MOL Group expands footprint and convenience expertise in CEE

MOL Group, the international oil, gas, petrochemicals and retail company headquartered in Budapest, Hungary, is on a transformational journey.

The company has a strategic ambition to become a digitally-driven consumer goods retailer and integrated mobility services provider by 2030.

According to Peter Ratatics, MOL Hungary COO and EVP of consumer services at MOL Group, it’s a multi-faceted approach. Alongside goals to expand its network in new and existing markets in Central and Eastern Europe (CEE), MOL Group aims to extend its Fresh Corner retail concept to new locations and will introduce a franchise operation for the brand. It is planning to launch an Amazon-style marketplace in the region in 2022 and leverage its digital expertise to drive customer loyalty and basket spend. The Group also intends to build an integrated mobility platform, harnessing multiple solutions in order to play a key role in the future of mobility.

Expanding network

Currently MOL Group has 1,941 service stations in nine countries in CEE under several brands: 466 in Hungary, 434 in Croatia, 304 in the Czech Republic, 254 in Slovakia, 243 in Romania, 106 in Bosnia and Herzegovina, 70 in Serbia, 53 in Slovenia and 11 in Montenegro. MOL Group holds the market leading position in Hungary, Croatia, Slovakia and Bosnia and Herzegovina; is the second largest player on the Czech market and the third largest in Slovenia, Romania and Montenegro.

And the business is strengthening that position. In June 2021 MOL Group announced it was acquiring the OMV operation in Slovenia, comprising 120 services stations, increasing its share of the market to around 40%.

“Our footprint is strong but there is a lot of consolidation in this region,” Ratatics explains. “We have been able to select locations that are a good addition to our operation,” he says.

In March 2021, for instance, MOL Group added a further 16 service stations in Slovakia, operated under the Lukoil brand, to its portfolio. This demonstrates that even in a market where MOL Group already has a strong proposition it can still grow market share, Ratatics says.

At the same time, MOL Group concluded a deal with Marché International AG to buy the company operating nine restaurants in Hungary under the Marché brand.

Seven of the acquired nine restaurants of Marché International have been operated alongside the MOL service station network for over 10 years. Over that time MOL has gained regional experience and expertise and, as a result, says it can now operate the restaurants as part of its own business; with the intention to convert them into the Fresh Corner concept during the first year.

In terms of new countries, Ratatics reports that it’s no secret that the business is actively watching the merger between PKN Orlen and Lotos in Poland and will seize the opportunity to acquire any ‘remedy package’ that will be placed on the market to enable that deal.

That would give MOL Group access to a further 40m potential customers.

“It’s the largest market in CEE where we don’t have a footprint at the moment,” Ratatics says.

Fresh Corner 2.0

MOL Group currently operates 1,028 Fresh Corner restaurants covering approximately 50% of the network but is targeting 80%, Ratatics reports.

“We would never aspire for 100% coverage because it’s not economically feasible,” he says. The business is also investing in a smaller version of the Fresh Corner concept for out-of-town locations and where one service station can represent the grocery store in a given town or village, he adds.

Fresh Corner was launched four years ago and during that time MOL Group has gathered a considerable amount of experience and knowledge plus customer feedback on the concept.

According to Ratatics, this spans everything from the interior design, ambience and lighting to space allocation, the height and colour of the gondolas and the gaps between the shelves.

“There’s been a lot of learnings and all those tiny details have been incorporated into the latest version – Fresh Corner 2.0,” he says.

The insights have also enabled the business to open a ‘downtown’ Fresh Corner shop in Budapest without any fuel offering, Ratatics says. Further, MOL Group’s experience, coupled with the maturity of the concept, have enabled the business to create a franchise operation for Fresh Corner, which is targeted at both fuel retailers and standalone stores.

The consumer appeal of the Fresh Corner brand is now evident from two hero products: coffee and hot dogs.

Through Fresh Corner, MOL Group is the largest coffee retailer in the region, selling 53m cups annually. Hot dogs are now a significant contributor too with 12m units sold a year.

Digitalisation has played a key role in the Fresh Corner operation, Ratatics reports. The business embarked on its digital transformation journey in 2019 with a focus on accurate, real-time data availability and advanced analytics and it has reaped the rewards.

Today, hot dog sales, for example, are supported by forecasting tools to ensure the business has the optimum number of sausages on the hot dog counter during a two-hour window to maximise sales and reduce waste.

Fresh Corner’s success is also due to its ability to transcend all markets. “In general Fresh Corner is ageless, genderless and relevant for everyone,” Ratatics states.

