It was a time when petrol cost £1.70 a gallon or 38 pence a litre and Maggie Thatcher was re-elected making her the longest-serving Prime Minister since the early 19th century. Forecourt Trader was officially launched in April 1987, following its humble beginnings as a supplement within another title Car and Accessory Trader (CAT), owned by Haymarket Magazines. The response to these early editorials was such that the publisher sensed a period of great entrepreneurial activity, at a time when convenience retailing first began to make its way into the forecourt market. The time of Gerald Ronson at Heron, Rikki Hunt at Elf and Tony Southworth at Telegraph.
What these and other colourful characters brought with them was a whole new ethos clean, bright, well-lit shops. Places where you wouldn’t be afraid to eat sandwiches.
Oil companies were just starting to take note of the potential of the convenience shop market. There were a great many stories about retailers who had built up a successful trade, only to have the oil company finally sit up, take notice and then take the site off him or her. Back then, the total forecourt shop market was worth just £650m; there were more than 20,000 retailers; and in most cases they were completely free to stock whatever they liked in their shops.
UK petrol sites 20,197
l In June the new Stop ’n’ Shop package was launched at the Forecourt Marketing Show a harbinger of things to come. The July issue broke the story of Kuwait acquiring 53 sites from the Soviet Nafta network. Esso announced a £3m package of additive-enhanced fuel to counter Shell’s attack on the market with Formula Shell.
l A survey by Euromonitor published in the October issue found that forecourts were "in prime positions for development as complete, one-stop retail centres".
l By November, BP had signed with Link enabling motorists to fill up and withdraw cash, Texaco signed a automation deal with Micrelec, and Burmah announced a facelift for its entire network.
UK petrol sites 20,016
l The year began with Burmah launching its first promotion. FT deliberated on the value or otherwise of installing video rental.
l During February, Burmah acquired ICI’s retail fuel business for £21m. Shell withdrew Formula Shell fuel following a number of critical consumer reports.
l March, and BP dipped a tentative toe in the water of its ’partnership’ scheme.
l The government announced a ban on forecourt alcohol sales. No further licences would be granted, though rural sites already selling alcohol would be allowed to continue.
l In June, Esso made clear its plans for fully-fledged c-store retailing to boost profits while celebrating its centenary year. Shell launched Advanced Diesel, BP launched ’the ultimate petrol station promotion: Lifestyle’.
l Burmah Castrol split into Castrol (UK) and Burmah Petroleum Fuels.
l Major reshuffle of senior management at Shell saw MD Jaap Klootwijk retire in favour of Roy Reynolds; the Norfolk House Group sold 58 sites to Fina for £26m; BP unveiled £50m plans to expand BP Express from 21 sites to 120; and Burmah introduced unleaded.
UK petrol sites 19,756
l During February Burmah acquired Hardaker; the government revealed that one in four motorists were now buying unleaded fuel; and Elf and Circle K opened their third joint c-store.
l Jet opened the first unleaded-only site in March at Grosvenor Place, central London media coverage concentrated on the lack of sales. Driver controlled deliveries (DCDs) came under the spotlight. The conclusion? DCDs would be commonplace in the ’90s.
l Unleaded fuel was given another duty concession during April with a 4ppl cut, while Fina spent £20m "rubbishing a few myths about unleaded".
l May, and the majors defended hefty price hikes, blaming a weak pound and increases in the cost of crude oil.
l Shell led the news in June, unveiling plans for a low-cost alternative to the £25,000 Traveller’s Check franchise fee to attract dealer business. Esso said unleaded would be nationwide by the end of the summer. We focused on the rising threat of hypermarket petrol stations.
l Fuel prices came down following intense consumer pressure. Esso licensees got together to fight the ’unfair’ terms of the company’s Partnership licence, with 400 refusing to co-operate with the company’s revised contract.
