The forecourt sector is facing a tough start to 2013, as it will be affected by the wider economy, but there will be trends and opportunities that could be turned to operators benefit. That’s the view of the industry at the start of the New Year.

John Lynn, managing director of MRH (GB), number one in Forecourt Trader’s Top 50 Indies, sees reasons for optimism. He said: "Trading has been good for the past two months with good volumes and margins. There’s also speculation that crude could fall below $100 a barrel, and a fall in prices is always good for retailers."

In addition, he suggested the Chancellor’s decision to scrap the duty rise planned for January had led to a lot of speculation that the next planned rise in duty might also not go ahead.

On the downside he said there were concerns that Morrisons and Asda were looking at standalone forecourt operations.

At Park Garage Group (PGG), number three in the Top 50 Indies, managing director Sunil Tandon, was expecting another tough year. He said: "On the fuel side with volumes dropping, margins being squeezed and hypermarkets offering linked promotions, there will be a lot of competition.

"On the convenience store side we are not expecting growth to continue at previous levels. It will be important for retailers to get the sales mix right to ensure they are getting higher margins. Valeting has been tough with the competition from hand car washing, but even some of the hand-washing operators are struggling and we are seeing stability in the market."

Cost of utilities

Sunil added: "In such a market it’s important to look at all your costs and we will be paying a lot of attention to the cost of utilities issues like water charges and electricity where we are using it 24/7. The right tariffs and meters can make a big difference."

Jeremy Clarke, managing director of Motor Fuel Group, number five in the Top 50 Indies, predicted another challenging year. He said: "The availability of funding will remain a problem for the smaller independents and the overall, slow downward trend in station numbers will continue. At the same time, the hypermarkets will continue to shape the market with their aggressive pricing and promotional discounts."

However, he added: "Continued consolidation by the majors will lead to growth opportunities for the top indies. BP will carry on building their BP/M&S alliance, Esso will develop their branded wholesale supply approach across the country and Shell will maintain their focus on company stations."

Martyn Ward, managing director commercial and sales at Palmer and Harvey, warned that consumers would continue to watch their spending. However, he added: "It’s not all doom and gloom, there are opportunities for forecourt operators, especially as drivers are filling up little and often. This means that they’ll be in forecourts more frequently and so retailers need to seize this additional footfall."

He predicted that day-part retailing would offer forecourts a way to drive growth, particularly with food-to-go, and use of technology such as contactless payments and pay-at-pump was likely to increase dramatically.

Murco Petroleum’s retail marketing director, Jamie Goodfellow, said: "Although the proposed 3ppl rise in fuel duty scheduled for January has been cancelled, the continuing difficult economic situation coupled with further tax increases to tackle the deficit mean that motorists and consumers face more pressure on household incomes.

"The reduction in the number of car journeys has already had an effect on fuel sales and we believe this will continue in 2013.

"On a more positive note, c-store footfall figures are on the increase as more and more shoppers are not driving to supermarkets but are shopping locally."

The introduction of Phillips 66 to the UK market after the split of ConocoPhillips has been a success, leaving it well placed for 2013, according to UK and Ireland marketing manager, Peter George. He said: "Despite the difficult economic climate and challenges presented by legislation to the energy sector, our refineries in Humber and Whitegate are well placed within their respective markets to ensure security of supply to our customers."

Andrew Owens, Greenergy chief executive, said: "The independent sector is becoming a stronger force in the market. There’s now increased confidence in the sector, and it’s attracting new interest from investors and financiers, as well as innovative supply offers from companies such as Greenergy with a long-term commitment to the UK road fuel market.

"With the decline in UK fuel sales at last starting to slow, and with a consumer move to convenience alongside the weekly shop, there’s a brighter future for dealers willing to adapt traditional supply and brand models."

News Review of 2012

Fuel tax begins its domination of 2012’s headlines when RMI Petrol chairman Brian Madderson calls for reform of the system. Gerald Ronson is recognised in the New Year’s Honours with a CBE.

Petroplus, whose refinery at Coryton in Essex supplies 20% of the UK’s road fuels, goes bust. The squeeze on supply pushes retail prices up.

MRH (GB) retains its number one spot in Forecourt Trader’s Top 50 Indies. As diesel prices reach record highs there are calls for an inquiry into the fuel market. Crowds flock to the NEC for FFE. Drought threatens to close car washes.
Panic buying is sparked by government ministers’ comments about a forthcoming tanker drivers strike, leading to many sites running dry. The Chancellor reaffirms plans for a 3ppl increase in duty to take place in August.

The OFT gives a provisional ’no’ to RMI Petrol’s request for an inquiry into the road fuel market, but leaves the door open for it to come back with additional evidence.

Forecourt Trader celebrates its 25th anniversary with a bumper issue. Transport minister Justine Greening uses the pages of The Sun to threaten oil companies with action if fuel prices are not brought down.
Chancellor George Osborne performs a U-turn, announcing that he will not go ahead with the 3ppl duty increase in August, saying he will freeze duty until January 2013.

A report by Palmer and Harvey says UK forecourts are lagging behind European counterparts and need modernising. A Tesco promotion offers fuel at 2008 prices, which means up to 50ppl off.

A campaign by the Tax Payers Alliance and the PRA highlights the cost of tax when motorists are refuelling. The government is urged to follow France by cutting tax on fuel in a bid to boost the economy.
Symonds Forecourts scoops the Forecourt Trader of the Year Award with its Budgens of Wells site. GB Oils buys the Top 50 Indie Calanike Retailing. Another top Indie, Jonathan James, exits the forecourt sector.

Booker sets its sights on the forecourt sector, launching a format of its Premier symbol group tailored to the forecourt sector. Drivers are making cutbacks to keep their cars.

In the run-up to the Chancellor’s Autumn Statement there were increasing calls for the 3ppl duty increase scheduled for January to be scrapped, and again George Osborne relented.