The seemingly inexorable rise in the number of sites run by the Top 50 Indies continued last year, but the increase of 99 to 2,222 is much lower than the 300-plus increases of the two previous years.
The internet has now been widely available for so long that many consumers have grown up with it, and as it continues to develop and affect more areas of everyone's lives it is helping to shape trends in shopper behaviour in the convenience sector. HIM Research & Consulting has been studying these developments in consumer activity and has identified three key trends which could influence future behaviour of shoppers at forecourt shops: the casual connoisseur, the modern mindset; and fast consumption.
Many dealers continued adding to their estates in 2016, driving up demand, and therefore the value of sites fuelling continued optimism and investment in the fuel retailing sector.
A House of Lords Select Committee is currently interviewing witnesses as it considers making proposals to reform the licensing laws. Any recommendations will not be binding on the Government, but are likely to be persuasive, and could impact on petrol retailers.
The government is consulting on plans to force larger service stations, supermarket forecourts and motorway service areas (MSAs) to provide hydrogen refuelling facilities and charging points for electric vehicles.
As this issue of Forecourt Trader went to press the Government had just published the headline figures on the results of its revaluation of business rates, and forecourt owners were waiting to see how their bills in April 2017 were likely to be affected. It reported that rateable values in the retail sector were set to increase by an average of 4.7%, although this was heavily influenced by a 26.2% increase in rateable values in London, with most regions in England and Wales seeing a decrease. There is also due to be a reduction of 1.7p from 49.7p in the standard rates multiplier.
Food-to-go in the UK offers significant opportunities for growth, according to the latest figures from IGD, which has unveiled new research into the market for the very first time. Driven by changing shopper lifestyles, IGD is anticipating the market to be worth £16.1bn in 2016, up by 6.8% from 2015.
HM Revenue & Customs (HMRC) has successfully appealed to the Upper Tribunal Chamber (UTC) against the decision in the First Tier Tribunal (FTT) that HMRC's decision to refuse Brobot Petroleum an excise duty Deferment Account Number was unreasonable.
If the most important factor affecting the forecourt sector is fuel sales, then the 2016 Statistical Report from UKPIA (UK Petroleum Industry Association) contains a heartening message. Total road fuel sales looked to be in a permanent decline after year-on-year falls from their peak in 2007 to 2013, but the trend is now positive again after the figure increased slightly for the second consecutive year in 2015. Nevertheless total road fuel sales are 9% lower than they were in 2007.
With the latest diesel cars requiring Adblue every fifth or sixth visit to a petrol station, do you currently have plans to install the appropriate dispensers?
As Forecourt Trader went to press the nationwide polls showed the two sides were neck and neck and it was too close for either side to be confident of winning the referendum on June 23. As the pressure has mounted supporters of each camp have become increasingly desperate to land a decisive punch, ramping up the rhetoric and stoking up the heat, but the blizzard of contradictory claims has shed comparatively little light.
The number of Londis and Budgens stores on independent forecourts is set to soar after Top 50 Indie Motor Fuel Group (MFG) signed a new shop supply agreement with Booker Retail Partners (BRP), commencing on July 1.
In the recent case of Mohamud v WM Morrison Supermarkets plc, the Supreme Court ruled that WM Morrison was vicariously liable, as an employer, for an unprovoked attack carried out by one of its forecourt staff on a customer. This case raises important points and considerations for all petrol filling station and retail operators, particularly those where a small number of employees are left to operate a site with little supervision.
The Top 50 Indies now account for almost 25% of the forecourts in the entire UK market, according to Forecourt Trader's latest report on the biggest independent retailers.Editor Merril Boulton told an audience of more than 150 at the 2016 Top 50 Indies Dinner that between them they added 361 sites during 2015 taking the total Top 50 to 2,123 sites.
Despite a surge of more than 300 in the total number of sites run by the Top 50 in last year's report, the independent sector's appetite for growth showed no sign of slackening with an even greater increase over the most recent 12 months.
Last year saw a major landmark for the dealer sector in the UK as it powered ahead to represent nearly 70% of all UK forecourts.
In what has already been a hectic year for businesses in Forecourt Trader's Top 50 Indies, another twist has just been added by HKS more than doubling in size to just under 60 sites in just three months.