UK petrol sites 19,465
l The decade dawned with an attempt by Jet to move upmarket with a £10m spend on re-imaging. Rates rises in the form of the newly introduced Universal Business led the news in February, while March’s big story was the advent of the MMC report.l April and a date for the licensees versus Esso hearing had been set. Petrol prices rose by 10%.
l May, and the Esso licensees were thrown out of court. "They have no rights," commented the judge. Shell unveiled plans to convert 500 of its best shops into c-stores. Elf was rumoured to be considering the acquisition of Murco in June, and Shell was rumoured to be doing likewise with Repsol.
l The failure of the Esso licensees’ legal action led to the company insisting on 24-hour opening in August. Norfolk House bought Save’s network of 100 sites for £60m. Shell dealers reacted angrily to the company’s new Shell Share contract. September, and the £3 gallon was touted as a possibility and all the majors suffered profit decreases.
l Monopolies & Mergers Commission report into the supply of Petrol the third in the previous 25 years. The OFT recommended that licensees’ contractual rights of tenure and compensation be scrapped and included in oil companies’ codes of conduct instead.
l As prices spiralled, the hypermarkets cleaned up on fuel sales, and the possibility of even higher prices was ever-present due to the Gulf crisis.
UK petrol sites 19,247
l Bad debts would rise as the recession deepens warned the PRA. Shell admitted "there might be problems with the Shell Share retailer agreement", and the possibility of a price war was rumoured. Shell agreed to review the profitability of its Share agreement on a site-by-site basis. The Dutch major also promised to initiate a price war if the hypers continued their relentless march into forecourts.
l In May Shell capitulated over its Shell Share agreement backing down on key issues. Elf MD Rikki Hunt was appointed head of rival Burmah. Shell offered top-up loans to potential Share franchisees and Gulf unveiled a radical revamp called ’Retail 91’.
l Repsol bought 29 sites from Norfolk House for £10m and Heron put its 150 sites valued at £150m on the market. l A draft licence requiring petrol retailers to report stock losses greater than 0.5% of sales per week to a local authority was slammed by PRA director Bruce Petter. Elf bought Heron’s entire network in November; the Frost Group was floated; and Burmah chucked out 40 of its middle-management team.
UK petrol sites 18,549
l Esso opened the year with a pledge not to increase licensee margins; Heron said it would spend £100m on a new network of 100 sites badged Snax 24. Proteus targeted rural dealers in a bid to double its network in two years. In May Shell general manager Jim Slavin was replaced by David Pirret. The PRA mounted a campaign to persuade MPs of the unfairness of changes in Petrol Undertakings which would allow oil companies to take commission from shops.
l Shell launched a £2.5m TV ad campaign to bring Shell Select to the public’s attention and Brian Handley took over as Fina retail manager.
l A beaming James Frost appeared on September’s cover having recently re-floated Save from the jaws of doomed parent company Norfolk House a UK first. Esso stunned its licensees in November with sweeping changes to the Partnership licence. ’Crisis meeting for 170 Esso licensees’ was the lead story in December’s news.
UK petrol sites 17,969
l February brought a PRA prediction of widespread closures down from 19,247 to 15,000 by 1995. Forecourt shops were thriving, selling £1.7bn of goods during 1992. Shell unveiled plans to change Share in April. City pundits predicted the hypers’ bubble would soon burst hmmm. Shell cut margins by 1.5ppl. September brought a price-match challenge from Jet to the majors and in October, details of a poster campaign from Esso intended to show the inferior quality of supermarket petrol. Louise Nemanich (later to be dubbed ’Manic Hen’ by Mo’Gas) replaced Neil Lambert as manager, commercial sales at Texaco.
l Frost bought 17 sites from Texaco for £4.5m cash and Elf and Fina swapped more than 40 sites. Shell dropped its retail licence agreement as part of a £100m network revamp.
UK petrol sites 16,971
l Tom Souls replaced Mike Fretwell as general manager, retail marketing, at Conoco and John Auld, managing director of Kuwait Petroleum moved to become MD of the company’s Thailand operation. Sadly he died there suddenly in 1996. Come February, and the PRA was fighting changes made to the Undertakings. Elf commission operators were bracing for a fight over the new Optimate agreement.
l Elf marketing director Mike Saunders moved to Repsol, and BP licensees formed a National Action Committee. Texaco launched its new generation fuel Cleansystem3 and the Bayford Group bought 22 sites from Elf. Tesco opened two standalone sites with small convenience stores in May.
l Statoil, meanwhile, was setting its sights on Europe; and Shell’s long-awaited £25m Smart Card had been launched in Scotland. The Lottery bonanza took to the road in November, and the PRA challenged Texaco’s restructuring of margins as tantamount to ’price fixing’.
