``We are targeting 600 outlets in the first phase of expansion,'' says Mr R B Sahi, general manager, retail, BPCL. He adds: ``At a time when margins in the oil industry are under excessive pressure, the retail services - like the `In & Out' - can account for around 40 per cent of a BPCL dealer's overall profits. Also, we expect a significant contribution to our revenues in a couple of years.''

BPCL has roped in multiple consultants for detailing and developing its retail strategy, besides McKinsey, which has just completed its one-year engagement with the oil PSU.

BPCL will begin with pilot projects in 40 out of 60 BPCL outlets in Bangalore, Mumbai, Delhi, Kolkata, and Chennai. BPCL has already tied up with 14 companies for categories like fast food, photography (Kodak Express), music, financial services, ISP (who will provide e-fulfillment infrastructure besides three PCs), e-commerce portals, document centre, ticketing (in Mumbai), ATMs, and courier counters. The pilot `In & Out' stores are expected to occupy an area of 500 to 700 sqft.

Says Mr Sahai, ``In the next three months, we'll monitor the pilot stores' performance and depending on sales from specific categories and locations, we'll finalise our `In & Out' roll-out plan.''

BPCL has identified 2,000 retail locations as strategic outlets - an extensive study undertaken a couple of years ago had given a number of 1,234 outlets - which will give the company a competitive edge over competition.Also, out of its retail network of 4,500 outlets, BPCL has direct control over 3,000 outlets - through a mix of ownership or lease. These are expected to be BPCL's bulwark against a bout of competition once the oil industryis deregulated in line with WTO's requirements. ``Loyalties can change in an open environment,'' says Mr Sahi. ``It's important for us todefend our turf from globally aggressive entrants.''