Advertisement
YOU ARE HERE: LAT HomeCollectionsCompetition

They're Not Just Gas Stations Anymore

Business: Struggling retailers pump up images in drive for market share.

March 04, 1996|JILL LEOVY | SPECIAL TO THE TIMES

While gasoline is the life force that animates L.A., selling it is not as effortless as it used to be.

Squeezed by flat sales and rising costs, gas station owners in Los Angeles--considered the most cutthroat gas market in the nation--are resorting to increasingly extreme measures to stand out.

"Everyone's trying to increase their piece of the pie," said Don Gunnuss, retail marketing manager for Chevron Products Co. of La Habra.

The intensifying gas wars have resulted in an explosion of new marketing efforts, even as the number of gas stations has declined. Through radio spots, billboards and new ploys--such as the Mobil "friendly serve" and Unocal's "We get it" campaigns--oil companies are trying harder than ever to elevate gasoline from an uninteresting commodity to a product worthy of brand loyalty.

Gas stations of all stripes are upgrading their images. In their eagerness to inculcate strong preferences about a chore most people dislike--buying gas--retailers are building bigger convenience stores, faster pumps and adding fast food. They're planting flowers, handing out moist towelettes and dressing employees in freshly laundered uniforms. They've even resurrected a '60s relic: the friendly attendant who'll wash windows for free.

It can all be a little disconcerting. Magda Zouen of Porter Ranch flung an anxious glance up at the "self" sign at a Northridge station recently after an attendant surprised her by insisting on pumping her gas.

Reassured that she would not have to pay the full-service price, she settled back to watch, looking a little embarrassed. "I don't want to pay more," she said. "But I like it. Of course."

Gas station profits are under pressure, and there are fewer gas stations in existence--fewer than 10,000 in the state today, down from 22,000 in the early 1970s, said Dennis DeCota of the California Service Station and Automotive Assn.

The plummet has continued in recent years. In L.A., Orange, Riverside and San Bernardino counties, there were 4,015 gas stations last year, down 26% from 1987, said Trilby Lundberg, North Hollywood publisher of a market research newsletter.

"The Southern California market once was the harvest of the world" for gasoline retailers, DeCota said. "Now, you have to fight for market share."

There are a host of reasons why gas stations are struggling, but chief among them is simply that L.A.'s population has stopped growing at a rapid clip. The population lull caught gasoline retailers off guard just as they were coming off a spate of overbuilding, DeCota said.

Added to that are the growing costs of meeting clean air and water regulations in L.A. and of installing new equipment such as computerized self-service pumps.

"This business used to be very good. But it's not like it used to be," said Rafat Salib, owner of a Northridge Chevron station, who said his profit margins have dropped by two-thirds in six years, to 5 cents a gallon from as much as 15 cents.

With no growth in the market and little flexibility to raise prices, gas stations have little choice but to wrest market share from one another.

The goal is to boost volume and improve returns. Gas stations used to pump about 30,000 gallons a month on average in the '70s, said DeCota. Today "they have to do 200,000, or they won't even build them."

To grab market share, Mobil--second to Arco in regional volume, according to Lundberg--has included in its "friendly serve" campaign a program that pays dealers part of the cost of hiring attendants to greet customers and pump their gas for free. The strategy has created more than 2,000 jobs in Southern California, local supervisors said.

"Shell, Chevron, Mobil--you can't tell them apart except they're different colors," said Dave Hackett, regional supply operations manager for Mobil. "We asked ourselves, what can Mobil do to get to the point that people recognize us?"

Other strategies include Texaco's addition of Burger King and Del Taco fast food at its stations. Arco is running similar tests with Baskin-Robbins ice cream and Taco Bell. Chevron has spent $40 million in L.A. in the last two years on face lifts for its stations and upgraded pumps. Unocal's "We get it" campaign bets that hardened Southern California drivers will melt over fully stocked paper towel dispensers.

Unlike past promotions offering glasses illustrated with football themes and redeemable stamps, the new marketing strategies signal a recognition that "no one likes to buy gas," said Mobil's Hackett.

"I hate it," offered Rebecca Carleton, 18, a Simi Valley delivery driver, as she pumped her own gas at a Northridge station recently.

Carleton's attitude is typical of the problem facing gasoline dealer. She shrugs when asked which stations she goes to. The nearest ones, basically.

Does she want better service, fast food or paper towels? "No," she said. "I want them to invent a car that's automatically full."

Advertisement
Los Angeles Times Articles
|
|
|