Forecourt Trader - 30 years at the heart of the fuel retailing community

Boosting value

You don't expect to see pallets loaded with bulk packs of products in a forecourt convenience store, but that's just what you get at Bush Service Station, one of Top 50 Indie Falcon Sharma's 12-strong network of forecourts in and around the Midlands.

In fact the store is bristling with offers, with point-of-sale placards trying to tempt you with 'Mega Deals', £1 Deals, and warnings that 'When it's gone, it's gone'; not to mention the Premier radio in the background with its share of promotional messages. The store is immaculate, with its packed and colourful shelves and clean, bright and welcoming atmosphere.

It's the result of a collaboration between the Falcon Sharma Group and Booker's Premier symbol operation.

"A couple of years ago we recognised that we didn't have great presence in forecourts (currently 110), despite being the biggest symbol in the UK with 3,000 sites," explains Premier's director, Martin Swadling. "But we sensed there was a great change in the market.

"There was the economic situation when everyone was looking for extra value in the shops, and perhaps they hadn't been used to getting that value for money in the forecourt sector. We felt the time was right for us to take a much closer look at our Premier offer for forecourts."

Premier relaunched its forecourt format about two years ago, and trialled it with Falcon Sharma. The group was founded by brothers Bal and Kumar Sharma who started working as commission operators in the early '80s, and began acquiring sites in the early '90s their first acquisition being Bush Service Station.

"We wanted to work with retailers who were keen to drive their shop sales, as well as their fuel and all the rest of the services," says Swadling. "Sharma Falcon's Ward End site fitted the bill and was the first one we did."

Ward End is a former BP Connect site that Falcon Sharma acquired three years ago. It was a troubled site, losing £20k a year on drive-offs. Fuel volume was about 6.2mlpa but the margin was really low due to matching local competition. Shop sales were £5,700 a week. The site is also surrounded by the likes of Tesco, Aldi, Lidl and M&S Simply Food.

The Wild Bean Café was stripped out, and the store went straight from Connect to Premier. The 1,200sq ft store was fully merchandised by Premier's in-house team, which was given a blank canvas. The symbol's retail development managers are regionally based, so understand the local market, which is key in growing sales, as each market has its own idiosyncracies, stresses Swadling.

"We effectively put the standard Premier offer into the site. We put our own label Euro Shopper entry brand into the store, alongside the big brands, which was probably a bit unusual for a forecourt. But our Euro Shopper brand is the fastest-growing convenience brand in the UK, and now worth £150m. Every product in the range is price marked, but low-priced, giving fantastic value for money for the consumer. Importantly the brand also makes a decent margin for the retailer at least 30% profit on return.

"We also do what we call Mega Deals four lead consumer promotions every four weeks. They go on the front of our consumer leaflet and on our TV advertising. They are bigger format packs what you might call supermarket-style packs such as bigger loo rolls, or boxes of crisps. These deals generally add about £3m per month to Premier retailers' businesses and they have been a real point of difference. Many retailers describe them as footfall drivers they are reasons for consumers to come into the store. And it seems they are buying them on impulse introducing the notion of a bulk impulse purchase!"

Ultimately the trial proved successful, with the Sharma brothers so impressed, the Premier format is being rolled out across the group's 12 sites, replacing Spar: "Signing over to Premier was a gradual process once we saw sales rising," says Bal. "We were slightly apprehensive about the move initially. We were worried about losing our margin, but that hasn't been the case at all. Sales are up 65% across the board.

"Having Premier has really changed customer perception of us forecourts are normally deemed expensive. But we started doing price marks and Mega Deals and people are just loving us. We've had a few people saying we're cheaper than Tesco's!"

Ward End is now doing £17k a week in the store, despite lower fuel volumes which have dropped to about 4.8mlpa following a change in fuel pricing policy higher prices leading to higher margins, according to Kumar. "Our higher fuel prices don't affect shop sales. The model works. We've also cut crime to £1,000 a year by training staff to look at the driver before they authorise the pump, and if they're unsure, check the registration on a free website."

The Sharma's also have a strong car wash ethos across the business, recently investing £100,000 on a new car wash, air lines, jet wash, and getting a £55,000 return last year.

Bush Service Station has an edited version of the Ward End site's Premier offer as it is smaller at 600sq ft. But within 18 months, sales are up 55%.

"Sharma Falcon has really embraced the value for money ethos and taken it to another level," says Swadling. "At Bush End, for example, they had sold a pallet of Walkers crisps (24 boxes) within a day of starting the promotion."

Swadling says Euro Shopper has proved a great success and complements the big brands: "The brands live well side by side, offering two different solutions for the consumer.

"Take energy drinks, for example. We're seeing double-digit sales growth for Red Bull, but also the same for our Euro Shopper energy drinks. Some people want to buy a good product at great value, and other people want a brand they know and recognise.

"It's about bringing value to the forecourt sector. We want the value for money that Premier is recognised for, to also come alive on the forecourt.

"Price marking is important consumers want to recognise they're getting good value for money. In my experience forecourts were always a bit nervous about price marking because they wanted to maximise their margins. But that's changing.

"The more that Aldi and Lidl and the supermarkets respond to that, there is real pressure on forecourts to change the way they operate. Premier is in a great position to help more forecourt retailers boost their sales and make more cash profits. We're cheaper than all our symbol competitors, and we have a value proposition and a range of goods that will grow their sales and increase their basket spend faster than anyone else."

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Weekly Fuel Prices 26 June 2017
RegionDieselLPGSuper ULUL
East116.3455.90124.84115.31
East Midlands115.68126.68114.83
London116.0057.57125.95115.31
North East114.7059.90124.65114.44
North West115.84125.61115.03
Northern Ireland114.85122.73114.35
Scotland115.9949.70122.05114.98
South East116.4558.90125.91115.57
South West116.13124.79115.18
Wales115.4656.90124.56114.28
West Midlands115.8457.40125.93115.11
Yorkshire & Humber115.56127.20114.93

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