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

Back to the future?

01 July, 2003
Shopper research company HIM predicts that oil companies will forget shops and go back to their roots
Page 12 
The big oil companies will be out of shop retailing by 2010. It sounds a ludicrous statement considering the money many of the majors have been throwing at developing convincing c-stores on their sites. But that’s what Harris International Marketing (HIM) predicts for seven years’ time.
According to the company’s ‘C in 2005’ report, not only will sites continue to dwindle year on year – no change there then – but the majors will withdraw from shop retailing altogether by 2010.The publication is HIM’s third attempt to predict the future of the convenience industry, and all speculation derives from three debates with senior managers or directors from a number of organisations including the Association of Convenience Stores, the BP & Safeway Partnership, Fuelforce, the Institute of Grocery Distribution and Tesco.“Senior managers from all the companies contributed to our deliberations but we take a fair whack of responsibility for distilling and focusing various predictions,” said HIM chairman and author of ‘C in 2005’ Jef Harris.Harris claimed the company’s forecast is based on the historical ethos of petrol companies that have traditionally been more focused on the upstream attractions of refining profits than the downstream industry.“Gas stations are a necessity to keep pipelines flowing so upstream continues producing the profits,” said Harris. “Oil companies have traditionally been more turned on by upstream profit than downstream. This has led to them not developing the skills and energy and enthusiasm for retailing at the front end.”Harris cites numerous indicators of the majors’ withdrawal from shop retailing. “Conoco has become the first to split its business [by the sale of its company owned network to Fuelforce] – between Jet and Fuelforce,” he said. “You’ve also got direct managed sites evolving into a commission basis, and you’ve got the fact that whether they’re independents or managed, stand-alone c-stores continue to operate more effectively and therefore more successfully than oil company forecourts.Meanwhile independently-run forecourt stores are better at satisfying shoppers than company managed sites, which have been less successful.”However, HIM cannot deny that some of the majors have invested a lot of money and effort in developing their own c-store formats – such as the roll-out of the BP Connect sites and Total’s new Bonjour format.“But on balance,” said Harris, “all the other points seem to be that they [oil companies] are surrendering their sites to the supermarkets. Tesco, Sainsbury and Somerfield have taken the best sites from Esso, Shell and Total from a convenience point of view, and we foresee more of that happening because they have the skills and resources.“A good c-store has to be a credible, local, alternative source of supply. Dealing with perishables is a bloody headache for oil companies, but not such a hurdle to jump if you’re Tesco or Sainsbury with the supply lines, logistics and management skills.“We predicted that someone would break ranks and set the process in motion two years ago – and Conoco did that.”Unsurprisingly, HIM’s forecast has been rejected by the majors. “That would be a complete U-turn for BP considering the direction we’re taking,” a BP spokesman said.BP Retail’s convenience director Martin Bryant added: “This is an interesting prediction but it’s the complete opposite of where BP wants to be in seven years’ time. BP Connect is the cornerstone of our retail strategy and it’s the Connect offer that differentiates us from our competitors.“We have come a long way from the days of fuel as a distress purchase with shops as a half-hearted add-on to the forecourt. BP Connect is an integrated offer with everything the customer needs under one roof. The BP Connect convenience store enables customers to shop in comfort for a wide range of everyday products while the Wild Bean Café provides an attractive range of food and drink prepared on site for people on the move. “Customers like the BP Connect offer and it’s customer research that drives our innovative approach. Our aim is to make BP Connect the place where people want to be rather than the place they have to go to.”Shell has responded in a similar vein. “Shell remains committed over the long term to offering a forecourt convenience retail solution to its customers,” said a spokesman.“Our research confirms that our customers want a core product range of sandwiches, snacks and drinks that keep them on the go. Shell’s recent partnering with Sainsbury’s emphasises our commitment to extending this convenience solution in areas where our customers require it.”Finally, Malcolm Jones, retail marketing director at Total UK, said: “Total Group is committed to developing our presence within the convenience retail sector. I believe the key determinant for all involved in c-store retailing is how successful you are in meeting the customer needs with the right offer in the right location. We are seeing positive feedback in our Bonjourc-stores – which are all about customer satisfaction and top- quality customer care.”Despite the majors’ adamant responses, Jef Harris sticks by his company’s predictions. “Of course they won’t say ‘yes, that’s definitely our strategy’. Even if they thought it secretly they wouldn’t say so.“It would be a U-turn for someone like BP who has been seen to be extraordinarily, energetically and wholly committed to developing its own skills and resources, but it is seven years away so who knows what’s going to happen.“It’s probably not their strategy at the moment, but I’d be surprised if it was totally out of the question.”So how does HIM envisage the majors’ withdrawal from shop retailing will occur?“Because there are so many alliances in place it’s likely to be a creeping thing. Both sides will perceive it to be a good idea and it will extend to the whole network like the plague,” said Harris. “But the retailer, meaning someone like Tesco, might say ‘thanks but we don’t want those sites’. It’s an interesting reflection and will be easier to review when we see how Tesco does converting One Stops in iffy locations and making Tesco Express sites out of them.“I think if supermarket retailers take over the pumps, the oil companies will be delighted to become suppliers. There’ll probably be a lot of legal to-ing and fro-ing but I think the oil companies will simply become suppliers. They’ll not only be happy to get rid of the headache but pleased at how well volumes are pulled through by ‘real’ retailers.”Whether HIM’s predictions are founded or not, the next decade is likely to prove challenging for oil companies. But Harris concluded: “It’s a logical prediction, but merely a prediction.”



  • 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?