Shell plans Adidas, Starbucks stores at Philippine gas stations

PILIPINAS Shell Petroleum, the publicly listed Philippine arm of Shell, plans to have retail shops and restaurants in a third of its petrol refilling stations by 2025 as its seeks to boost revenues beyond fuel.

That could drive non-fuel retail earnings to grow at least 15 per cent a year and build an income stream that provides a quarter of sales, CEO Lorelie Quiambao Osial said in a Bloomberg interview. Shell wants 550 of its 1,300 to 1,400 stations in the Philippines in 2025 to have retail offerings that range from convenience stores to restaurants and shops like Jollibee, McDonald's, Starbucks and Adidas.

"We are transforming what you'd normally call petro retail stations into mobility destinations," said Osial. "Before it's motorists-driven. Now, it's something for the passengers to enjoy as well."

Pilipinas Shell's push to grow its non-fuel revenue while aggressively expanding its gas stations gained focus after it closed its refinery in 2020 and shifted to buy fuel supplies from abroad. The refinery's closure made earnings more predictable and freed up resources to fund projects with higher yields, like building up its gas station footprint. Currently, a quarter of revenue is from non-fuel retail, Osial said.

The 5-year strategy, which started in 2021, costs about 3 billion pesos (S$73 million) to 4 billion pesos annually. It calls for adding between 40 to 60 stations a year, to bring Pilipinas Shell's network to up to 1,400 outlets and 5 mid-range oil terminals by 2025. The plan is a bet on rising personal income and petroleum demand in the Philippines, and expectations that the country's "low motorisation rate" will catch up with other markets, Osial said.

Pilipinas Shell has also added electric-vehicle (EV) charging points at some of its stations in anticipation of a growth in EV use in the Philippines.

Among the country's biggest petrol retailers, which also include Chevron's local unit and the nation's sole refiner Petron, Shell Pilipinas has been making the biggest push into diversifying away from fuel in its petrol stations since 2021, said Astro del Castillo, managing director at First Grade Finance, an investment advisor and consultancy firm.

"It could double this segment by 2025 considering that it's just starting to aggressively penetrate this market," he said.

To further diversify income from fuel, Pilipinas Shell also plans to have 900 of its gas stations in 2025 provide oil change and car maintenance services, said Osial, who helped build Shell's gas business when the global oil company returned to Iraq in 2013 and was tapped in 2021 to take charge of its Philippine retail operations.

"There will be more offers on the non-fuel space," Osial said. "Customer behaviour is changing and it's still evolving." BLOOMBERG

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