Euro Garages' rapid growth in the UK since its formation in 2001 has already propelled it into third spot in the Forecourt Trader Top 50 Indies, and now it is aiming to become a leading player on a bigger stage. after a private equity firm agreed to invest in the company.
With Shell signing a deal for hydrogen refuelling stations (HFSs) at three of its sites, and Toyota launching its Mirai hydrogen fuel cell electric vehicles (FCEVs) in the UK, a new kind of fuel is finally gaining a little traction in this country.
Brobot Petroleum, a Top 50 Indie which operates 23 filling stations in the Midlands, has successfully appealed via the First Tier Tax Tribunal against HM Revenue & Customs (HMRC) imposition of unreasonable conditions to obtain an excise duty Deferment Account Number: Oil Products.
Over the past few months, as the gap in wholesale prices for diesel and unleaded petrol has narrowed, a debate has raged between motoring organisations and retailers as to whether drivers were paying too much for diesel.
Just days after Forecourt trader published its Fuel Market Review 2015, two big deals endorsed the Review's observation that "all the signs continue to be positive for the retail forecourt sector in the UK".
Last month Booker Group plc surprised the industry by announcing a deal with Irish food wholesaler Musgrave Group plc, to buy its British offshoot, Musgrave Retail Partners GB which comprises the Londis and Budgens businesses for £40m. Completion of the acquisition is conditional on the approval of the Competition & Markets Authority (CMA) and Booker has already entered into talks with the CMA on the first 40 working day stage of this process. It is a process that Booker is familiar with as it had to clear the same hurdle when it took over the struggling Makro cash and carry business in 2013.
Little more than a month after Esso announced it had agreed deals to sell off its remaining 201 company owned sites to independent dealers, another swathe of oil company sites is heading for the independent sector, after Shell concluded deals to sell 185 of its forecourts.
Last month Top 50 Indie MFG announced plans to remove the Murco brand from all of its company-owned sites, and develop it as a brand exclusively for dealers.
After one of the most volatile quarters on record for fuel prices, International Petroleum Week in the middle of last month was perfectly timed to bring some clarity to the turmoil, and give dealers some guidance on what may happen to prices in the months ahead.
The LPG industry was out in force last month trying to wake up the powers that be in the UK to the economic and environmental benefits of LPG.
New guidance has been published by the Association of Convenience Stores (ACS) to support retailers in preventing fuel theft and advising them on how to respond when it does occur.
The future is bright, the future is convenience, and there is significant growth out there, delegates were told at last month's IGD Convenience Retailing conference in London.
As winter approaches with its worst extremes of weather putting all parts of the forecourt structure to the test, canopy maintenance specialists are warning that some overhead structures on forecourts could be in a lethal condition.
The concept of pre-payment for fuel as a way to prevent drive-offs has been around for a long time, and in some countries it is mandatory, but it has always been resisted by the majority of the trade in the UK. Indeed, as forecourt shops have become ever more important to many businesses, and therefore the need to drive footfall into them, the prospect of many customers simply paying at the pump and then driving off without visiting the shop, has only strengthened opposition.
Total retail fuel volumes show a continuing trend of decline, PRA chairman Brian Madderson told an audience of forecourt and convenience retailers and suppliers at last month's Forecourt Forum at the Ricoh Arena in Coventry.
Fuel cards everybody moans about the margins, but continues to accept them as they are used in the transactions of around 20% of an average site's fuel volume. They are key generators of fuel and non-fuel sales. But at what cost?
Behind the scenes, dealers nationwide are taking a closer look at the dwindling margins from fuel cards, and are beginning to question their contribution, particularly in the light of ever-rising site operating costs and changing dynamics within the marketplace.
"When did you last hear a dealer say they love credit card charges, bunkering margins, fleet cards, or paying RPI increases on Platts supply deals?," said one exasperated independent dealer. "In some cases they are netting less than 1ppl for the trouble of supplying expensive and extensive facilities, staffing, cash flow and tax-burdened operations."
In many cases, the card customer will pay the same price or more than the published forecourt price and it's arguable that the card issuers are taking a higher margin than the dealer without any of the substantial costs and risks of providing fuel.
Mainly for hauliers
Fuel cards have been around for around 40 years, having started as a means of emergency re-fuelling on the road mainly for hauliers as they worked further and further away from their home base. They have now evolved from a paper-based means of obtaining fuel offered only to a select number of business users, to being a fully computerised, multi-billion pound essential business tool.