UK petrol sites 16,244
l The PRA won a decisive victory in its new campaign to gain off licences for forecourt shops. Tesco launched new low-benzene unleaded and opened its third Express site; Jet announced a £10m package to support Jetcash. Neville Cope took over from Phil Richardson as PRA president, but was dropped when he was ’copped’ taking pirate loads.
l In April Elf launched its new Formula Elf dealer package, and Bruce Petter complained to the Department of the Environment about Stage 1 vapour recovery legislation and its threat to rural dealers. Texaco’s manager, retail sales, Louise Nemanich (’manic hen’) confirmed a new retail strategy which involved selling off or exchanging more than 80 company-owned sites, and not renewing 200 dealer contracts.
l Jet announced a similar move, with plans to cut 230 sites, as it focused on its core marketing areas. Elf denied rumours of a sell-off. James Frost spent £83m acquiring Burmah Petroleum Fuels Ltd. Esso began trialling new shop ideas.
l And then it all began Pricewatch. Esso’s initial trials in Central Scotland and the Tyne Tees area triggered outrage among local retailers who dubbed it ’Doomwatch’. Shell sparked a debate about LRG with the launch of low-lead 4-star, supporting the PRA in its criticism of the Frost Group’s ’unleaded 4-star’.
l By November Sainsbury’s turned up the heat by announcing a nationwide pricing policy of 49.9ppl or less on unleaded petrol, while prices in the Pricewatch trial areas slumped to 44.9ppl. The OFT announced an inquiry as prices plummeted to below-cost levels. The Forecourt Trader of the Year awards were launched.
UK petrol sites 14,748
l The year opened with Bruce Petter pressing for an MMC probe. Then the bombshell, as Pricewatch was launched nationwide, and the 10-year Tiger Token promotion came to an end. BP and Mobil were forced to prematurely announce their merger plans in March. The Trade and Industry Committee agreed to a short inquiry into the petrol retailing sector. By May fuel marketing margins in the UK had slumped to a record low, but shop sales soared. Elf confirmed plans to launch shop-only forecourts, and a new, three-tiered shop format Le Shop. Manic Hen clucked back to America. Mark Goldspink took her place at Texaco.
l August witnessed a glorious moment for the PRA when the Commons backed its battle for fair play. Shell announced the axing of one third of its dealer network; Elf announced a link with Somerfield. David Charman, became our first Forecourt Trader of the Year.
l Disgruntled Esso licensees united to form the Esso Licensee Retailers’ Association. Both Fina and Total announced new shopping concepts: ’Locale’ and ’Rapide’; and BP opened its joint venture with Safeway. The year ended with Gulf, Elf and Murco announcing a merger; and Texaco reversing all of its ’Manic Hen’ decisions by re-opening its doors to dealers.
UK petrol sites 14,748
l The issuing of a Green Paper on vertical supply agreements gave retailers of all colours and status the chance to have a say on the legislation affecting the agreements they have with oil companies. The ELRA formalised its complaint to the European Commission over its well-documented grievances with Esso. Fina completed phase one of its multi-million pound redevelopment programme, and Shell appointed former Safeway executive Jim Rands to be responsible for its 850 Select convenience stores.
l Bruce Petter left the PRA and Murco decided to withdraw from its three-way merger with Elf and Gulf.
l Unrest in the Esso retail network gathered momentum as more than 200 retailers attended a gathering organised by ELRA. Unhappy Save retailers continued to complain; the OFT consulted directly with independent retailers for the first time; and a major blow for Elf as Gulf also pulled out of the merger and put its complete portfolio of UK assets up for sale.
l BP announced it was replacing its licence and lease in favour of self-employed managers. Shell put itself within reach of market leadership with the bid to purchase the Gulf network. It later announced a European restructuring, with the loss of around 3,000 jobs. BP opened the first of a new ’cluster’ site format. Ray Holloway became PRA director. FSB and the PRA called on oil companies to establish a code of practice in their dealings with independent fuel retailers.
l The FSB hit back as the EC decided not to pursue the complaint against Esso. BP’s Quantum agreement continued to cause retailer unrest; and Total’s trials with Victoria Wine triggered an outcry.
