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

Trouble up North

29 November, 2010
Top 50 Indie Phil Richardson says dealer fuel volumes are disappearing for good, and oil companies are not helping. MERRIL BOULTON reports
Page 22 

The North East has never had it so bad, according to Top 50 Indie Phil Richardson, of Park Road Group, who has eight Total-branded sites around Newcastle. He says the situation for independent fuel retailers in the area is dire, and the outlook doesn't look any better. "Fuel volumes around here are significantly down," he says. "In one week my sites were at best 16% down and at worst 28% down compared with last year. And the volume seems to be gone for good.

"People have changed their habits. They've gone off to the cheap boys the hypermarkets and the Shell co-owned sites of this world, who have laid their stall out for several years now to be cheap. We haven't got the substance to be able to respond for any period of time. A small dealer has to make a margin, otherwise he can't pay his bills."

"We've got a sea change in our market anyway, because people have become much more conscious of fuel and energy costs, and are driving more efficient motor cars. The government has encouraged the motor industry to respond to environmental concerns by producing more fuel-efficient vehicles, and they are doing so to the point where even in a big BMW, you could be doing 60mpg."

On top of that we've got what Phil describes as the mother-of-all recessions, with the government planning cuts of 490,000 public sector jobs accounting for 64% of all employment in the area. "If you put all that together, the forecourt market is changing and rapidly in a way we've never seen before."

Now that the majority of dealers are on a Platts-related deal, Phil says that when the big boys start pricing with very minor margin, the ordinary dealer can't compete. EVER.

"Oil companies are pricing fuel on their own sites at a level independents simply can't compete with," says Phil. "I think it's completely unethical that oil-co-owned sites should have such a price advantage over their dealer sites."

Phil questions how long any dealer could run his operation profitably by trying to match certain oil co-owned pricing where, despite a lot more business being generated, it doesn't translate into profit. He says the problem is exacerbated if you are in an area of like-branded sites, where the oil company sites of the same brand are more competitively priced than you.

"There appears to be no difference in the offer to the motorist, who will go for the cheapest price."

Just to compound the problem, Phil believes oil companies have got their heads in the sand at the moment. "I don't think they care about their dealers in real terms they know what amount of fuel they are delivering. They can see whether my sites are 10, 20 or 15% down. The problem is that the price of fuel has continued to go up, but we're still required to buy maximum load sizes. So the cash pressure on your average dealer is greater than it's ever been."

He cites as an example an average dealer site doing 40,000 litres a week two years ago, who is probably now doing 20-25,000 litres a week: "He's still having to buy £42,000-worth of fuel. He gets wrong-footed on price. Cash is sitting under the ground. It's just a spiral that goes nowhere.

"The smaller operator is being bullied out of the market. He hasn't got the guns in his armoury to be able to compete. And he doesn't have the funding to be able to develop the shop side of the business which nowadays is massive. A lot of dealers can't raise those funds against an asset that is depreciating.

"The oil companies must be aware that things are not rosy in the marketplace, so why can't they help? For instance by sharing loads between two sites, particularly if they are under the same ownership. The retailer may only want 38,000 litres between the two, not 38,000 litres each. With big deliveries, the money is not coming back quickly enough, because volumes are down, and that leads to other problems."

Graham Greaves, proprietor of Henry Cooper Coaches, a BP site since 1920, says his unleaded fuel volume has shrunk from 94,000 litres in August 2009, to 57,700 for the same period this year. He is a short distance from a co-owned Shell site, and can't compete with its pricing.He has invested in a high-quality forecourt, with a small store. "There are times when it would be cheaper for me to buy fuel from the Shell than from BP. It is impossible to compete. The good days are over. We have no more tools to fight with. Smaller load sizes would help.

"At the moment all we've got to look forward to is continuing price increases. Do the oil companies want us to survive or do they want to take us out?"





  • Weekly
    Retail
  • Weekly
    wholesale
  • Daily
    Average
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

Most read

Are you feeling positive about the opportunities for growing your business in 2018?