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.
"There’s an awful lot going on in the sector at moment," he said. "The number of closures slowed dramatically and in 2012 as in 2011 there was a net drop of only about 100 sites. Closures have slowed dramatically and we’re down to 8,600 open sites."
He said these were net closures as some former sites have come back on stream: "These were sites that looked like they’d come out of the industry forever but have come back in because it’s easier to get planning permission if there’s been petrol sold there before."
The grocery multiples increased their number of sites by 40 during 2012. "There are new sites scattered around, coming on stream mostly from the supermarkets, and more in the pipeline," he added.
Renshaw said one of the most interesting things to note was that very few really rural sites had closed. "These are sites that are probably seen as not viable but they are a service to their community so have not closed."
He said more good news came from the fact that: "If you ignore Calanike in Scotland, as an industry there have been no major financial catastrophes we don’t have an HMV, Blockbusters or a Jessops.
"You hear horror stories; people trying to make something out of the drop in petrol volumes but in fact, according to DECC figures, the market is only down 1% the same as in 2011. Petrol is a bit more down but diesel is up. The fact is the market is still there and we are not losing any significant volume."
Renshaw then pointed to a Sunday Times article which talked about the huge improvement in vehicle efficiency. "So that 1% drop could be down to better fuel efficiency," he said, and added that it’s actually cheaper to run a car than it was 20 or 30 years ago.
Another positive note for independents was that the hypers’ fuel market had been curtailed.
Renshaw said that although they had 40% market share with 1,311 sites, their volume growth was flat and they were just exchanging volume between themselves.
"This is because more people are shopping locally so local sites with neighbourhood support are doing better. Supermarket volume is flat; co-owned is down; and dealer/indies is up."
The good news kept on coming. Renshaw said dealers had a much wider choice and "less chance of being stuck with one supplier".
"Dealers are now able to determine their own supply, their own distribution and their own brand," he said, but asked what this meant for consumers and whether it was a case of ’is what you see what you get’ as there could be cases where the fuel below ground is not the same as the brand above ground.
Renshaw signed off by saying that January had not been as bad for the market as people thought it was, and February and March had been "pretty good".
Amanda Barber, partner at Barber Wadlow, told the audience that 2012 had been a busy year with acquisitions, disposals, investment management, rent reviews and valuations.
"From our research, we believe 1,100 petrol filling stations (PFS) were transacted last year a staggering 13% of the total number of PFSs in the UK.
By our reckoning that makes 2012 the most active year in terms of property transactions in the PFS for at least the past 15 years."
She said the industry was changing fast but according to the Barber Wadlow Property Value Indices, values increased only modestly across the market.
She added: "In reality there were more significant increases in value for top-end sites."
Barber said there was an "established rental market for PFSs" and it was not unusual for a premium site to command a rental of £250,000 a year.
"In my experience supermarkets at the top end are gaining volume. The average volume for a supermarket site is 11mlpa but I’ve seen them pushing 30mlpa."
Her prediction for the next 12 months was that supermarkets would start to improve their forecourt shops. She pointed to the private equity firms that are now entering the market. The reason? "The untapped potential, particularly of the retail offer."
Barber’s business partner Adam Wadlow then took to the stage to talk about the need to keep ahead of market.
"One hundred and fifty sites have come back into the market in past two years. You can’t sit still. You’ve got to consider your long-term business strategy and need to protect your market place."
He signed off with a radical thought: approach a supermarket to lease your site.
Next up was the PRA’s chairman Brian Madderson (main picture) who announced that 43 out of Forecourt Trader’s Top 50 Indies were now members of the PRA.
He then spoke about the organisation’s ’wins including the government’s deferment and cancellation of fuel duty increases and the hope that another duty increase in the term of the coalition was "unlikely".
Madderson mentioned the spiralling costs of fuel, stating that a 38,000-litre tanker load cost a retailer £51,000 last year, up from £25,000 in 2002.
As a result he said independents are operating on the lowest stock possible for cash-flow reasons."
He finished with these recommendations:
Move the duty point ex-rack to dispensers; "we need a duty deferment arrangement," he said.
Business rates rural relief change the methodology for c-stores as at the moment it’s anti-competitive.
Planning needs to protect existing PFS.
Delay on the introduction of E10 as it was "coming in before we are ready for it".
Mark Lodge of Lloyds TSB, told the audience that his bank viewed the forecourt sector as "low risk" because fuel is a commodity and is therefore essential. He added that barriers to entry into the sector were very high so only serious operators could enter.
Lodge said that Lloyds TSB was currently financing two knock-down rebuilds.
"If your bank doesn’t understand petrol retailing, please educate them," he said.
But he had a warning about the PRA’s call for duty deferment. "In every other industry where this happens, government wants a guarantee."
Our survey says...
Exclusive forecourt shopper research from him! found that although those surveyed were happy to have a forecourt shop that was open long hours there were still some niggles. Aside from fuel prices, queues at the pumps and in the shop were the biggest gripe.
Him client manager Katie Hemmings said solutions included pay@pump; fuel-only lanes; and contactless payments. She added that one customer said a hand-written sign in-store apologising for queues at busy times was a nice touch.
With a nod to Forecourt Trader’s new Forecourt Loo of the Year award, she said toilets were important because the shopper’s view was that if they were not up to standard what did that say about the rest of the store?
She advised forecourt retailers to ’be famous for something’ whether it was excellent customer service or great food-to-go, but obviously not long queues or dirty toilets!
KerryFresh gave a presentation stating that it wanted to "be famous for being the UK’s premier chilled delivery service". It also unveiled an exclusive range of 12 microwaveable snacks.
Rollover shared its success with hot dogs and the fact that it sells over 20 million a year. Ron Perry & Son and MRH Rugeley were shown as examples of forecourts that are doing well with hot dogs.
Cuisine de France shared tips on how to fulfil the breakfast, lunch and snacking missions in-store.