UK petrol sites 13,833
l Shell completed the purchase of Gulf’s UK marketing operations. Rikki Hunt, who now owns his own petrol retailing company Petrol Express, bought Oakstead Holdings. BP retailers continued to be wrankled over the Quantum agreement, so much so that Phil Richardson moved all his sites to Jet. The Esso Partnership Licence was slammed as worthless by the FSB.
l The OFT’s long-awaited report into the supply of petrol was declared a whitewash by petrol retailers and representative bodies. BP licensees and tenants were jubilant when BP met all their demands. Esso confirmed it was in talks with Tesco, and launched its first promotions since the end of Tiger Tokens ’Pump up the Volume’.
UK petrol sites 13,305
l The government considered whether to hold another investigation into the petrol retailing sector; while the PRA urged retailers to fight for a fair deal. The onward march of the supermarkets continued; while the Total and Fina merger looked set to go ahead.
l UKPIA and the AA called for curbs on fuel tax (sounds familiar!). The battle between Esso and licensees raged on. A report concluded that the huge European fuel surplus one of the central forces behind supermarket growth would be unlikely to ease until 2005. (And the rest!).
ATMs began to roll out. Elf fought a bid from TotalFina in vain. Texaco gained 80 Shell sites.
UK petrol sites 13,276
l An adjournment debate was held at the House of Commons about the problems endured by petrol retailers. Caroline Spelman MP urged retailers to write to their MPs to sign Early Day Motion 18.
l Shell withdrew from direct management on company owned sites and moved to retailer contracts. BP unveiled its new global branding and Connect, its new forecourt c-store.
l The ’Dump the Pump’ campaign in August was dubbed a damp squib as motorists continued to fill up, but later that month as oil prices surged to their highest for 10 years, protest action in France spread to blockades in the UK. Panic-buying drained most sites dry. The country came to a standstill.
UK petrol sites 12,990
l Esso was defeated in the Court of Appeal when four of its former licensees won the right to go to trial on whether Esso could make them pay for its Tiger Token promotion. Save Service Stations was put into the hands of administrators; Conoco’s 200 Jet-branded company owned sites were sold to Rikki Hunt of Fuelforce for £75m.
UK petrol sites 12,250
l The Euro was launched. Conoco management was out in force following the sale of its Jet-branded network to reassure dealers it wasn’t about to quit the UK. The date was set for the long-running battle between Esso and its retailers. Figures showed forecourt sites closing at the rate of 16 a week.
l BP announced a 40% cut in its workforce at Milton Keynes.
UK petrol sites 11,448
l Rikki Hunt’s 170-strong Fuelforce network dropped Jet’s Smile promotion. In-depth coverage of the long-awaited Esso trial got under way. Total announced a plan to close at least 200 of its company-owned sites. Harris International Marketing ruffled a few feathers after predicting that oil companies would withdraw from shop retailing by 2010.
l Judgement day for the Esso trial left even more confusion. The judge ruled against the 100 licensees on Tiger Tokens and hot fuel; and left many going back to county courts to get individual judgements.
UK petrol sites 10,867
l Retailers were showing unprecedented confidence about the forthcoming year. Having run out of steam, Esso’s Pricewatch campaign came to an end after an eight-year run. Morrisons completed its purchase of Safeway.
l Fears of a return to the fuel crisis of 2000 were raised as rising prices, threats of demonstrations and uncertainty in the Middle East made the headlines in the national press. A fighting fund to tackle the industry-wide problem of wet-stock loss was launched by the PRA. UKPIA said there was enough oil to last us for the next 50 years. Esso launched its Energy brand.
l Q8-branded retailers were uncertain about their future as Kuwait Petroleum GB was sold. The long-running court case involving former Esso licensees came to an end when their case was dismissed on appeal.
