Forecourts have come a long way in the past 10 years, with small, basic kiosks being transformed into large modern c-stores, with hot food and quality coffee. Led by oil company investment in high-level offers like Esso’s On The Run and BP’s Connect, the distinction between the old-fashioned ’oily’ filling station and the more appealing grocery-style offer has never been greater.
Such development has raised customer expectations and highlighted the need for independent retailers to invest in the facilities the customer now demands.
But investment doesn’t come cheap. A large new shop will usually have a £300,000 price tag, while a complete site rebuild will cost at least £500,000, and more than likely around £800-£900,000. However, experts in the industry say that with a sound business plan, a healthy return on investment - usually 20% - can be achieved quite quickly, and often it can be exceeded. As site numbers continue to drop, so the surviving businesses become more viable, meaning attractive sites, with a range of services should naturally pick up a greater share of that extra trade. But while the most proactive retailers are continually improving their offer, market specialists say there are plenty of others who have shied away from development, particularly some single-site owners.
"There is a solid percentage of sites out there that are now faced with closures around them and so they have a real opportunity to take advantage of those gaps," says Ron Sanderson, founder of specialist property consultancy, Clarion Roadside. "Now is the time to act, not stand still and fall by the wayside."
== STRATEGIC THINKING ==
You need to look at your site strategically when planning any kind of redevelopment, says Sanderson.
"You should be looking to maximise the business use of the site and also to maximise the freehold value once you’ve finished. If you get it right, you win twice," he says.
"You should look at what the area is already offering. See where your site fits in the marketplace - is there anything missing? For example, if there isn’t a dry cleaners you could quite cheaply build on a drive-through unit and introduce a dry cleaning franchise that you would take rental from. It’s about thinking outside the box."
Relatively minor projects can have a major impact, such as introducing a car wash. But the most important thing, says Sanderson, is thorough research and evaluation to make sure the economics of any scheme work.
Taking outside advice from someone like Sanderson can help to identify the best way forward. "I can offer a different, more objective view," he explains. "I’ve not sat on the site looking at it every day for the past 10 years. People can get attached to doing certain things or believe they should do them a certain way. My question would be, is that really going to make you any money? Is it going to help keep your site going for another 10 years?"
== SUCCESSFUL SHOPS ==
The trend for larger forecourt shops has shown no signs of waning and is where the major source of profit lies.
Alec Cornish-Trestrail runs ACT Design, and has worked with many leading dealers, such as the Simon Smith Group and the Frasers. He says he now rarely builds anything smaller than 1,500sq ft, and all the shops he builds go to symbol groups.
New shops rarely cost less than £300,000, with as much of the money being spent on the shopfitting and equipment - including fridges, air conditioning, shelving, security systems and epos - as on the actual structure itself. However, Cornish-Trestrail says there is usually a quick return on investment. "It doesn’t take very long at all for those sales to increase once you re-open," he says. "If you spend £300,000 on building a shop, you’ve only got to go up £6,000 a week to get a 20% return on that money. If you spend £500,000 on your site then you still only need an extra £10,000 a week and that’s quite achievable."
Increased shop sales help subsidise investment in the forecourt itself, which in turn attracts more people to the site. Hence, if you’re developing in phases, Cornish-Trestrail recommends doing the shop first, to start getting that return. The car wash, another good revenue generator, should come next and the forecourt itself last.
"We did this at Frilford and the shop was so successful that the bank manager immediately gave us authority to proceed with the forecourt," he says.
The Sunday trading laws mean stores larger than 3,000sq ft can only open for six hours. For this reason, forecourt stores tend to stay below this threshold so they can trade all day on a Sunday. However, Cornish-Trestrail says there’s a good chance the restriction could be raised to 4,000sq ft, meaning it’s wise to consider building in such a way that the shop can be readily extended.
