Shell has again come under fire from the petrol retailing fraternity with its discount pricing strategy. As retailers struggle to balance scaring customers away with sky-rocketing fuel prices and making some kind of margin, those in the vicinity of a Shell company-owned site are scratching their heads in disbelief.
Former PRA chairman Phil Richardson said: "Can someone please explain to me why a mighty oil company like Shell seems hellbent on obiliterating the competition, including, dare I say, its own dealers?"
"I have never subscribed to the theory that volume is the sole driver of a business. I take the view that a modest profit per litre will help keep the wolf from the door and may even help me re-invest in my humble network. It seems, however, that Shell has a different objective: sell as much as you can for a miniscule margin and screw the competition to boot."
Richardson said that not far from his site in the north west, a Shell company-owned site was recently selling fuel at 94.9ppl for unleaded and 95.9ppl for diesel.
"At these levels my margins are plus 0.45ppl and minus 3ppl respectively. Try as I may I cannot find a site in the trading area that Shell appears to be competing with. At these levels competition is hardly healthy, it’s just brutal."
Shell has been offering some "tasty Platts offerings" according to Richardson, but he said "who in their right mind would sign up with a company that thinks nothing of undercutting their own dealers by several pence per litre. Try explaining to your customers why your prices are 4ppl more expensive than the same branded site down the road. Rumour has it that Shell has achieved its profit target for the year and is now giving it away."
See Mogas page 50.