UK petrol sites 10,354
l The year kicked off with grim tales following the rollout of Chip & PIN with many retailers encountering problems.
Texaco did a ’Jet’ by announcing the proposed sale of its company-owned network, kicking off with the sale of 140 sites to Somerfield.
l BP retail director Graham Sims predicted bigger peaks and troughs in the retail fuel market. While Shell unveiled its plans for 100 ’clusters’, and withdrew from the whole of Ireland. The end of Fuelforce was in sight as its investors pulled the plug. Esso campaigned to recruit more dealers.
UK petrol sites 9,714
l With the Buncefield oil disaster taking place over the Christmas period, there was a question mark over whether it would be rebuilt. Greenergy International began construction of a £13.5m biodiesel plant. The Top 50 Indies listing was launched with Graham Peacock of Malthurst leading the field.
l Graham Sims left BP; Shell’s "cavalier attitude to pricing" came under attack, and as Drought Orders took effect David Charman of Parkfoot Garage called for a campaign to ban roadside car washing.
UK petrol sites 9,482
l Christie reported that property values had doubled with average retail property values rising 5.9%. Tesco took out full-page ads to apologise for contaminated fuel, as motorists flocked to indies. Top Indies group Philip Wilks & Son was sold for £15m and became part of Bishop Commercial Holdings.
l Asda and Tesco’s latest round of fuel cuts was another blow for indies. Flooding hit retailers in the West. The PRA called for a delay in the fuel duty rise. Shell was again slammed over discount pricing strategy.
UK petrol sites 9,386
l Forecourts were still hot stuff in terms of property prices; while biofuels bugs flourished in tanks. MPs caused consternation by suggesting retailers drop their prices to match the fall in oil prices. BP shocked its retailers by giving one month’s notice on Premia increases by email. Fuel card company Arval agreed to review its charges following uproar, and BP prepared to sever all ties with the company.
UK petrol sites 9,178
l The PRA was under review and retailers were shocked at plans for a tobacco display ban. The Chancellor backed down on business rate hikes, but the ACS was concerned about the 2010 revaluation.
l ExxonMobil Corporation announced plans to invest more than $600m in a new biofuels programme, as UKPIA warned of the huge challenge regarding developing and supplying the next generation of eco fuels.
UK petrol sites 8,884
l MP Philip Dunne joined retailers in their fight against the new business rates. RMI Petrol, now with Brian Madderson at the helm, called on retailers to support its business rates challenge. Volcanic clouds from Iceland caused huge disruption across Europe.l US company Murphy Oil put its Murco Milford Haven operation on the market; and Total UK confirmed the sale of its entire UK marketing assets.
UK petrol sites 8,765
l Following an icy Christmas period the news was all about the ’perfect storm’ triggering record fuel price hikes with worse to come. The Rontec consortium bought Total and sold 254 sites to Shell and the wholesale business to DCC. More arguing with Government about fuel duty hikes and so it goes on...
amanda barber discusses Changes in the forecourt property sector
l In the mid-1980s, there were circa 20,000 forecourts, with a two-dimensional market led primarily by the oil companies and independents. There was a steep increase in property values from 1987 to 1989, following which values declined significantly, with the annual reduction trailing off during 1992.
l In the ’80s, we used a single valuation rate (for the forecourt, shop and valet) of £1 per gallon! This approach didn’t allow for any distinguishing factors (eg shop sales, pricing, valet sales), but the shops were smaller (c 250-350sq ft) and sales minimal (£100,000-£150,000). So, a one million gallon site equalled £1m!
l At the end of 1995 Esso introduced its ’Pricewatch’ scheme, which radically altered the market. During 1996, the forecourt market was virtually devoid of transactions, as operators sought to maximise returns from their existing facilities. Any expansion which took place was through mergers such as BP/Mobil and Shell/Gulf.
l By the mid 1990s, there were circa 14,000 forecourts and the market was starting to acknowledge different profit centres as forecourt shops grew in importance. As a result, joint ventures with superstore or c-store operators, for example BP/Safeway and Esso/Tesco Express, became a pre-requisite for development.
