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

Keeping it local

03 August, 2009
Times may be tough but value is the key, while Jet's dealer-only strategy is really paying off. Linda Harrison reports
Page 21 

As we fight our way through the recession there seems to be one word on every consumer's lips: value. And according to ConocoPhillips, for the forecourt sector this means competitive fuel prices teamed with the best customer service.

Patrick Hudson, the company's marketing manager, retail, says: "One of our main priorities is to keep fuel prices on our sites competitive in the local area. But it's more than that. People at this current time are looking for value and certainty - and to make sure they're not getting ripped off.

"If you have excellent service as well as competitive fuel prices then your local customers will stay with you. That's why the sales assistant at the site is so important - it's the key locally, and that's why with a dealer model like ours it's so important to get it right. As a company, we've been offering value for more than 50 years, and it's now more important to customers than ever. We've never been a premium price brand and, although we might not always be the cheapest, people still rightly recognise that our Jet brand offers value in the local community."

Hudson says the company's dealer-only network is proving a successful model, even in the midst of the credit crunch, and is attracting more new dealers. He explains: "We've had a lot of interest from retailers, with many approaching us, and we're now up to 22 new sites this year. The overall target for this year was only 24, so we're very pleased."

Recent signings include Morrisons Garage in Stirling - a site which has been in the Morrison family for three generations; Duns Service Station near Berwick in the Scottish Borders; and Quarry Service Station in Houton Le Spring near Sunderland, which Conoco says changed to Jet in February and within the first two months saw a 40% increase in fuel sales.

There is also Primrose Valley Garage in Filey, North Yorkshire, previously a Jet site that changed to Total before returning to Jet in November. Including these 22 forecourts - 11 of which are single/independent and 11 groups - Jet currently has a total of 387 branded sites in the mainland UK. There are also a further 18 not included in these figures but branded Jet and supplied by GB Oils in Northern Ireland.

According to Hudson, at this time last year the company had 426 sites, so it is down about 20 sites. This is something he says "reflects some losses to the competition, but is mainly sites leaving the industry". He says he hopes to finish 2009 with in excess of 40 new sites joining Jet and is "very keen to grow with like-minded retailers who serve their communities well".

In addition, as reported in the July issue of Forecourt Trader, Murco Petroleum's four-year retail supply agreement with Conoco ends later this year, with Murco due to change its 56 Jet-branded sites to Murco. The rebranding starts this month.

Geoff Patching, Conoco's sales manager, retail, adds that the company is on the lookout for more sites, and now has a revised target of adding 40 to 45 new sites by the end of the year. He says: "We're talking to lots of dealers at the moment. And we say to anyone who is thinking of switching from another brand: talk to dealers who've recently turned to Jet, find out what makes Jet different."

The company deals with retailers of all sizes, and 60% of its network is made up of single operators. Meanwhile, it currently supplies fuel to 15 retailers in Forecourt Trader's Top 50 Indies list. The average Jet site sells about 3.1mlpa, which Hudson says compares very favourably with the competition, while the company is the third largest supplier to the dealer market.

== Challenging environment ==

Other statistics remain the same as last year - the company's retail market share nationally stands at 3.5%, while in certain areas, such as near its refinery in Humberside, market share rises to 12%.

Hudson is the first to acknowledge that it's not all good news at the moment, and that the recession is causing tough times for many. But unlike some of its competitors, he says Conoco has not responded to the tougher financial times by reducing staff.

"People are a very important part of our offer and recognising this, we have no current plans to change the size of our retail division despite the very challenging business environment and rumours that some of our competitors are planning deep cuts to their organisations.

"Our UK retail team comprises 14 people with each of our field-based regional managers handling about 60 sites. Relationships and building partnerships with our customers have always been vital to the way that Jet does business and we aim to continue this and make sure it stays ingrained in our culture."

As to the effects of the recession, he says volumes have taken a hit, adding: "Fuel volumes are down in general, and people are more value and price conscious so the supermarkets are probably doing better than others. People just aren't buying as much fuel. For us, fuel volumes are down about 5-6% like-for-like on last year, which reflects tough market conditions, but we believe our figure reflects well versus our competitors.

"We always look at the local sites and also at value, and 'local and value' is probably the best place to be right now." He adds that margins overall aren't as good as last year either. "It's a very tough market out there. I don't think volumes will come back this year."

But Hudson says he's being realistic rather than pessimistic as there are ways to boost business.

"Most of our retailers have been with us for a long time. A lot of oil companies won't help their customers if they ask for it but we will, we'll always talk to them. And if a retailer wants me to go to see a site I'll go. I think a lot of people are having difficulties with credit, and we try to work with them."

He reiterates the fact that the Jet strategy is to try and keep fuel prices competitive locally, and that many retailers report that their fuel volume increases when they switch to Jet.

Jet also benefits due to the location of many of its sites - because they are usually not main route sites, they don't have a lot of customers using fuel cards. Hudson says this section of the market has been hit due to redundancies or businesses cutting back on company cars. But local sites don't suffer as much.

In the current climate, Hudson says there are no really new initiatives coming out within the industry, and it's a case of "knuckling down and getting your business in order". Over the past year Conoco has modernised its image, finishing a project to make all its pole-signs LED, as well as cleaning all canopies across its network.

Meanwhile, it is developing its AimHi scheme, which aims to encourage retailers to keep service standards at a premium as well as giving tips on how to improve business.

The scheme's recently added features include new online training for retailers while Patching says it rewards retailers with shopping vouchers as well as running a league table to keep a competitive edge.

He adds: "We go to sites and observe what's going on. Is the sales assistant smiling? Sometimes it's something as simple as that, that keeps customers coming back."

The company is also proud of the many community projects it is involved in as part of its Fuelling the Local Community initiative.

Recent events included a community day where Conoco staff were dispatched to do work for local charities and organisations in Leamington Spa, Warwick and Kenilworth.

This included building a chicken coop for a charity for physically-disabled adults and painting a picket fence and working at gardens at The Lawns care home.

As for the future, Conoco recently got a new marketing manager for the UK and Ireland. Stefan Wulkan has worked for the company on a number of different assignments in the UK, Sweden, the US and latterly Germany.

Hudson says Jet continues to be a strong brand, something he believes is largely down to its dealer-only model.

He says: "Local people are much better than us at selling locally. With a retailer, it's his livelihood, he's got to make it work".

All in all, Hudson feels, there's light at the end of the tunnel for ConocoPhillips.

He adds: "I think there are definitely enough opportunities for the future."





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