This has been a turbulent and exciting year for petrol retailers with the independent sector powering ahead to represent nearly 70% of all UK forecourts. The decision by the remaining oil majors to continue divesting their retail assets has enabled a few of the larger independent groups to grow quickly and impressively, but some smaller multi-site operators have also been on the acquisition trail. 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.
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. However, the larger well placed forecourts sold off by the oil majors are being re-developed as roadside retail destinations, with franchises such as Subway, Greggs, Starbucks and Burger King proving popular additions to premium fuel brands.
Additionally some wonderful ’new-to-industry’ sites and ’knock-down-rebuilds’ have opened over the past 12 months by companies including Brookfield, Valli Forecourts, Blakemore Retail, Mitha Forecourts, James Hall, Exelby Services, HKS and many others. Nearly 40% of independents now have established symbol brand convenience offers as a vital income stream to supplement variable fuel margins. These sites provide a compelling customer offer so the market is no longer in a race to the price floor.
Certainly the collapse of Brent Crude from US$115/barrel in mid-2014 to below US$45/barrel just six months later resulted in a massive reduction to pump prices, which in turn, has helped keep inflation low, boosted economic recovery and pushed up demand for road fuels.
While ever mindful of the volatility inherent with commodity prices, there are no signs of an imminent upward surge in crude costs, and the phrase on everyone’s lips in the oil industry is ’lower for longer’. But we must be cognisant that one day when global demand does rise above output again, the recent investment cutbacks in oil exploration and production will impact swiftly on market price levels.