As another major name plans to exit the high street, forecourt industry commentator Jan Mikula looks at why petrol retailers seem to be avoiding the retail blues.
Hardly had we gotten properly into January when the news leaked out that one of the oldest names in UK retailing, WH Smith was looking to sell-off its remaining high street branches and concentrate on its railway and airport retailing businesses. While those high street branches are apparently still trading ‘profitably’, they are now relatively insignificant to the company’s overall income these days. And what was left unsaid is that the outlook for them is hardly positive.
In common with some other traditional retailers, who shall remain nameless, their shops look somewhat tired to put it politely and in need of some major refurbishments; but the larger question seems to be what exactly are these outlets supposed to be? Historically, WH Smith’s core offerings were news and books, and at one time, music and video; but the former is a dying market and the latter are today served by more specialised physical or online retailers.
And within days of the WH Smith’s news, Lloyds banking group announced that yet another 130 or-so of its high street branches were to close over the next 12 months. As with all of the bank closures in recent years, the reason was that they were under-used: customers are doing their banking online or on their mobile apps. Sounds perfectly logical, but again, and not only in Lloyds case, have you been into a bank branch recently? In the ones that I still occasionally use, where there used to be five people serving customers there are now two, and another one directing customers to the same machines that you can find outside; all around the walls are large TV monitors running constant adverts for the services they offer online or by phone. And everything from the carpets upwards looks tired – that word again. It sometimes feels as if the big banks had deliberately tried to put-off customers from wanting to go into their branches. Surely not…
With this background, it was a pleasant surprise to look at Forecourt Trader’s news articles in January, which paint a rather different picture of the fuel retailing sector. Individual owners are investing money in new facilities – both traditional, such as their shop premises, or futuristic, including more EV charging points; and there are reports of bigger groups still looking to acquire more sites, etc, all suggesting that this sector is buoyant at the moment. And long may it be so.
But this rather begs the question as to why is it that while the high street is clearly dying, the forecourt sector appears quite healthy in comparison? After all, both suffer many of the same issues: technological change, ever-rising overhead and direct operating costs, and what the British Retail Consortium has just described as an ongoing “Out of control” crimewave against retail premises and staff.
One obvious difference is that people have to buy fuel, and food, from somewhere, whereas much of the high street today is merely about discretionary spending. Is there anything in a WH Smith shop, for example, that you can’t buy somewhere else, such as a forecourt shop? However, the forecourt sector faces the ever-growing challenge of EVs to its traditional market, and some of that competition may come from unexpected entrants who won’t necessarily think of traditional forecourts in their model. It probably wouldn’t be wise to rely on the need for fuel as the sole saviour of the forecourt industry as we know it today.
Perhaps one essential factor in the relative health of the forecourt sector compared to other retailing at the moment, is that whether by accident or design, forecourt operators have not forgotten their core market, nor have they rushed to completely replace humans with technology. Perhaps more importantly, they have maintained continual investment into their premises – even if sometimes piece meal, or forced by legislation, etc. While some forecourt designs today may seem like a bit of a jumble of multiple competing and clashing brand-logos that often completely obscure any overall identity, the fact is that owners have continued to improve their facilities. Tired sites don’t stay that way for very long; there are people out there willing to snap them up and invest to improve or completely re-build them.
The takeaway from all of this is that the forecourt sector’s survival/success is not just an accident – it’s all about continuing investment.
- Jan Mikula represents nationwide franchise accounting company EKW Group – ekwgroup.co.uk