The market for independent forecourts continues to suffer at the hands of the supermarkets but a strong convenience and ancillary offering can help draw in both fuel and non-fuel customers
by Kevin Scott
In its 2014 Business Outlook Christie + Co’s Director and Head of Retail Steve Rodell commented that the future of independent fuel retailers was in question. Dealer volumes were down to 1.8 million litres a year per site, compared to 12m litres for supermarkets. Rodell said that not only did this signal that dealers were being overtaken by the supermarkets, but it also raised serious questions about fuel resilience in many UK regions.
Echoing Petrol Retailers Association chairman Brian Madderson’s assertion that the shift in volume share to supermarkets was having a drastic effect on independents, Rodell added that all was not lost: “On a more positive note, the continuing disposal of forecourts by oil companies looking to concentrate on the supply-side created many opportunities for dealers, who continued responding to the supermarket threat through diversification. However, the threat will remain considerable as our own research revealed that for every 50 new forecourts opened each year, 40 are opened by the supermarkets.”
Weakening Competition
It is in this environment that Scotland’s independent forecourts vie for market share. There has been little to report this year of Government intervention on subsidised fuel discounts, though the PRA is thought to be continuing to lobby for the OFT to re-open its investigation into the UK market. One of its objectives would be to broker a voluntary agreement similar to one in Australia where supermarkets have agreed to cease making fuel offers that were judged to be causing a substantial weakening of competition in the medium to long term.
The PRA says a similar move in the UK would lessen consumer detriment arising from lack of future competition and ensure independent retailers had a more level playing field. Meanwhile in Scotland Nisa, Spar and Premier continue to roll out their own fuel offering, while Phillips 66 brand Jet is celebrating its 60th anniversary year. As well as a healthy pipeline of enquiries from new sites looking to join the Jet brand, the company is continuing its plans to expand into the north of the country, with the bulk of enquiries coming from dealers in this region. Serving the existing network of 51 sites throughout Scotland remains a top priority though, whose longstanding history here is behind the high numbers of dealers that remain loyal to the brand. So far this year, no sites have left Jet for another supplier and one third of the Scottish network have already retied on a new long-term deal, including a number of early reties. As well as continuing to benefit from Jet’s competitive pricing and security of fuel supply – thanks to the Phillips 66 Humber refinery in Northern England – these sites will be updated with Jet’s new image and uniforms.
Also proving to be a big draw for Jet dealers is the Proud to be Jet standards and services programme. Launched at the start of the year, it has already reaped rewards for many of Jet’s Scottish dealers. The programme is designed to improve the forecourt experience for customers in terms of facilities and forecourt safety, but also to reward dealers and instil a sense of pride in being part of the brand’s network. Dealers are rewarded ‘diamonds’ – linking in with Jet’s 60th anniversary – and of the 22 Scottish sites that have been audited so far this year, 16 have qualified for diamonds, including 12 top scorers.
These sites are already benefitting from a wide range of items that are aimed at further enhancing their site standards. Paul Yates, Scotland Territory Manager at Jet, comments: “Our 60th anniversary year is proving to be very successful. The latest market stats from Catalist show that, with the exception of UK nationwide operators, we are now the major supplier to independent dealers in Scotland. Our proposition has never been stronger; I would encourage independent operators to get in touch to find out why we’re Scotland’s supplier of choice.” non-fuel sales Non-fuel aspects of forecourt retailing continue to grow in importance too.
Andrew Aitken, owner of Jet’s Bypass Service Station in Haddington, is based on the outskirts of the town. Andrew says that despite having a high fuel throughput (five million litres per annum), he knew he couldn’t survive on fuel alone: “Our store is relatively modest, with a focus on a more traditional ‘garage shop’ offering including a range of car care products, specialist oils and so on. “We knew we had to look at alternative ways of driving forecourt footfall, increasing profit margins via ancillary sales and offering something our customers couldn’t get elsewhere locally.” On the forecourt side, the store has invested in a range of car care facilities including two Jetwash machines, two air/water towers and two car vacs with fragrance. Demand for all of these facilities is high and feedback extremely positive.
Andrew has also begun stocking a range of ancillary products with particular focus on seasonal items. Along the front of the forecourt the store has coal bunkers containing coal, logs, kindling, and Hotmax natural fuel logs and briquettes. In winter, the shop also stocks Aberdeenshire peat. “These products are extremely profitable: we sold ten tonnes of coal each week in the winters of 2011 and 2012,” says Andrew.
The forecourt has been designed to enable customers to park right next to the coal bunkers: there are 10 parking bays next to the bunkers, making it easy for customers to transfer items directly into their car – and avoids delays at the pumps. Coming into summer and Andrew has introduced products that are used in gardens in chimeneas and fire pits, as well as bottled gas and other fuels for barbecues. He adds: “Strangely enough, one of our biggest sellers is potatoes.
We buy direct from a local farmer and sell them in 25kg sacks. At peak periods, we sell around two tonnes of potatoes a week. Again, customer feedback is very positive and they like getting locally-grown produce.” For retailers looking to replicate Andrew’s success in this area, it’s worth noting that he has also invested in a forklift truck to help with stock deliveries and to move larger orders into customers’ cars or vans. He says: “Feedback from our customers suggests they really appreciate the convenience of being able to buy all of these items when popping in to fill up or buy milk and bread. We take pride in the way that the items are displayed on the forecourt and believe that the way it is set out attracts customers into our store.”
Snacking stations key to forecourt success
Kepak Convenience Foods is setting its sights on increased sales of its micro-snacking products in forecourts with its range of in-store Hot Snack Stations. As motorists look for more choice on their journey breaks, Kepak is actively promoting its range of Hot Snack Stations, which enable drivers to heat chilled food in a matter of minutes. “Not every forecourt has the space or staffing levels for a hot food counter,” says Kepak Marketing Director John Armstrong. “Our solution – a pre-programmed, branded microwave, or a complete Hot Snack Station – is ideal for forecourts that want to give motorists a hot food option such as Rustlers or Zugo’s Deli Café. Both options will either complement a hot food counter or provide a lower-cost, easy to maintain alternative.”
The Kepak microwave costs just £140 plus VAT and is pre-set for a range of Hot, Quick & Tasty products, not just Kepak best-sellers Rustlers and ZUGO’s Deli Café. Kepak also offers a purpose-built stand with microwave (£500 plus VAT), with built-in bin and POS. Both prices are ex VAT. The stand only is available at £360 plus VAT. Orders can be placed with R H Hall on 01296 663400.
