins one million transactions per day. That presents an enormous conversion opportunity in non-fuel, which will help to drive that business transformation.