Tony Barlow, whose Local Service Station trades in beautiful Shrewsbury in Shropshire, puts a real stress on independence and individuality. He has been buying fuel on the open market since 1998 and he wonders why a lot more forecourt retailers don’t do the same. "I switched because I was contracted to Butler (a subsidiary of Total) but they fell so far behind it became pointless a one-sided contract," he says.
When the market was stable a couple of years ago his prices were comparable within 2/3/4p of supermarkets. "The supers seem to be able to buy six weeks in advance so they can hold their prices. I get priced on the day but if the prices go down then I’ve got six weeks on them." Prices do still go up and down. "My last tanker was up but the one before that was down, he says. At the moment Tony’s price for petrol is 136.9ppl against 134.9ppl at the local supermarket. He has three suppliers and is treated like a true customer.
"If I want fuel tomorrow I ring up today and they have one shot at it. I think more people should buy on the open market. As long as you have a certain image and friendly service. The big brands come with their own baggage and they all look the same."
This led me to ask myself, as I frequently do, what’s the real price of anything? Most things are negotiable houses, second-hand cars, old debts, anything on a market stall. Even when you buy your energy, there are ’packages’ (designed to confuse). No one price fits all. But there aren’t many that are up there, on a pole, prompting comparisons between sites, for a litre of petrol/diesel.
Is it because a gallon of gas is always 4.5 litres of petrol, if you take my meaning: totally perceived as being the same from pillar to post, or pole. And why is it that a couple of pence off fuel at a local supermarket is enough to get people queueing differently?
They’d never do that for spuds or wine or cigs (apart from the contraband/counterfeit stuff).
I’ve questioned, in the past, the curious custom of putting the price of your two main products up there in the air to scream into the distance. If everyone took their pole prices down (and their fractions of a pence difference) would it make any difference?
People don’t buy diesel/petrol because they fancy it. It’s not an impulse purchase. It is always a necessary top-up.
The shop’s the essential thing
You don’t need me to tell you about tough times although I’m going to anyway. Some, particularly those in the ’soft’ South, couldn’t see much evidence of recession a year ago. But it is now a well-muscled thing what with VAT and fuel hikes this year (oh tell me about it; yes, I hear you), rises in unemployment and less money kicking about. Local shops are doing slightly better in some places as people look to using their cars less often. If they do that though, they are also searching for better prices.
All the above highlights that the shop is ever more an essential element in your overall business. And the symbols are there for you to pretty much cherry pick from.
Nisa Local recently said that its most fertile recruiting ground is the forecourt sector with 40% of all new recruits being forecourt operators. I spoke to one recently who has asked to remain anonymous (he likes to keep a low profile; I don’t know why, but has promised to tell the full story in a year’s time).
He faced horrendous rate hikes and his answer was to expand his site so that the 4,000sq ft Nisa store will be 4,500sq ft when finished and will even sell fresh fish. "We will just be a small supermarket that happens to sell fuel," he says, "and we are after a greater weight of pedestrian traffic."
Despite the fact that only 30% of the gross profit is achieved via fuel sales, the Valuation Office still walloped him. "They seem to be a rule unto themselves," he adds.
With wider aisles, a café area and a bit more range, he will be doing his best to recoup.
Beware the lease arranger
Refrigeration is more likely to go off around now than at any other time owing to the strain of summer (although as I write this it is pouring hard). June is turning into a bit of a ’themed’ month for me and July will only get worse.
Most calls were about failed equipment, a fair bit of it in the refrigeration field. Some companies seem to think, bit of kit sold, job done never mind about the back-up, the maintenance. I despair about these and I suggest that you never enter into leasing arrangements that tie you into a pay back situation that lasts for years and makes you pay at least three times what the bit of kit is worth especially as some equipment companies renege on putting it right when it’s gone wrong.
The problem stems from the fact that the leasing company is the third party. They financed the equipment for you and it’s nothing to do with them when it is faulty.
The company that sold you the kit has had their money and, in some cases, gone bust. This goes for photocopy equipment and epos systems as well as refrigeration.
I know you need the equipment but have a good look around before you commit.
And I also urge you to keep up the maintenance on refrigeration, both via good husbandry and regular checks from engineers. These days, c-stores have a great deal of refrigeration. It helps to sell stuff but it’s hell when it goes wrong.