Forecourt Trader - 30 years at the heart of the fuel retailing community

Brand designs

03 April, 2009
Why getting the right name above the door can help you stay ahead of the game. LINDA HARRISON reports
Page 39 

In 2009 most recesssion-hit shoppers are looking for one thing when they get out their wallets: value for money.

And having a recognised brand name associated with your business is one of the strongest ways to be seen to be offering this.

That's according to the Institute of Grocery Distribution's (IGD's) senior business analyst Stewart Samuel, who says the symbol groups are still actively targeting forecourts, and there is no sign of a slowdown in retailers joining them. He says: "There are many benefits to an independent forecourt operator joining forces with a symbol group, such as getting a strong brand above the door and the high recognition for that brand by the consumer. In addition, at the moment everyone seems to be investing in entry-level and private-label products, for example Musgrave has launched its Good Value range and Spar has its Extra Value products. Shoppers are more constrained with their spending than they used to be, more under pressure, and the most successful retailers are selling these kind of value products. Retailers can also benefit from advantages like better supply chain efficiencies."

Samuel says one trend in the area is in the growth of food-to-go. Early data from the upcoming IGD report The Evaluation of Convenience Retailing, due to be published at the end of this month, shows there is growing penetration of food-to-go in forecourts - and that this category is growing faster in forecourts than in other areas of c-store retailing. Samuel explains: "We've seen companies like Subway targeting the forecourt sector, but all the symbol groups are developing their hot food offerings. There's a strong match between food- to-go in forecourts and what the symbol groups offer."

One of the fastest-growing brand names in the sector is Spar. Between the beginning of this year and mid-March it added 62 new forecourts to its UK network, bringing its total number of outlets to 624. The company says its offer is a "total retail solution to meet individual retailer needs in varying locations".

The symbol group is focusing specifically on its range of products, especially food-to-go, as well as fresh food and the Spar brand. Meanwhile, it says working with the main oil companies lets it show how it can cater for different kinds of sites.

Capper & Co, one of Spar's six UK regional distributors, is also ramping up the forecourt side of its business. Bryan Walters, Capper & Co sales director, says the company has increased the number of independent forecourt operators it supplies by 94% in the past three years - from 69 to 134. The company, which covers the region from west Wales to Kent, is actively looking to grow its network further. Walters says it's more important than ever for retailers to join forces with a symbol group, and that being associated with a brand identity gives consumers extra confidence in the offer in store. Other advantages include:

? Being connected with a vibrant and quality own-label. According to Walters, this can offer price advantage, better margins and add footfall.

? Access to the symbol group's marketing programme. Walters explains: "You can't survive without a marketing programme, particularly in today's marketplace. You've got to tell the customer what your offer entails and make sure it fulfils their needs. And it has to be flexible enough to suit different kinds of sites. With Spar you get two hits because there's the national Spar programme as well as local support."

? Business development support. Walters says: "It's difficult if independent retailers are trying to think about how to run their business along with keeping up with new legislation and keeping an eye on the competition. With a symbol group you get a bespoke business development adviser and have access to help with staff training, planograms and HR resources."

? The ability to react quickly to changing market conditions. Walters explains: "With the credit crunch, the multiples have moved very quickly to come up with economy ranges. We constantly benchmark ourselves against the multiples and we move quickly. We've launched our No Nonsense range in response to the economic conditions."

? The opportunity to network with other retailers at events and conferences.

== Key to survival ==

Walters adds: "To be independent in today's marketplace is becoming increasingly difficult and stressful. Tesco and Sainsbury's are all on the forecourt. These guys set the bar as far as the consumer is concerned, and to not have the support of an organisation means you will struggle to survive in the long term."

Meanwhile Musgrave Retail Partners GB is launching around 50 new lines under its Good Value label this year. The range includes fresh lines such as bacon, ham, cheese, apples and tomatoes, plus impulse and staple products like cola and crisps. It is also planning to develop around 500 own-label lines across Budgens and Londis this year, rebranding existing lines and reviewing areas for new product development.