And, while there may be some differences in the proposition due to local taste, such as a spicier or cheesier hot dog or a different selection of sauces, Ratatics states its MOL’s ambition to standardise the operation.

“There may be slight differences but within the framework we could guarantee that if you visit any service station you could identify that it’s a Fresh Corner,” he says.

Marketplace opportunity

MOL Group is aiming for a strong ‘Amazon-type role’ in Central and Eastern Europe and plans to launch a marketplace-style operation by the end of 2022, investing $35m on a digital platform, a roadmap and capability.

According to Ratatics, the business is ideally placed to develop an e-commerce proposition since it has strengths in five key pillars:

• Access to the customer
• Knowledge and capacity for category management
• Data and analytical capability
• Logistical capability and
• A strong brand with reputation and trust

“We will focus on that and invest in some of those pillars, like the further sophistication of the digital tools and very fast reaction on logistical deliveries, in order to build a marketplace operation,” Ratatics says.

In Hungary, the business envisages central warehouses will be the most logical supply chain solution, since the highways are well connected to the capital and product could be delivered within two to three hours to every corner of the country. In Romania and other markets more hubs may be required with smaller, local warehouses and last mile delivery pick-up from service stations.

As a marketplace operation, the e-commerce model will include MOL Group’s own SKUs and its category managers will source and resell on the platform, Ratatics reports. However, the vision is to open the platform to the Group’s existing suppliers, as well as other B2B partners.

According to Ratatics, these would be producers who are not currently relevant to brick and mortar service stations or impulse purchasing such as gardening tools or furniture.

Again, MOL Group intends to leverage its advanced analytical tools and digital capabilities via the marketplace.

“Based on your purchase and search history, we will be able to provide the most relevant and next best offer for you that you don’t even know you were looking for,” Ratatics smiles.

Leading in loyalty

One of the crown jewels of MOL Group’s digital transformation is its customer app and new digital rewards-based loyalty programme. The app was launched in Croatia in 2020 followed by Slovenia in 2021 and will continuously be rolled out to other countries as well. The countries replace their previous ‘earn and burn’ programme and with a more rewards-based one.

In the first year of launch the programme signed up 300,000 members, while 70% have downloaded the app and are using it frequently.

Ratatics reports the programme will have 700,000 members by the end of this year and 1.3m in 2022.

“It’s the dream of companies to have direct customer communication with the customer – their phone and not just email,” he says.

Gamification is inherent in the loyalty programme’s structure with a tiered system building from blue to silver to gold and ultimately VIP status for top customers.

Rewards increase in value as members achieve each tier or complete challenges to win digital stamps, which helps to create new consumer behaviours – increasing their frequency of purchase and basket size.

MOL Group, meanwhile, can analyse its customers’ purchasing history, including those products they may have never tried and can determine whether a reward can encourage them to try something new.

“The name of the game is to increase the frequency and the basket size,” says Ratatics. “That’s what we are trying to achieve with this reward programme with gamification, advanced analytics and personalised next best offers.”

Integrated mobility

Mobility and future mobility in particular encompasses a number of streams and MOL Group is building knowledge, expertise and capability in this field.

The Group began developing its mobility services capability back in 2016 with both B2C and B2B customer brands. It has launched the Limo car sharing service in Hungary and now boasts 80,000 car sharing users; although Ratatics concedes the service is not yet profitable since it competes with both private cars and public transportation; while users also have to contend with traffic jams in downtown Budapest.

However, Ratatics maintains car sharing, fleet management (MOL Group has a Fleet Solution, offering 4,000 fleet cars) and public transport (MOL Group operates 300 buses in an alliance with Mercedes Benz and 2,000 share bikes) will all play a role in the mobility revolution.

“In some cities, public transport opens up a new channel to a customer base we have not touched in the past – we are reaching people who take public transport,” he says.

MOL Group’s link with Mercedes Benz also provides the assurance and certification of the quality of the bus, he adds.

“It’s very complex in that sense and you need to operate in all parts of it [mobility] to build out the platform and integrate all different types of solutions,” Ratatics says.

That also includes hydrogen and fossil fuels plus EV. MOL Group has been quick out of the blocks in terms of EV charging. Between 2016-2020 the business installed close to 200 EV chargers in the region and launched the MOL Plugee brand and app in order to deliver a seamless consumer experience. Now it is building its EV charging presence in order to increase network density with the aim of becoming the leader in EV chargers and connected services in 2025 and beyond.

MOL Group is making great strides: network expansion is on the cards. The business is leveraging its Fresh Corner expertise. A marketplace is being built. Digital transformation is well underway and future mobility solutions are in development.

The business looks well on the way to achieving its 2030 strategic ambition.