Once again Experian Catalist is pleased to be able to provide Forecourt Trader with the UK summary for their Fuel Market Review 2010. The data shown in the following tables is from Experian Catalist’s latest release of its UK database in April for the first quarter of 2010.
Summary
Following the theme of the last two annual Fuel Market Reviews the retail price of petrol and diesel has continued to make the news and we have seen a steady increase in prices over the past year as shown in the chart below. Between May 2009 and May 2010 the price of unleaded has increased by 25ppl with diesel increasing by 20ppl. After the divergence of the prices of petrol and diesel in 2008/9 to reach 14ppl, the gap has narrowed again over the past year from 7ppl to around 1ppl back to the differential last seen in the summer of 2007. The press and the consumers’ focus on pump prices for much of the past year has caused a continuing squeeze on margins and a continuing shift of fuel volumes towards the hypermarkets. Many of the hypermarkets are up on fuel volume on a like-for-like basis with much of the rest of the industry down or at best on a par for fuel sales. However, in contrast and as for last year, forecourt shop sales have tended to hold up with consumers moving towards more top-up visits to the local forecourt c-stores rather than visiting the busy hypermarket for their daily requirements.
Despite all the economic woes and the focus on fuel prices, 2009/10 has continued where the previous year left off, and the forecourt and convenience sector has remained positive. From a property perspective, values are remaining relatively robust and certainly they are holding up better than in most other sectors. Compared to high street retail the forecourt sector has not had any of the failures of any of the major players and we have seen new-to-industry and rebuilt sites coming on stream right through the period.
At the various industry events dealers are still talking about expanding their networks and acquiring sites.
Attendances at the IFFE show in March were good and a flick through Forecourt Trader will tell you that there are still a lot of people out there optimistic about the future and looking to buy although putting this into practice has proved to have been more difficult over the past year!
On the downside, keeping a tight rein on operating costs will continue to be a big issue going forward, particularly with the uncertainty surrounding the proposed change to the commercial rateable values in 2010.
Most of the fuel sold across UK forecourts comes from the eight remaining refineries around our coast and it may have escaped your notice that at least four of them are ’up for sale’ for the right price. Pure speculation, but in a year or two’s time, 50% of the UK’s refineries may have new owners and they are more than likely to be from the developing world: India, China, the Middle East or Russia. The Seven Sisters with their familiar brands may be going and they may be being replaced by new brands with different ideas!
We are all looking forward to the Olympics in 2012 and the government and the mayor of London still seem keen on promoting the idea of alternative fuels playing some part of the transport infrastructure for the Games. We currently have four hydrogen refuelling locations in the database (all still fairly experimental) but we may see more planned, particularly around London over the next few years as we approach the Games. The same goes for electric vehicles not much cheer there for forecourt operators, but then the drivers all still need to eat and drink when they are out on the road!
As we have said before, to the outside world the UK forecourt market may be mature with not much going on, but to the readers of Forecourt Trader this market is in continuous flux with changes occurring right across the sector almost on a daily basis. For example, there were 375 closures and over 550 sites that changed fuel supplier brand in 2009/10. Experian Catalist will continue to monitor and survey the UK market in order to supply its clients with up-to-date market information and will continue to provide regular summaries to the industry. It’s been said before but one thing that is certain is that when we come to look at the data for the Forecourt Trader Fuel Market Review for 2011 there will have been a lot more changes and there will almost certainly have been even more surprises.
Market Structure
Compared to the Forecourt Trader Fuel Market Review 2009, we see that UK site numbers have declined by a further net 292 sites, and we are now reporting 8,884 open retail sites in the UK with an average fuel volume of almost 4.2mlpa, and shop sales of £525,000 per year.
Continuing the upward trend of last year, we saw an increase in the number of sites closing to 375 (295 in last year’s Review). Of these closures, 366 were dealer sites and they were fairly evenly distributed across the UK and from a wide range of brands.
During the period we also saw the opening of around 29 ’new-build’ forecourts in the UK, similar to the number in the previous year 19 by the multiple retailers, one new company-owned site and nine new dealer sites.
Considering Northern Ireland only has 539 sites (6% of the UK), it did have six (20%) of the new-builds in 2009/10.
A couple of years ago we saw the start of a trend towards bringing back on stream former closed or obsolete sites. With the high market prices of forecourts and the issues with planning for new sites it was sometimes easier to find a former site and redevelop it. In the previous Review we saw 60 sites re-open and last year we recorded 57 closed or obsolete sites being re-opened all by independents. There are now 5,431 independent dealer sites in the UK and with something approaching 30% of these sites being operated by dealer groups with three sites or more. The average dealer site now sells 2.3mlpa and turns over £8,000 per week through the 57m sq shop.
With only 14% (1,224) of the sites, the multiple retailers have gained further market share and control over 37% of motor fuel sales they are the single largest sector. The dealer sector has 61% of the sites and 34% market share.
The regional breakdown of the forecourt sector continues to make interesting reading with the market dominated by the south east region which has a quarter of the sites and 31% of the UK’s motor fuel and 35% of forecourt shop sales concentrated there.
The joint ventures between the oil companies and the multiple retailers have been bubbling along in the past year with the trialling of the Shell/Waitrose operation; the BP/M&S Simply Food programme continued slowly; and the Esso/Tesco Express alliance operation only added a couple of sites last year. The Co-operative Group’s integration of the former Somerfield forecourts has continued apace. In addition to the Shell deal, Waitrose has been extending its offer across the Welcome Break motorway service area network. Tesco is continuing its relentless drive forward, with 10 new forecourts last year. Asda has continued with four new sites, all unattended; Sainsbury’s with three new sites and Morrisons with one.
Market Shares & Brands
Looking at the brand profiles in Table 1, Murco added 45 sites to its network last year compared to a net loss of 46 sites by Texaco and 50 by Total. Last year we reported GB Oils increased its presence by 63 sites, but this year we see a net loss of 37 sites to 258 sites although it now owns the Gulf brand (172 sites) which it bought from Bayfords during the year for £22.5m as reported by Forecourt Trader. The unbranded sites again took a big hit last year with the loss of 77 sites, down to 809, as they remain most vulnerable to the continued squeeze on margins and to the pressures on the environmental factors surrounding forecourt operation. In the dealer sector, Texaco is still the major supplier with 1,029 dealer sites followed by BP with 842, and Total with 426 sites.
Forecourt Shops
Overall the forecourt shop sector has continued to top £4.2bn sales per year in the UK. Similarly to last year in the dealer sector, shop sales are close to £2bn per year with the average dealer forecourt shop of 57m sq now turning over close to £400,000 a year. Within the dealer sector, 18% of the sites (981) now have a full c-store and almost 50% have a car wash. As expected, the number of sites with alcohol licences and ATM machines has continued to grow, with 40% of dealer sites now having an ATM and 30% of dealers now holding an alcohol licence.
As many of you who go to the Forecourt Trader of the Year Awards evening will know, Northern Ireland continues to be at the forefront of the forecourt shop market. This is illustrated by the select band of Maxol dealers in Northern Ireland who have the highest average shop sales at just under £1m per year.
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