l In the ’90s, there was some movement towards a ’profit’ approach (although still fairly crude), but now we were valuing shops separately from the forecourts usually on a rate per square foot basis. Shop sales were, however, still low compared to today and the shops small (typically, 500sq ft was a large shop and sales were £250,000-£350,000).
l By 2000, the number of petrol filling stations dropped again to circa 8,500, but the market started to get a bit more sophisticated. The market has become more high quality, but it is still an under-developed one hence the reason why it still attracts new interest.
l We now use a ’profits’ approach to value forecourts and this is firmly established, allowing for individual characteristics. It gives flexibility to recognise reduced margins (in some locations) of a superstore operator or premium pricing in a monopoly location.
looking back with Derek Lodge, chairman of rusdene services
The one certainty in our industry over the past 25 years has been there is no certainty. We started our business in 1986 much the same time as Forecourt Trader. At that time the over-supply of refined product gave retailers unprecedented margins. It also provided the major supermarkets with cheap and plentiful supply. We knew it couldn’t last. High fixed margins, with the hypermarkets cutting the price, were untenable. Pricewatch was a bloodbath.
Many companies were ’one trick ponies’ cut-price fuel retailers who did not have well-balanced retail businesses went bust. Those companies which had preinvested in more balanced businesses not so reliant on fuel survived. We thought this had settled down and then the blockades of terminals in 2000 caused another crisis and the subsequent unfair practice supported by the Labour government to hold prices down against the market saw another wave of companies going bust. Over the past 10 years we’ve seen the development of the large independents with Malthurst, Euro Garages and Park Garages leading the way. Singleton operators struggle unless in niche markets with broad-based businesses.
What of the future? More of the same uncertainty, change, and high investment costs. More closures again and only well-balanced businesses will survive. Continued unfairness, some oil companies selling product on their own sites at prices lower than they supply us. Hand car washing fuelled by recession, cheap labour and cash continuing to hurt our car washes. Continued over-investment in a no-growth retail market by the hypermarkets.
The good news is that excellent companies like Budgens and Nisa can provide independents with a product range to compete at the top end of the convenience market. Hypermarkets will have to make a profit somewhere and the continued investment by them will inevitably lead to diminishing returns. Good investment is the only worthwhile investment so we continue to invest but become ever more careful in our financial projections. We are in the most difficult period since the war and probably ever in the fuel industry. Just be good at what you do.
Paul Sykes ponders the past
In 1987, the country had 20,197 sites. We ran 11 a mixture of licensed and owned. We turned over £7.7m, of which £7.03m was fuel (21m litres!), £633,000 shop and £29,000 car wash revenue. To put that in perspective, last year we had five sites turning over £30.5m, of which £22.2m was fuel (25.4m litres), £8.17m shop and £135,000 car wash revenue. Our balance sheet value then was £389,000 and we had an operating profit of £107,000 a 27.5% return on capital employed. Happy days! Most of our sites were with Texaco these were the days before the ’Manic Hen’ and they were a great company to deal with. Supply contracts guaranteed margins of 5ppl, though we used to take large amounts of money ’up front’ to develop the sites. The shops were generally no more than large kiosks selling a limited range.
By 1988, the country was down to 20,016 sites but we had 14. In 1989 the country was down to 19,756 and we were up to 16. We peaked at 17 sites in 1990, by which time the country total was down to 19,465. The players then who are not around today Elf, Burmah, Fina, Anglo, Q8, Mobil, Flare. The Gulf War had started for the first time. Dick Dasent, managing director of Repsol (UK) was preparing for ’Quantum Leaps’ after buying Carless (great name for a petrol company!).
In 1992 Statoil announced that its strategic plan included UK downstream. The hypermarkets had grabbed 12% of the motor fuel market and Bruce Petter, director of the PRA, "believes that their foray into the spot market is little more than an attempt to profit on low prices". He did not see them "becoming fully-fledged oil companies". Stage 1 Vapour Recovery was being promoted.
