The easiest way of summing up 2004’s results would be ‘steady as she goes’. It didn’t produce many really dramatic trends on the forecourt. Yes, consumers railed against high fuel prices, and some majors are now reporting astronomical profit levels, just as we are reminded those profits originate ‘upstream’, and there’s no profit in UK fuel retailing... So, as far as our ‘average forecourt’ is concerned, what can we report?
* Average Fuel Volume: Up by 2.9% in the year, to 4.93 million litres (was 4.79m). Not too surprising since we believe that aggregate UK demand for motor fuels is currently static – or even declining slightly – while the number of petrol retailers is definitely declining every year. There may be 25 million vehicles registered in the country, but an increasing number of those are going to be ‘spare’ or ‘alternate’ vehicles belonging to one driver – and almost all of them are much more fuel-efficient than would have been considered technically feasible just 15 or 20 years ago. We have not yet seen any official figures for the number of active forecourts across the UK in 2004, but most observers expect the figure to have fallen to below 10,000. To put the average volume into some sort of historical perspective, five years it had only just broken the 4m-litre-year mark, and 10 years ago it was a paltry 3.4m.
* Average Shop Turnover: Up by 4.4% in the year, to £615,000 (was £589,000). Yes our ‘average shop’ broke through the £50,000 per month barrier during last year. Unfortunately as we’ve pointed out on numerous occasions previously, you always have to look at ‘sales’ values in the context of price inflation; and however imperfect a measure of prices in the forecourt shop, RPI increased by 3% during 2004. In the simplest terms therefore ‘real’ shop turnover only increased by 1.4% – better than nothing but not spectacular. Why? Well there are many possible reasons, but one of the prime factors may be the physical size of the typical forecourt. It is possible that we’re now reaching the limit of just how many fuel and shop customers the present site format can reasonably expect to cater for: parking, pump access, queuing at just one or two points of sale, etc, all have an effect on customers’ choice of shop – regardless of whether the products and prices are attractive. Let’s not forget that five years ago the annual shop turnover was just under £427,000 and five years before that £248,000.
* Wetstock Losses: Up by 26% in the year, to (0.59%) of sales volume (were (0.46%)). This figure is both worrying and puzzling: for many years our average (which covers both petrol and diesel) used to hover around or below (0.2%) and attracted a lot of adverse comment in certain quarters as being ‘unrealistic’ – ie too low. There may be various reasons for the apparent increase, including perhaps the physical age of the infrastructure at some sites. We have not changed how we compute the figure, as such, although the data-capture method on site has altered over the years – in the past daily figures used to be manually reconciled in a wetstock book that was driven from manual pump and tank readings, whereas today most of the values on site are collected almost as a by-product from electronic POS and tank-gauge systems. The expectation would be that the electronic systems are more accurate – although that would depend on whether anyone was actually verifying their results. In practice we find that many operators ‘accept’ daily loss values that would once have started them into major on-site testing and investigation. Cynics might point out that in those days the ‘operator’ owned the fuel, and had a direct interest in keeping losses low – in many cases today the fuel belongs to the oil company. Whatever the cause, the results started to look worse from 2002, and continued to rise in 2003 and 2004.
* Wage Costs: Up by 6.1% in the year, to £67,300 (were £63,400). In October our annual PAYEpeople Forecourt Wages Report showed an increase of 5.4% on the year to September, albeit from a larger sample than that used for the ‘standard’ Industry Database figures, so the increase here ’t come as much of a surprise. Operating costs in general are increasing every year, and apart from wages, many sites have seen substantial increases in electricity bills, and with the plethora of multiple telephone/data phone lines now installed at so many forecourts, telecommunications costs (or at least the line rental) are also going up.
Data supplied by EKW group