Shell moots Smart deal with rival Sainsbury’s

In a bizarre about-face, Shell is negotiating a joint venture with one of its bitterest rivals in petrol retailing, Sainsbury’s.

It is understood the two will be linked by Shell’s customer loyalty scheme, Shell Smart, which is likely to be extended to Sainsbury’s shoppers.

The deal would signal a change in the oil giants’ attitude toward its supermarket rivals, which have taken a 20 per cent share of the petrol retailing market – 15 per cent of it since 1987. Petrol retailing for Sainsbury’s is so successful, it plans to have 230 petrol outlets by the end of the year. Shell has 2,000 sites.

Despite denials, there have been widespread claims that the supermarkets have been cross-subsidising, using petrol as a loss leader to attract shoppers into stores and win business away from petrol retailers. At the start of the year the major oil companies cut their prices in an effort to retain market share.

The deal is likely to be a strategic alliance – Sainsbury’s may start selling its products in Shell outlets.

There will also be a problem relating to the British Airways loyalty scheme, Air Miles; both Shell and Sainsbury offer Air Miles as part of their reward scheme.

It is not known how Sainsbury’s recently launched loyalty card scheme, Reward, could combine with the Shell Smart card, or if there will be any kind of electronic link. Shell Smart allows Shell to gather a wide range of information on cardholders.

Shell has already linked with a number of other businesses – points can be redeemed at branches of John Menzies for instance – and it says it has over 3 million cardholders. It has invested 20m in the scheme.

Both Shell and Sainsbury’s refused to comment on the deal.

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