The past year has been a busy one for the PRA, and its chairman Brian Madderson expects there will be no let up in 2014.
Much of his time in 2013 was spent challenging and educating arms of government, such as the OFT, Department of Energy & Climate Change (DECC), The Treasury and HM Revenue & Customs (HMRC), and many of those battles are set to continue.
Duty deferment offers one of the most exciting prospects this year. After frustration at the end of 2013 when HMRC was unjustly blocking applications by PRA members for duty deferment, a meeting with Treasury Minister Nicky Morgan appears to have loosened the logjam.
The OFT played a major role in 2013, giving a clean bill of health to the market at the start of the year. It then looked rather silly when European competition regulators raided the offices of several oil companies to investigate allegations of market rigging, and DECC admitted its figures, which had underpinned the OFT report, had strongly understated the supermarkets’ share of the market.
While the European report is awaited, the PRA is highlighting a breakthrough in Australia, where supermarkets agreed to cap below-cost offers on their fuel, and will be pressing for a similar cap in the UK.
The PRA will also be campaigning strongly about the UK’s "energy resilience". With independents accounting for about 65% of forecourts, and DECC admitting its figures on the supermarkets’ share of the market were wrong, it has now set up a working party with the PRA to re-examine the National Emergency Plan.
On the trade side, John Lynn, managing director of MRH (GB), the number one in Forecourt Trader’s Top 50 Indies list, believes there is some positive momentum going into 2014. He says: "There are signs of economic recovery, but the question is whether it will translate into transport growth and higher fuel sales? In 2008, the economy fell off a cliff but will it come back? The market fell by about 7% between 2008-09 and I don’t think we will get it all back, but 2% or 3% would be good."
The convenience sector is also forecast to grow through to 2020 and Lynn says this can only be good for the forecourt sector.
On the supplier side Esso is likely to continue its sell-off of sites while BP can be expected to continue rolling out its successful partnership with M&S. The fragmentation of the logistics underpinning supplies will also continue with a proliferation of "non-traditional deals".
Looking at the refinery sector, Lynn says there are rumours about closure or sell-off of a site, and while he believes that importers could fill any gaps in the market, he says the government will probably be getting worried about the capacity in the industry.
Turning to the supermarkets he does not expect any change in their pattern of opening new sites, but he questions Asda’s stated aim to open 100 standalone forecourts by 2018. "Where are they going to get the sites," he asks, "unless they are going to buy one of the top indies?"
Ilyas Munshi, commercial director of another high flyer in the Top 50 Indies, Euro Garages, expects the competition will be unrelenting, but he believes the market is improving. He says: "These are still challenging times for the industry. Fuel pricing is very competitive and forecourts need to have a strong convenience and non-food offer. Some of the smaller independents will struggle with a number facing closure or exiting the industry.
"Overall though, the outlook for 2014 is very positive. We have had a very good December with sales ahead of last year and consumer confidence appears to be returning which should be good for business and we are expecting a very good year for Euro Garages.
"We will be investing in growth and looking to expand the estate in the south and consolidating in other areas such as the Midlands. With the oil majors continuing to divest their estates, there will be considerable opportunities for block acquisitions of sites and we will hope to pick up some of these."
Another independent that saw strong trading at the end of 2013 was Symonds Forecourts. Managing director Nick Lloyd says that trade was up 10% on a like-for-like basis over the Christmas period and he expects it to continue growing in 2014. He says: "For innovative and bold retailers the opportunity for growth is there."
What is vital, he says, is for forecourt operators to understand their market. They need to talk to their customers and their staff and tailor their offer to the demographics of their market. In some areas a quality offer like Budgens which Symonds has, will be most appropriate, but in other areas a value offer may be required, and this is why Symonds is working on a value concept.
He says: "In the wider market Aldi and Lidl are doing very well at the value end while at the quality end Waitrose is growing strongly, but the middle is struggling. There is a need for forecourts to differentiate and not get caught in the middle."
The same dynamic is visible on the fuel side, he says, where many customers are looking for quality. "We are seeing good sales of premium fuel and the strength of the brand is more important than ever, but there will be other areas where a value offering will be appropriate."
Suppliers expect to see growth too. Andrew Owens, Greenergy chief executive, says: "Dealers are responding in different ways to an increasingly competitive marketplace. We expect some of the Top Indies to continue to get larger as they look to achieve economies of scale and greater buying power. We also expect to see further growth in brands such as Nisa on the forecourt as dealers choose alternatives to the traditional supply and brand models. In all cases, dealers are looking for greater choice and flexibility from their fuel supplier."