On the plus side they deliver loyal repeat customers who may also shop for higher-margin non-fuel items although some dealers are yet to be convinced. Try analysing the shop sales derived from fuel card customers and you may be surprised. On the negative side, these customers come at a price.
Fuel cards come in various formats: fleet cards eg AllStar; oil company cards such as BP PLUS or EuroShell; pay as you go (PAYG) bunker cards such as Diesel Direct or Texaco Fastfuel; or bunker cards such as Keyfuels or UK Fuels.
Merchant service fee
In terms of costs to the dealer, there are a number of different methods of charging for them. A merchant service fee (MSF) can be charged against the transaction value as a pence-per-litre rate or as a percentage, as is the case with the Allstar card. These charges are either built into the wholesale price of the fuel by the fuel supplier, or paid direct to Allstar by the dealer. The method used depends on whether the fuel supplier has a direct relationship with Allstar and passes on a centrally negotiated deal to the branded dealer; or if the dealer deals directly with Allstar.
In the case of branded oil company cards, the transaction is typically purchased from the dealer at the wholesale price they paid for the fuel, plus a pence-per-litre card commission such as with BP PLUS or EuroShell. For PAYG cards and bunker cards, the site gets a small ppl commission as the fuel is not owned by the dealer. In the 'good old days' fuel cards served as useful 'incremental volume' on top of the volume from traditional private consumers. However, with the growth of supermarkets with their price position and customer promotions dramatically altering the customer mix (mums are more likely to fill up at the supermarket) volume associated with fuel cards ie the business/commercial customer has gone from being a 'nice to have', to being a vital component of a site's overall volume in many cases.
However, as the volume has grown over the years, unfortunately the resultant net margin to the dealer has not. Card commissions those associated with oil company issued cards and bunker cards have stayed frozen at the levels offered when these schemes were launched 25-30 years ago, and in addition AllStar has started to impose an RPI-related increase on its charges. In most cases, industry experts estimate that in order to keep up with the rate of inflation, rates should be at least double what they are today. This all comes at a time when oil companies are imposing targets on retail volume and RPI escalators onto the Platts add-on for wholesale fuel.
A further problem which dealers complain about is the time it takes to get paid by the card issuer and the process by which they are paid, which can be very confusing and cause difficulties in reconciliation.
Other pressures include Allstar's recent introduction of its 'Premier Programme', in which Allstar markets a PAYG bunker card to its Allstar fleet customers traditionally bunker cards have been serviced by CH Jones (Keyfuels). However, both CH Jones and Allstar are now owned by Fleetcor. Experts believe dealers will lose out as traditional Allstar customers are now being encouraged to favour a Keyfuels-supplied PAYG bunker card, (acceptable at around 1,800, mostly dealer sites) to pay for their fuel at sites which accept both cards. The net result is that the dealer will get a reduced margin from the transaction as the commission on PAYG bunker is substantially lower than if the transaction was made using the Allstar card.
As if all this wasn't enough, the popularity of paying for fuel using cards has grown dramatically among private consumers. It is estimated that at an average site around 80% of fuel is now paid for using some form of plastic card. Many people are now paying with premium-rate credit cards which offer enhanced loyalty schemes such as Air Miles or cash back. While this is good news for the consumer, unfortunately this is financed via inflated (compared with standard credit cards) merchant service fees from the dealer. To try and combat this, the PRA is working with the government to push for an early implementation of the EC's proposals on interchange rates and one of these proposals will be to outlaw these premium-rate cards.
However, addressing the issues surrounding fuel cards is proving to be more difficult. In many cases acceptance of the cards is mandatory as it is an integral part of the fuel supply agreement, and rates vary between oil company brands. Besides that, the fuel volume is so significant that it would be commercial suicide to walk away from accepting these cards. Resentment among dealers is building they take all the risk, and the margin they're getting on fuel cards doesn't cut it any more.
Independent retailer Barrie Richards of St Blazey Service Station, said: "We need a strong voice in the industry to enable us not just to pick up crumbs, but to support and sustain our businesses going forward. Pinning us down to impossible returns is not going to support the card companies beyond the short term either.
"What do card operators think we make from fuel? It's clear we are not very good, as an industry, at getting our message across."
