Continuous investment helps forecourts continue to drive margins in spite of the cost-of-living crisis and a less-than-favourable economic backdrop.
By Elena Dimama
Forecourt retailers have been resilient in their commitment to invest in the sector, continuing to put money into their businesses despite rising costs and a looming financial crisis.
According to the 2022 Forecourt report, published last October, independent forecourt retailers are making “significant investments,” spending around £18,000 on average last year, compared to around £10,000 spent by convenience stores that don’t sell fuel.
A booming sector
The total value of forecourt sales is £4.8bn, according to the 2022 Forecourt Report. Forecourts can be crucial in helping communities, as 37% of forecourt businesses have no other retail or service business close by. Some 30% of them have up to five retail/service businesses close by.
Meanwhile, there are 7,407 forecourts with shops in the UK. The top-selling categories are tobacco and vaping (£884m); soft drinks (£417m); beers, wines and spirits (£263m); non-food (£293m); and confectionery (£188m).
The significance of forecourt retail is further demonstrated by the fact that the average customer visits their local store 3.8 times per week. According to the ACS report, 21% of customers visit a forecourt shop every day, 20% most days and 12% every other day.
The average spend is £10.38 with an average basket size of three items.
Meanwhile, 6% of forecourt retailers are active in their communities, raising money for local charities, getting involved with local projects and donating to food banks. “It’s essential that the Government recognises the crucial role that forecourts play in their communities,” ACS CEO James Lowman says. “These businesses are community hubs in their own right, providing essential services and an ever-increasing range of products for customers along with fuel and alternative power solutions.”
When presenting the report, Lowman did admit this was a challenging year for forecourts, especially on the back of the launch of a Competition and Markets Authority (CMA) investigation into the fuel market. “This has been a turbulent year for fuel supply and pricing, with international events determining the price that consumers pay at the pump,” he said at the time. “The CMA’s initial findings earlier this year recognised that retailers have little control over the cost of fuel, making very small margins themselves, while changes in currency markets and the ‘refining spread’ contributed to much bigger variations in prices.”
A viable business
Owning a forecourt is still a sound business plan for many potential investors out there; according to business property adviser Christie & Co, buyers continue to look favourably at petrol stations. Sites sold through the company in 2022 saw an average of five offers per transaction, reflecting strong ongoing demand. This caused a 1.5% increase in Christie & Co’s retail price index for 2022.
According to the company, consumers have become more conscious of their overall expenditure, yet petrol retailing is “arguably better placed than other industries to weather 2023’s anticipated headwinds as they offer essential local services”. The growth of other income streams such as fast-moving convenience goods was also identified in the report as a key trend shaping the market, with 88% of the UK’s petrol filling stations now featuring a retail offering, 31% of which are full convenience stores.
Future-proofing operations
In the UK, there are overall 33,996 electric charging points at 20,534 locations; as the time ticks towards the government’s deadline to end of sale of new petrol and diesel cars by 2030, the industry is getting ready to serve the growing fleet of electric vehicles.
In February this year, Jet announced the official launch of Jet Charge – the brand’s ultra-rapid pay-as-you-go charging offer. Following a soft launch at three company-owned sites – Jet Beacon Garage in North Yorkshire, Jet Newton Park in County Durham and Jet’s flagship Refinery Service Station in North Lincolnshire – the new offering promises ease of use and speed.
“Speed, reliability and simplicity define Jet Charge,” says Oliver Mueller, Retail Business Manager for Phillips 66. “Unlike a number of existing products that require convoluted app downloads and complex payment methods, we have chosen a very different road. No connection fees, no subscriptions – just fast reliable charging with no minimum charge.”
Meanwhile, Motor Fuel Group (MFG) also announced it is to invest £50m in EV charging hubs in the UK in 2023, building on the 2022 investment journey that saw it install 271 ultra-rapid chargers across its network, with an additional 31 hubs, and a further 175 chargers in construction.
Outlining its investment plans, MFG said it is committed to spending £400m in EV infrastructure by 2030. According to the company, the new hubs opening in 2023 will provide a further 360 ultra-rapid chargers on the MFG network.
“Our ambition was to invest ahead of the curve and give drivers who were contemplating purchasing an electric vehicle the confidence that they could travel as easily as with a petrol or hybrid vehicle,” William Bannister, CEO, MFG, explains. “Although we have a way to go to achieve this, our investment in 2022 has set us on a positive trajectory.”
Alongside its investment in EV, MFG spent £50m improving its retail, food-to-go, and valeting offers.
EPoS-ready
According to the Forecourt Report, 69% of forecourts have EPoS, with 28% citing till systems as an area of investment.
Henderson Technology has recently announced a partnership with Certas Energy to become an approved EPoS supplier for Gulf and Pace forecourts.
The partnership will enable Henderson to supply EdgePoS to retailer stores branded Gulf and Pace across Scotland, England and Wales, with sites to be supplied over a 60-month lease agreement with no upfront cost to the forecourt retailer.
“We work with several forward-thinking forecourt retailers who are looking to invest in an innovative EPoS system. When we looked at Henderson Technology and the EdgePoS system, we saw these same progressive ideas from the company and the software it provides,” Alex Friendship, Head of Business Development Roadside Services at Certas Energy, says.
“We undertook a rigorous tender process and were impressed with Henderson Technology’s technical expertise, market knowledge and support.”
Ascona launches partnership with the Wales Air Ambulance
Ascona Group has announced the Wales Air Ambulance as its charity partner for the 2023/24 financial year.
To mark the launch of the partnership, Ascona has made an initial donation of £10,000. Over the next 12 months, 25p donations will be available to be paid via card machines across all of their sites in Wales, and Ascona has committed to match each donation up to total value of £50,000. In addition, the Wales Air Ambulance will share in the proceeds of Nisa Retail’s ‘Making a Difference Locally’ fund, which is expected to amount to a further £10,000 in contributions from purchases made at Ascona sites in Wales.
Ascona anticipates raising over £100,000 for the Wales Air Ambulance by the end of the 2023/24 financial year, through all of the proposed fundraising activities.
Jet unveils research into factors for women’s choice of service station
Jet has released research into the determining factors for women drivers when choosing which service station to stop at.
The study found that the top three factors were competitive pricing (51%), a good-looking/well-presented site (50%), and clean, functioning toilets (44%).
Áine Corkery, manager, brand, UK Marketing, Phillips 66, said: “As our programme of re-imaging/refurbing sites across the UK comes to an end, it is gratifying to know that many of the improvements and upgrades made have been identified as being important to women when it comes to service station choice.
“We aim to provide a safe, well-lit, cared-for environment with an emphasis on great service designed to get customers back on the road quickly and safely.”
