Non-food shop promotions are now an established part of the forecourt offer, and the market is filling up with companies offering forecourt-focused products, ranging from lighters and torches to radios and even pruning shears. With margins around 30% and management of the category fairly low-key, it’s easy to see why this area has really taken off. Products are typically items of high-perceived value that are put on special promotion in the store with highly visual pos.
Asif Ayub, sales director at supplier Fast Trak, explains how the market works: “When a customer arrives at the forecourt there is an opportunity to grab their imagination while they’re filling up their tank. That split second could change a purchase of a Mars bar into a premium product with high-perceived value, such as a lighter, tool kit or torch and can deliver exceptionally high margins and make a significant impact on the profitability of any forecourt.”
He adds: “Profit on return can range from 25% to – in some cases – as high as 35%, and with all the items supplied on a low-risk sale-or-return basis. This is achieved through greater joint-buying power with more and more independents being prepared to run a forecourt promotion to entice customers. These impulse purchases will help their turnover in some cases up to 10 per cent of their retail sales.”
The Fraser group of forecourts was one of the first to enter the market eight years ago, and Mark Wilson, managing director, says the business wouldn’t be without it:
“These products have gone from item products to category products and we would certainly miss the category if we didn’t do it. I think the market is strong because currently people do have high levels of disposable income while at the same time many forecourts themselves are high quality – c-stores rather than petrol stations – so customers have more confidence in parting with money when they see an offer.”
Another attraction for retailers is that most companies offer products that are produced exclusively for forecourts, giving retailers a unique selling point.
Garry Campbell, managing director at supplier G7, says: “Designing and developing products with dedicated manufacturers, enables G7 to produce product ranges specifically for the petroleum retail market. In addition, years of international marketing experience with leading oil companies, means G7 has acquired specialist knowledge on how to develop and deliver effective forecourt promotions. By focusing on quality and innovation, G7 has significantly enhanced both consumer value perception and retail revenues in the forecourt promotions category. Current stockists of G7 products include many of the UK’s leading independent retail groups.”
DSL was the first company into the market and is still the biggest player in the sector, offering products from First Aid kits to 4-way extension leads.
However, a plethora of companies have since joined the market. While this offers retailers more choice, there is a concern that too many players could take the fizz out of the market.
Assifa Gadatra, a director at Spot Promotions, which has supplied forecourts for five years, says: “The market for these sorts of promotions in forecourts is still strong but there is a danger that too much competition – lots of companies have entered the market recently – could take the focus away from the high quality and so dilute the appeal of the whole market as products that are cheaply made are putting consumers off the idea of such promotions altogether.”
The Fraser Group’s Mark Wilson says: “The problem with the market at the moment is that there is a lot of competition and there are companies that offer the same products to supermarkets and c-stores too. There can be a tendency to repeat product lines but consumers don’t want to keep buying the same things. I think the companies need to be a bit more forward-thinking. Link-ups with well-known brands tend to work well – things like AA road maps. G7 also has its own Swiss Tech brand, which does work.
G7 first introduced its Swiss Tech brand in 2004 and Garry Campbell says the range “offers an upscale alternative for those retailers looking to ‘raise the bar’ in terms of category growth, quality perception and customer satisfaction”.
Items in the Swiss Tech range (which includes pen knives, torches, sunglasses and wireless in-car audio machines), have their own distinctive bright red packaging. Campbell says: “G7’s principle focus is on innovation and design. All promotions are designed in-house to create a consistent brand image across products and displays.
“Our passion for every aspect of the design process ensures that we optimise product packaging and presentation to create promotions of high perceived value.”
So how many items can forecourts expect to sell? Well, Asif Ayub at Fast Trak says an average site sells between 150 to 200 items per five-week promotion.
“All our products are impulse purchase items,” he points out. “Each offer is designed to have the highest quality product at a bargain price – for example the Dec/Jan offers included a personal organiser at £2.99; a Desk Mate at £2.99; a 28-piece CD Wallet at £2.99 and a Forever Flash Light at £4.99.
He adds: “Our speciality at Fast Trak is finding the product that catches the consumer’s imagination, then to market and merchandise at the pump and till point, so the quality and value for money speaks for itself.’’
The marketing, of course, is key – particularly at the pumps, as Ayub explains: “POS comes in the form of pump crowners to attract the customer while filling up, and till point displays with a sample product. On higher value promotions there are also shop posters. Without pump crowners sales fall by 75% – they are the most important part of the POS as the customer has made that decision to buy even before they reach the counter to pay.”
One advantage for retailers of the increased competition in the market is that companies must compete on service, ultimately making life a lot easier for retailers.
Mark Wilson says: “A big attraction for us is that the category is no hassle at all. With G7, for example, I am given prior notification months in advance of the products and can say no if I want to. They offer bespoke promotions and come in and change all the POS on the forecourt and in the shop, take away the old stock and the old point of sale and that service is a big attraction to us – it wouldn’t work so well if we depended on our own staff to do it.”
Assifa Gadatra at Spot Promotions says retailers should look beyond the margin to the service aspect when choosing suppliers: “From the retailers’ point of view because there are a lot of companies to choose from, it is tempting for them to focus just on the margin, but these promotions only really have a sustainable success if the products are high quality. So, as well as margin, retailers should look at the quality of the product and at the service that’s on offer.”
She adds: “We feel that our service can make the retailers’ life a lot easier as we can tailor the promotions to suit the site and we organise everything, so there really is nothing for the retailer to do. We are a flexible company that currently supplies around 600 forecourts and has lots of independents as well as groups in the north west and offers margins of around 30%.
“We give the retailers a catalogue and they choose the promotions that they want to participate in – we treat each customer individually. We have our own drivers who go out every five weeks and merchandise the site, taking away the old merchandise and the point-of-sale material.”
Similarly, Garry Campbell at G7 says: “By combining new design technologies with traditional one-to-one-customer service, G7 offers petroleum retailers the best promotions in the market. Company vans call directly to site, ensuring all aspects of delivery, returns and uplifts are dealt with. A national agreement with TNT offers G7 customers a ‘next-working day’ service to re-supply out-of-stock items. Ongoing investment in product development and distribution services are key strategies to maintain G7’s reputation for both innovation and service.”
Finally, Asif Ayub at Fast Trak says: “We believe that each forecourt retailer needs a quality service. We set up each site individually allowing the best possible sales performance. At the end of each promotion, we will take care of the full installation of the next promotion. With each successful promotion we can always top up stock as required because we are only a phone call away.
“All our retailer customers benefit from our full sale or return policy with stock delivered as required. At the end of each promotion there’s no hanging around – all returns will be uplifted on changeover day.”
Mark Wilson, managing director of the Fraser Group, uses several of the companies on the market to get the right promotions for the company’s five sites.
He says: “It is a very important category for us – we were one of the first retailers to take it on and have been doing these sorts of promotions for eight years.
“The margins are good – our biggest seller so far was a wireless audio port priced at £9.99 with a 35% margin from G7.
“I think these sorts of products work because competitive items on sale in other retail outlets at the time were about £30, so G7 had identified an item that was making way too much margin and then still producing a quality item. For us, £9.99 items do sell very well, we don’t do so well with £1.99 products, with the exception of road atlases (although a 72p screwdriver set did sell well). I think the days of selling products for £1.99 is history.”