Simon Galway, a senior director at property advisors CB Richard Ellis, says that well-developed forecourt shops on local sites can also help stop the supermarkets picking up ever-greater fuel volumes. Not only that, in some areas residents are actually demanding them, says Galway, who heads the petroleum and automotive consultancy Team.
"It’s about bringing services back to the suburbs," he says. "If you can get local residents to visit your shop more often then they’re likely to buy fuel there too, rather than go to the supermarket and then fill up on their way out.
"We recently had a dealer who wanted to sell his site for housing but local residents wanted him to develop the forecourt and introduce a better shop offer. The council backed the residents and did not grant consent. The dealer is now in talks with a branded shop franchise and is planning to spend £1m on redeveloping the entire site with a 2,500sq ft shop. The economics show he will make a 20% return on his capital invested, which will be returned in eight years."
Meanwhile Mathew Fleming, bid manager, at retail interior specialists Barlows, believes that forecourt operators can learn a lot from the high street. The company works with many major retailers and teamed up with Total on the Bonjour store concept.
One technique that has been successfully transferred to the forecourt sector is ’zoning’ the store layout. "It’s about clean and clear communication. We zone shops so that the customer can quickly and easily identify where product categories are. It’s designed so that they can get in and out quickly, while making the experience as pleasurable as possible," says Fleming.
On average Barlows refits 40-50 Total stores a year and reckons that by following ’lean operating principles’, the time spent on-site - and therefore shutdown - has been dramatically reduced, meaning an outlet can now be finished in just four days.
This is achieved by a combination of pre-manufacture where the shop is, in effect, built off-site and then brought in and put together; collaborative planning, with every project scheduled down to the hour in detail; and site managers acting as the ’last planner’ to ensure the job stays on track.
Most modern forecourt shops are system-build structures, designed for flexibility and quick and cost-effective construction.
Global MSI is a specialist in the market - supplying BP, Esso and Shell company sites, as well as dealers. Managing director, Malcolm Froud, says their ’flat-pack-style’ steel building systems are 15-20% cheaper than conventional construction. They also give a more consistent finish when being used across a site network. "We provide the customer with what we call a ’dry envelope’ or the shell of a building," he explains. "It’s a steel frame onto which go insulated panels."
The forecourt canopy is one of the first things you see from the road and can really make a design statement. Global MSI is also a major supplier in this field and says that most dealer sites stick with tried and tested flat-top styles. These start at around £13,000, going up to around £50,000 depending on the size, and can look very good with the right signage package.
The company also works on special one-offs - such as featured on this month’s front cover - which is at Welcome Break’s Hopwood services on the M42. Designs like these are usually engineered based on architectural drawings provided by the client. Such canopies - with curves, glass or glazing - come at a higher price. The company is currently working on a ’special’ with a dealer in the North. Details are being kept under wraps, but the plan is for a ’very visually-striking’ canopy and shop on the retailer’s flagship site.
== SITE FLOW ==
Layout and access are probably the most crucial design aspects for an effective site - both on the forecourt and in the shop. "The best sites will be designed to achieve the greatest flow," says Richard Quarmby, former managing director of forecourt construction company TQ IPS, now part of Torex Retail.
"Customers will be able to drive on, fill up and pull away from the pumps to park if they want to do some shopping in the c-store. If they just want fuel and don’t want to go into the shop then pay-at-the-pump can also be considered."
TQ IPS forms a key part of Torex’s one-stop-shop offering for petrol retailers.
Quarmby, who now heads up the petroleum and convenience division, says the best flow will depend on a site’s location and customer needs. "If you’re in the middle of the city, then you’ll probably want to get a quicker throughput. If you’re in the country it might be more beneficial to keep people on site so that they buy more in the shop."
Torex works with many of the supermarkets - Tesco, Asda and Somerfield - as well as various dealer groups. "We visit each site and try to offer a range of options and advice on the plans. We really have built every size of forecourt, within various timescales," adds Quarmby.