On to 1993, and site numbers were down to 17,969. In 1994 they were down to 19,971. In 1995, 850 supermarket sites held 24% of the market. In September, I became President of the PRA. Esso had trialled Price Watch in the North East and went national. Bruce Petter announced prophetically that "Five year solus ties are beginning to act as if in a restraint of trade".
I spent 1996 doing the rounds with Bruce Petter, attending meetings where anxious retailers wondered how they would survive. The advice we gave to many of them was "get out now". Meanwhile, Esso announced that no oil company could afford to run a promotion ever again. Site numbers were down to 14,748. I spent many long days working with Bruce Petter on an unsuccessful attempt to get the OFT and Parliament to look into competition and predatory pricing. Our prediction of a reduction to 9,000 sites was ridiculed at the Select Committee hearing. The fierce price war between the oil companies and the supermarkets in 1996-97 saw margins plummet and some 2,300 sites close in two years. The oil companies lost, of course. Remember Save? Nobody could, of course. "Want a tip? Sell Save".
Today site numbers are below 8,500 and 1, 316 supermarket sites have 47.6% of the market. My prediction for the year 2037? I shall be 78, if beer doesn’t see me off beforehand!
down memory lane with manor service station’s Peter Brough
Oh for 1987 again! We were in the middle of the Thatcher growth years; the economy was growing; car ownership and fuel sales were still rising; the unions had been sorted out (mostly); and all seemed full steam ahead.
As far as our market was concerned it was firmly split into oil company owned sites selling at a sensible level to achieve a reasonable margin; and very largely dealer operated on licence or lease; dealer owned as a mix of small singletons up to large independents such as Heron or Save and supermarkets. Generally speaking there was no significant price cutting other than the few supermarkets and we all operated on a reasonable margin. It must be remembered that although we were affected by supermarkets, there were far fewer of them and the price difference was not as great as today. And, fundamentally, national fuel sales were growing year-on-year to help take up the losses.
Those sites that were operated by dealers, whether on lease/licence or owned by them, were by and large on fixed margins and did not even have any allowance for price competition. It would be nine years later with the introduction of Esso’s Pricewatch that everything would change.
I cannot remember whether the dreaded words ’global warming’ had been uttered. They probably had, but it was certainly not having any impact on how we operated our businesses. True, unleaded petrol had been introduced in 1986, but that was because of the harmful effects of lead in fuel and nothing to do with climate change.
These may seem like halcyon days, and in many respects they were. Life as a petrol station operator was simpler, easier, and you could predict how your business would fare for at least the next year. The big investment in shops was only just beginning. We were learning as we went along and either making expensive mistakes or not being adventurous enough.
Computerisation had come along with the development of the Edacom. Shop sales development would just not have been possible without computers. Suddenly there was a plethora of control equipment all trying to get onto the shops bandwagon. Some of us believed it was a flash in the pan and shop sales would never be more that a side show!
The big differences between 2012 and 1987 are obvious, but the industry today still has to manage change. For me it is just as challenging but not as enjoyable, or is that the cry of a man getting older?
Phil Richardson, Park road
In 1987 I had 12 petrol stations (eight now) and remember being very concerned that we weren’t able to compete in the market then we had problems competing with oil company-owned sites. The main thought was that the industry would shrink and that big oil companies would dominate. But I didn’t anticipate the growth of the multiple independent I didn’t think oil companies would shed so many sites. I became PRA president in the early ’90s and used to be called Dr Death because I predicted continuing site closures in the UK and coined the phrase ’fuel deserts’ in an article I wrote for The Independent. I also didn’t anticipate the huge growth of the hypers and the damage they would inflict but it was refining over-capacity that let the genie out of the bottle. But all of those troubles pale into insignificance compared to now.
Rikki Hunt, consultant
I was headhunted by Elf in the late ’80s as head of retail as I’d been running Sperrings/Circle K stores on some forecourts and there was a move in the industry to add better stores. A key issue was the arrogance in the oil industry about the grocers there were only 150 then. It was obvious they would take more share they just had to use their car parks. There was also arrogance about brand oil companies thought motorists came to their sites because of their brand, not because they were there! Esso’s Pricewatch campaign was a mega turning point, challenging the hypers on price. It’s been all very much a time of change but it was the best time of my life.