Last year saw a major landmark for the dealer sector in the UK as it powered ahead to represent nearly 70% of all UK forecourts.
The decision by the major oil companies to continue selling off many of their retail assets has enabled a few of the larger independent groups to grow quickly, but some smaller multi-site operators have also been on the acquisition trail.
While MRH, MFG, Euro Garages and Rontec took the lion’s share of the sites sold off by Esso and Shell, smaller companies such as HKS, Golden Cross Group, Synergie Holdings Spring Petroleum,Valli Forecourts and Chedgold were all successful in bidding for smaller packets of Shell sites. HKS more than doubled its size over the course of the year when it also added Brobot’s 23 sites to its Shell acquisitions.
PRA chairman Brian Madderson comments: "This is a refreshing change from the years of attrition caused by the rise and rise of the big four supermarkets which has seen over 4,000 small often family run filling stations wiped out since 2001." But he adds: "This miserable trend will continue for the less well positioned and financially damaged forecourts with 150 to 200 likely to close this year and every year for the foreseeable future."
But the companies which are able to invest in their businesses are redeveloping their sites as roadside retail destinations with franchises such as Subway, Greggs, Starbucks and Burger King featuring on a growing number of forecourts. Additionally several state-of-the art ’new-to-industry’ sites and ’knock-down-re-builds’ have opened over the past 12 months, developed by companies including Blakemore Retail, Brookfield, Exelby Services, Euro Garages, HKS, James Hall, Mitha Forecourts and Valli Forecourts.
David Moss, Shell’s retail general manager, North Europe, comments: "I’ve been impressed to see the level of investment that dealers are making to improve their facilities for customers. I’m seeing well-maintained, clean sites with services that are designed to give customers a great retail experience.
"More dealers are optimising their facilities through a strong convenience offer for motorists on the move, as well as identifying smart co-locator opportunities that work for their local communities. This isn’t just good for individual businesses but is good for our industry, raising standards and injecting strong competition. Last year was an important year for us as we welcomed more dealers to Shell, and I’m looking forward to the shared opportunities and possibilities to grow together over 2016."
Independents are also proving open to support from retail experts with nearly 40% of independents joining symbol groups, and Jet has even gone as far as agreeing a deal with Spar to provide its members with the option of joint branding for their sites.
Another positive vote of confidence in the independent sector is the growth of interest from the City. Last year saw the flotation of Applegreen and private equity deals for MFG and Euro Garages valuing the two companies at £500m and £1.3bn respectively. Speculation is rife within the industry that another big name will be concluding a similar deal early this year. Ilyas Munshi, commercial director for Euro Garages, says: "The interest from the City presents a lot of opportunities for companies to work with investment partners and make the shift to the next level."
But while there are many optimistic signs as we enter 2016 there is also some unease about the way plummeting oil prices have affected pump prices, and the way the supermarket groups are driving down prices even further in a desperate bid to drive footfall. Brian Madderson says: "It is interesting to observe the dynamics of UK grocery retailing which has dealt such a swift and negative blow to the out-of-town superstores. As the German discounters continue to develop new stores and build market share (Aldi and Lidl together doubled to over 10% in the past three years), online shopping increases exponentially and convenience stores prove ever more popular, the out-of-town behemoths struggle for business."
But one point of difference between the superstores and their discounter rivals is the fuel offer at many of their sites, and headline grabbing price cuts are seen as a way of winning back customers. Fuel at cost or below cost and subsidised by shop sales have long been a weapon in their armoury, but Nick Lloyd, managing director of Top 50 Indie Symonds Forecourts, believes it has been stepped up a notch recently.
He says: "Particularly in the past six to eight weeks, the supermarkets have been taking a really aggressive approach on pricing and using fuel to drive footfall, and that’s been having a significant impact on the rest of the sector."
But the independent dealers who are in business now have been coping with these types of tactics for years and he believes they will find a way to deal with the latest wave of price cuts.
He says: "We have to be ready to adapt and that is what the independent sector does best. The pressure on fuel prices makes the retail offer even more important."
One of the changes he believes dealers should be focusing on is ensuring their shop offer is tailored closely to their customers’ needs.
He says: "We are seeing a separation on the forecourts. You either have a convenience store or a transient/food on the go store and there’s no room in the middle any more because it has to be one or the other for the consumer."
Whether the massive oversupply in the oil market continues to depress prices at the pumps, or the troubles flares in the Middle East and causes a sudden surge, it looks as though dealers will be ready with a strategy to thrive.
News Review of 2015
Prices "crash" by 4ppl in six days with Asda taking unleaded to 105.7ppl and diesel to 112.7ppl, but AA dismisses talk of averages below £1 per litre. Petrogas opens its 50th site in the UK.
Prices continue downwards with one independent offering unleaded petrol at 99.7ppl, but David Cameron says retailers are not doing enough and prices should be falling "further and faster".
Asda buys 15 sites from Rontec as it aims to open 100 standalone petrol stations by 2018. Supermarkets quietly increase prices by 3-4ppl. Shell rolls out pay by phone and Autogas re-brands.
Esso announces the successful bidders for its final tranche of 201 sites. Euro Garages gets 104, with MRH taking 78 and Rontec 19. MFG makes Murco a brand exclusive to dealers and agrees new supply deals for its 200-plus sites.
Shell concludes sale of 185 sites with MFG taking 90, and Euro Garages adding 68. A BOSS study finds fuel theft is costing an average of £3,600 per forecourt. Harvest steps up its recruitment programme.
Petrogas unveils plans for flotation of the company and changes name to Applegreen. Jet secures deal for Amazon lockers on dealers’ forecourts, BP puts 13 sites on the market, and final stage of Gloucester Services on M5 opens.
Private equity firm takes stake in MFG valuing company at about £500m, and Applegreen flotation raises £67m. PRA raises concerns with government after claims a police force is no longer treating drive-offs as a crime.
The average price of diesel at the pumps falls below unleaded petrol for the first time in 14 years. Rontec and its sister company, Snax 24, merge and sign a five-year £1bn fuel supply deal with BP.
The first Jet and Spar dual-branded site opens after a deal between the two. A dealer wins a key victory in the legal battle with HMRC over duty deferment. Volume sales of petrol plummet despite falling prices.
Westmorland wins the Forecourt Trader of the Year award for its Gloucester Services on the M5. Shell signs a deal to open hydrogen refuelling stations on three of its sites in the South East of England.
MFG signs deal with Morrisons to trial new convenience retailing concept on its forecourts. A venture capital group takes a minority stake in Euro Garages that values the company at £1.3bn. Asda slows standalone expansion.
Top 50 indie HKS grabs all the headlines, doubling in size with the acquisition of Brobot and hosting the first Essar-branded site. With average prices close to 103ppl some dealers offer unleaded petrol at 99.9ppl.