Back to our 'exasperated' retailer: "We are all too content to continue griping, yet readily accept the status quo. Independent retailers control the lion's share of retail and commercial sites in the UK and have the critical mass to change their destiny. Ask yourself am I happy with this situation?"
Forecourt Trader's 2014 Fuel Market Review reports that an historic tipping point has been reached, with the first increase in the number of forecourts recorded since the '60s, and a significant upturn in the number of dealer sites, and this change is being reflected by a surge of interest in forecourt properties.
The 'Review of the Refining and Fuel Import Sectors in the UK' by the Department of Energy & Climate Change (DECC) has come at a crucial time for the sector, but many in the industry feel it has done little to point the way forward.
With Esso now accepting Tesco Clubcards and BP having offered Nectar points for many years, the loyalty card is a growing influence on where drivers are choosing to re-fuel their cars, and a strong influence on whether they also take the opportunity to top-up on their groceries, according to Blake Gladman, senior research manager at shopper research specialist HIM.
Disruption caused by winter weather is not unexpected in the forecourt sector, but what has made this winter different is the type of bad weather and the length it has gone on for. A day or two of snow can block roads, and the authorities are usually able to get traffic moving again fairly swiftly, but when it rains until there are floods, and then rains a lot more, it may take weeks before an affected business is able to get up and running again.
A significant new retail entrant to the forecourt sector could make its presence felt in 2014, according to Steve Rodell, director and head of retail at specialist property adviser Christie & Co. "They have significant capital funding and could buy a national chain if they are able to find the right deal," he confirmed.
The problems with planning, business rates, excise duty and card payments were spelt out in no uncertain terms as key concerns of the fuel retailing sector at the recent Regeneration Forum hosted by the Petrol Retailers' Association, and organised in conjunction with the Department of Energy and Climate Change.
As you may now be aware, there is a scheme for retailers to buy oil under duty-deferred terms from suppliers' terminals. Using the 'standard' deferment scheme, the price of the oil is invoiced by the supplier but without the duty and VAT being charged to the retailer. Instead, the duty and VAT is deferred separately against the retailer's deferment account. The taxes are subject to an average four weeks' deferment (credit) from HMRC.
BOSS, the British Oil Security Syndicate, has welcomed confirmation from the Crown Prosecution Service (CPS) that it has issued new guidance to lawyers and police forces to prosecute motorists who repeatedly claim to have no-means-of-payment (NMoP).
A new study looking at the attitudes of fuel customers and why they choose particular brands, has underlined the growing dominance of the supermarkets. Customer intelligence specialist Market Force Information, surveyed more than 1,500 consumers across the UK in an effort to understand the choices made when purchasing fuel.
The findings of January's Office of Fair Trading (OFT) report on the UK road fuel market have been seriously undermined by the revised market share figures for supermarkets released by the government (see panel). They show that the supermarkets have a far higher share of the UK road fuels market than was previously admitted.
The news that the European Commission is to introduce limits on the charges retailers pay for processing credit card and debit card payments has been welcomed by the PRA, but chairman Brian Madderson said a lot more still needs to be done to address problems in this area.
Two major reports in the past month have looked at road fuels and the motoring sector from very different perspectives, but both have highlighted the cost of fuel and taxation.
Many in the trade have welcomed the decision by the European Commission (EC) to launch an investigation into oil price fixing, especially after the disappointment caused by the OFT's refusal to sanction a probe into the UK road fuel market just weeks earlier.
There are plenty of positive things happening in the market for independent dealers. That was the message from Experian Catalist's account manager, Arthur Renshaw, as he kicked off the Forecourt Spotlight session at this year's Forecourt Show.
The introduction of E10 fuel into the UK came a step closer this week as the finishing touches were applied to a public awareness campaign about it. No oil company has yet committed to introducing E10 into the UK, but when one does the campaign will swing into operation to smooth the way.
Last month, leading fuel supplier Greenergy came good on its promise of a multi-format offer for independent dealers, with the announcement that it has added the Esso and Nisa brands to its portfolio. The Greenergy offer now combines fuel supply with a choice of oil major, convenience, independent and dealer own-brands, as well as a range of support services.
After winning a long battle just to get the OFT to consider whether there were competition problems in the road fuel market, the outcome last week was a deep disappointment for the PRA, and the many other groups campaigning for a full investigation.