As the pound sign begins to break out on forecourts around the country, the running sore over Shell’s long-standing ’cut-price’ strategy is also adding to the tension felt by retailers.

With price poles once again being the focus of the national media, retailers believe Shell’s cavalier approach to pricing is unnecessarily undermining their businesses.

Ron Haacke, general manager and director of Petrol Express, said: "Shell thinks it’s clever to give fuel away. As a company making the sort of profits it is at the wellhead, it cannot be concerned about its retail marketing division, because it’s not making any money at it. Shell is behaving the worst in the market - it’s a crazy strategy. Shell is strong in Watford, which is one of the cheapest areas in the country. What does that tell you? Years ago the industry used to complain about Jet and its cut-price strategy, but now Shell is the cut-price expert."

Another retailer calculated that Shell had been making just 0.5ppl on some sites. "How are you going to take all the costs out of that and make a profit?"

Another retailer said his fuel prices had been 1-2ppl adrift of Shell for three years, but for the past six months it had been 3ppl. "At the moment I would rather be closer to a Tesco supermarket than a traditional Shell forecourt."

In response a Shell spokesman said: "We believe we have a long-term sustainable business strategy based on our customer offer delivered on our company and dealer network. We remain committed to providing competitively-priced quality fuels in support of that strategy. Without doubt the current trading environment is proving challenging for us as the cost of product continues to escalate squeezing margin as it does. Like our dealers, we continue to look for the best way of managing the trade-off between price and volume in order to deliver acceptable returns for us and our retailers."

Topics