Palmer and Harvey has pooled the experience gained over the past 60 years at what it calls "the coalface of the forecourt industry", to produce an in-depth research document on the sector.
The Brighton-based wholesaler, which supplies 70% of the UK’s forecourts, claims its report The Palmer and Harvey Forecourt Index, available this summer paints a picture of a challenging sector, yet one that has significant opportunities.
Paul Hagon, development and strategy director, Palmer and Harvey (P&H), says: "Currently there are 31 million cars on the road served by only slightly more than 9,000 petrol stations, a decrease of nearly 11,000 in 20 years.
"This decline is the result of improved fuel efficiency, record oil prices, unfavourable exchange rates, all compounded by higher taxes.
"However the sector is far from being in decline, and as some of the major forecourt flags look to withdraw from the UK there are opportunities opening up for independents and multiples alike.
"Where once the major earner was fuel, now a key focus of the forecourt is supplying customers with a comprehensive convenience offer."
Petrol forecourt convenience stores represent the fourth largest channel in the £29.1bn convenience market, with a 14.1% share of the market worth £4bn a year.
"With £1bn in additional sales forecast in the market between now and 2014, forecourts have rapidly grown in sophistication and diversity," says Hagon. "To capitalise on this opportunity retailers need to develop their impulse shopping, food-to-go and fresh food offer further."
Reaching full potential, according to P&H, depends on applying best practice on the shop floor through effective use of merchandising, category management and ranging, as well using macroplans and planograms.
"We’ve seen retailers achieve measurable benefits underpinned by a minimum increase of 20% in turnover through the application of basic merchandising and category management techniques," explains Hagon.
"In retailing, as in any other profession, knowledge is power."
With retail in constant flux, doing an annual business audit that addresses the fundamental questions of whether the business is viable, what could be done to maximise return, and whether it serves the needs of its customers effectively, makes good sense.
In convenience and on the forecourt, P&H says this tends to boil down to three basic precepts: know your catchment area; know your customer; and know your competition. Other considerations, including legislation, play an integral part in success, but an ongoing knowledge of these three factors forms the bedrock of most successful retail businesses.
While knowing your catchment area, customers and competition helps define the unique selling points of your store, and gives you valuable knowledge that can inform how you refine your offer to maximise returns, when it comes to the practicalities, the devil is in the detail.
From macroplanning and planograms through to key consumer and category trends, as well as merchandising tips and promotions, P&H can help with a variety of tools available to retailers.
P&H defines the three main types of forecourt convenience stores, with a small sub-section, as: Urban neighbourhood: Site located in/around major conurbations with significant pedestrian traffic (chimney pots). Rural neighbourhood: Neighbourhood store in a village location with limited competition.Transient: Located on major ’A’ road/thoroughfare (predominantly drive-on trade).
Differentiated (sub segment): Significant or specific competitive pressure that requires a point of difference such as coffee, food-to-go, alcohol, etc.
Making clever use of space is essential in forecourts both on the sales floor as well as on-shelf. This is where macro space planning determining shop layout comes in, according to P&H.
Macro space planning determines the efficiency of the shop layout within the space available to optimise the linear meterage and position of the gondolas, chillers and other store furniture. It takes into consideration aisle widths and the projected movement of customers around the shop, as well as allocating relative space to categories within the shop.
P&H says its main advantage is that it helps customers to shop the store, and done well, it can portray excitement. Here, best practice includes:
Zoning shop layouts to match shopper missions impulse (need it now), distress (run out), planned (food for later) where possible.
Positioning categories in the correct and logical part of the shop to ensure the customer flows around and shops the whole store.
Ensuring that category adjacencies are sympathetic for example stocking bread near, or opposite milk, putting salty snacks close to soft drinks.
Allocating space for each category on a combination of sales and profit contribution.
Additional store layout pointers to bear in mind include:
Customers are looking for clarity, not clutter, so it is natural that they move towards space.
Wider aisles slow customers down. This is a law of supermarketing and is a good thing since the wider the aisle, the more customers feel at ease to peruse, and the more they end up buying.
By the same token, narrow aisle widths inhibit customer flow. What’s called the ’bum-brush’ effect comes into play customers don’t want to squeeze past another customer in a narrow aisle, so don’t venture down it at all. This obviously results in a potential loss of sales. High island gondolas are intimidating and cause customers to speed up.
The benefits of using planograms a diagram of fixtures and products that illustrates how and where retail products should be displayed in order to increase purchase are manifold.
P&H says planograms are:
Vital to increase sales. They give an immensely accurate guide on stocking the right products, in the right variant proportions in the right place and with the right facings, thereby making purchasing easier for shoppers.
Professional. All major retailers use planograms since both they, and manufacturers, know they work.
Helpful in promoting consistency. The set out a specific format that is visually easy to follow and contributes to continuity in store.
Good for instilling discipline, making sound category management principles easier for all staff to follow, and making errors easier to spot.
Essential to increase profit, because they promote increased sales as outlined previously, and also encourage less waste
Effective tools to improve ordering and restocking, since most come complete with barcodes or order codes as well as product descriptions and quantity information
Handy in aiding stock control for all the reasons mentioned previously
Helpful for training, since they are central reference documents with a set, easy-to-follow format
A key tool for improving cash flow, since they contribute to more sales, more profit, less waste and stock holding, and therefore a smaller bank overdraft
Essential when it comes to meeting shopper needs because they are ranged to ensure customers find what they need quickly.
P&H recognises that success as a forecourt retailer is a far from easy task: "The forecourt has experienced huge change in recent years and operators have had to become increasingly agile as they come to terms with rocketing fuel prices and the impact that has had on forecourt store spend," says Hagon.
"But as forecourt operators continue to adopt the retail tactics outlined in our Forecourt Index, and exploit the expertise of partners such as P&H, winning on the forecourt is a very real, and lucrative, possibility."
Retailer case study
Darnell Service Station is an independent forecourt in Sheffield. With Palmer and Harvey advising on the redesign, the old shop was recently demolished and a new, bigger, open-plan convenience store was built on the site. The new shop is built almost entirely of glass and so everything inside can be seen by those passing by on the dual carriageway, making for a more eye-catching location and a more welcoming visit. Owner Nizam Patel comments: "We also use specially designed forecourt planograms created by Palmer and Harvey that maximise sales and create the most efficient merchandising environment." The original, very small shop turned over around £30-£35,000 per month. The new shop is already turning over more than double that at around £75,000 per month, with £30,000 in phone top-ups and fuel sales of £500,000 per month.