Musgrave has pledged a £10m investment to support retailers in 2009. It is also offering Londis retailers a range of price-marked packs on key brands across grocery categories.

Alison Welham, UK franchise district manager at BP, says its retailers benefit from the security of a company network of 350 sites behind them.

She says: "The most obvious benefits of signing up as a BP franchisee are the improved margins. Currently our sites achieve an average of at least 30% after all franchisee costs, with higher margins achievable on highly transient locations. There's also access to the award-winning Connect and Wild Bean brands, and we offer total business support to all our franchisees. Furthermore, operation of a BP franchise gives access to our supply chain and the range of high quality marketing offers and promotions. We have a vested interest in the overall performance of our franchise sites and our objective is to make franchisees' businesses as profitable as possible."

Welham says the company converted 19 sites last year, taking the total to 32. And the small format concept was fundamental in giving smaller sites access to Connect and Wild Bean. She adds: "During 2008 we took a long hard look at our offer and operation. We sought feedback from our franchisee and dealer partners and subsequently made some significant changes across all elements of the offer from the sales process to day-to-day operations. We had to become more flexible with regard to fitting our offer into existing sales buildings and equipment and as a result we significantly reduced the cost of conversion."

The company aims to convert another 25 sites this year, some of which will be with existing franchisees.

Welham adds: "We fully appreciate that the current economic climate is challenging but our offer will materially improve business performance and on average our projects pay back in less than 18 months on margin improvement alone. In many cases the additional incremental sales results in payback in much shorter time scales."

And of course this year we will see the first pilot of the Marks & Spencer Simply Food franchise by an independent retailer. The much-awaited trial will take place at Jonathan James' Witchford Road Service Station in Ely, Cambridgeshire.

Finally, Tom Endean, marketing manager of trade body the British Franchise Association (BFA) urges retailers to think carefully about which brand to join forces with.

He explains: "There are many advantages to running a franchise - although you're technically just one person running a business, you have access to the kind of support that a corporate business might have.

"But at the same time it's essential to make sure you're putting your business next to the right name - and one that has a reputation that's carefully looked after."

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=== Case study: Euro garages ===

== The retailer has converted most of its sites to Spar ==

Euro Garages - number four in our Top 50 Indies list 2009 - says the Spar roll-out is key to its plans to boost revenue and create a strong community retail offering.

Director Mohsin Issa says: "Our entire strategy has been to buy rundown or derelict sites and invest in them to increase traffic and retail sales. Teaming up with an instantly recognisable brand helps us achieve that far quicker. Consumers are bombarded with brands every day but they aren't stupid - brands which don't earn consumer trust don't tend to stick around. A brand like Spar means something to the passing motorist and local shopper.

"It's been around for a long time but still offers a modern and fresh look in terms of retail. People know what they are going to get from the store and that's more inviting than a blank fascia which could hide a small outlet selling chocolate and newspapers when what you want is something for your breakfast. By converting to Spar we are instantly putting the site back on the map. The brand has proved a perfect fit for the demographic profile of customers for our site locations and offers us product choice, additional buying power, sales improvement and stock and category management."

He adds that, with land values falling, Euro Garages is expecting to step up acquisitions and continue its growth, and brands will continue to be key.

Coffee Nation recently signed a deal to install its self-service machines at Euro Garages' sites. The company, which has 75 sites, has also worked with Subway since 2005.





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Weekly retail fuel prices: 15 January 2018
RegionDieselLPGSuper ULUL
East124.9460.90131.85122.27
East Midlands124.34132.31121.54
London125.0662.90132.42122.10
North East123.94133.63121.07
North West124.1658.50132.51121.18
Northern Ireland123.4169.90128.40120.85
Scotland124.5774.90130.88121.33
South East125.1561.40132.52122.48
South West124.73130.24121.91
Wales124.44128.57121.19
West Midlands123.7465.23132.27121.20
Yorkshire & Humber123.9161.90132.74121.12

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