Cornish-Trestrail echoes the importance of easy access: "Try to avoid odd pump layouts if possible - you always want to look for the best possible access rating.
"Generally four-square or starting gates are best. Starting gates are particularly effective as it’s immediately evident which pumps are free," he says.
=== Planning rules ===
All planning applications must now be accompanied by a Design and Access Statement, which came into force last month. This must explain the design thinking behind a development scheme and demonstrate consideration of the layout, appearance, scale and landscaping, as well as show how access issues have been dealt with.
Alec Cornish-Trestrail of ACT Design says this will mean extra work during the design and planning stage of a redevelopment and site owners may need to employ an additional consultant to do it.
A good practice guide has been issued by the Commission for Architecture and the Built Environment (CABE) and can be downloaded at [http://www.cabe.org.uk/publications]
=== Typical Schedule for site redevelopment ===
1. Discuss design criteria with client. Prepare schematic layouts and approximate estimated costs. Agree preferred development scheme. (1 month)
2. Arrange for measured survey of site. Prepare planning drawings and submit planning application. (1 month)
3. Obtain detailed planning permission. (2 months)
Warning: This stage can take much longer!
4. Hold detailed design meeting. Prepare detailed working drawings. Obtain approvals from the petroleum licensing authority, building control, Environment Agency, highway authority. Submit and obtain Building Regulation approval. Obtain information on public utilities. Carry out asbestos survey and underground survey. Carry out trial holes and contamination tests. (2 months)
5. Prepare Bill of Quantities or Schedule of Works. Prepare and send out pipework, electrical installation, tank, canopy, shop front, car wash screen tenders. Prepare and send out building works tenders. (1 month)
6. Building works out to tender. (1 month)
7. Evaluate building works tenders and prepare tender report. Pre-order canopy, tanks... (1 month)
8. Carry out construction works. (3 months)
Keeping site open during redevelopment will extend the timescale.
Total time: 12 months Source: ACT Design
=== Retailer views ===
== Susie Hawkins, Simon Smith Group ==
"It’s incredibly important to keep moving on. You sit there and think shall we do it? Is it worth it? But at the end we’re always amazed and wish we’d done it sooner," says Susie.
The Simon Smith Group’s Barnwood site in Gloucester re-opened last May following a £1m knock-down and rebuild. Later this month Susie hopes to open a new post office at the site. The hot food-to-go fixture has been ripped out from the back of the Budgens store and moved to the front checkouts to make way for the new counter.
Susie is also overseeing the redevelopment of the group’s Over Monnow site in Monmouth. The work is being done in stages to allow the site to remain open. "It’s the only petrol station in Monmouth, so it’s important for us to stay open there. If our customers start to go somewhere else then they might not come back," she explains.
New pipework and off-set fills have already been completed, along with a new wash centre with a car wash, two jet washes and vacuum. But the biggest investment will be in the shop, which is going to be just under 3,000sq ft and will be supplied by Budgens.
While not a complete rebuild, adapting the existing building will mean major internal work, including taking out a floor, as it is currently two storeys. The work should take six to eight weeks, during which time the site will trade from a temporary cabin with a basic convenience offering.
== Derek Lodge, Rusdene Services ==
With seven sites in Hampshire and West Sussex, Derek Lodge is planning an £800,000 comprehensive site rebuild in the next 12 months, having already spent the past two years developing the shops on several other sites. He says that good independents have been developing their retail offers in a similar way to the most successful oil companies. For example, two of his sites have a Budgens store, aimed at replicating the Esso/Tesco Express offer. Other sites have adopted a similar format to Esso’s On The Run and BP’s Connect - more CTN-based, with food to go, a Costa Coffee offer and an off licence.
"We believe we have to invest in our sites to survive. You need to present a comprehensive retail business to the customer - a multi-facilitied site providing a good forecourt, along with an equally good shop and car valeting. Fuel sales are still important, but you can’t survive on selling fuel alone," says Derek.