Brand alliances in the forecourt sector are becoming increasingly common as retailers recognise the impact of big brands. The market has seen BP link with Thresher Wine Shop in Connect sites, Esso adopt the Costa Coffee brand in its On The Run stores, and forecourt developer Margram build alliances with McDonald’s and Somerfield – to name just a few.
And as independent retailers continue to transform their shops into fully-fledged convenience stores in a bid to survive in a fiercely competitive market, symbol fascias are becoming more widespread. Spar, the largest independent forecourt brand, now has approaching 300 forecourt shops.
Symbol groups such as Spar have proved invaluable to the independent retailer, with forecourt owners regularly reporting sales increases after signing up to a fascia. Loders Garage in Dorchester, for example, has seen a 20 per cent increase in fuel sales and a 30 per cent rise in shop turnover since redeveloping its site and adopting the Spar brand.
Director Lee Loder said: “We moved to Spar because of the strength of the brand. We are motor traders, not shopkeepers and needed to get on board with the experts. There is no doubt that having a professional convenience operation has driven our petrol sales. We are on target to sell an additional one million litres of fuel.”
But as the supermarkets continue to creep market share and expand their networks of standalone forecourts – like with Sainsbury’s and its Sainsbury’s Local format, and Tesco with Tesco Express – independents are increasingly looking to ways of improving their competitive power.
The Budgens franchise was launched in 2000, and has won a lot of supporters. Forecourt Trader of the Year winner, Jonathan James, is a big advocate of the brand and one of eight franchisees in the forecourt market. “Being with Budgens allows us to be seen as a supermarket while remaining an independent,” he says. “It’s allowing the independent sector to have a brand and supply chain that can compete head on with the multiples.”
Somerfield has become the latest supermarket to extend its expertise in grocery retailing to independents. The supermarket currently has 30 company-owned forecourts and plans to open 45-50 forecourts over the next 12 months.
“Franchising the Somerfield brand is a natural brand development,” says Richard Collins, project director for Somerfield Essentials. “In the eyes of the shopper, fresh is an integral part of the offer and the Somerfield brand places a high importance on fresh foods. Consumers’ quality perception is slipping backwards because retailers have not had access to fresh because of so few deliveries.”
Over the past 12 months, Somerfield has been trialling its Essentials franchise in seven TM Retail stores. Like-for-like growth in these shops has been 127 per cent. And with 17 depots throughout the UK, the supermarket claims there is nowhere in the country that Somerfield cannot service.
Part of the franchise package is free Arciris epos kit, a design and planning service, launch marketing including a fortnightly promotions programme, and the Somerfield Saver loyalty card.
Forecourt development company Margram already has an alliance with Somerfield. “With Somerfield, there is no doubt that the brand name generates substantially more shop customers than our own brand name Supermart,” says Margram chairman David Davis. “It’s a known national brand and we certainly see an increase in any sales we do.”
Margram’s tie-up with McDonald’s also helps to build the profitability of the company’s new-build sites. “With McDonald’s, there are two advantages,” says Davis. The first is that their rental defers our costs. The second is the traffic generation that McDonald’s brings to the site for our own fuel and shop sales. We see anywhere between a 10 and 15 per cent increase in sales.”
Davis adds that Margram’s relationship with McDonald’s and Somerfield starts from the drawing board. “We show both companies the site we have identified as ideal for their criteria,” he says. “Not every site is suitable for a McDonald’s because of the size of the site required.
“We carry out our own evaluations of the location, and are responsible for everything – from obtaining a contract to resolving all planning issues, of which there are many because it’s not easy to get planning permission,” adds Davis. “We are then responsible for building the site using known contractors, and then our alliance partners occupy the premises.”
But as with BP Connect and its Thresher alliance, independents should not just think about shop fascias, but also in terms of specific areas of the shop. Burger restaurant brand Wimpy, for example, is giving retailers the opportunity to tie up with an established brand for fast food. There are currently 10 forecourts in the UK with a Wimpy kiosk, but the company has now introduced a more flexible option – the Micro unit.
With the new Micro unit, Wimpy pre-cooks the burgers in its factory and the retailer then reheats them on site, but serves the product with a fresh bun and salad. The unit has a footprint of 8ft by 8ft, and because product is cooked off site, in most cases, there is no need to obtain planning permission for the extraction and cooking of hot food.
Roger Ahearn, operations director of Wimpy, explains why he believes the franchise is successful: “Customers recognise and trust the brand, especially considering public awareness of food safety issues.” he says. “We have ended up on motorway service areas that used to have their own operations – RoadChef doubled its sales when it became a franchisee.”
Franchisees run their own fast food business but have the security of backup from Wimpy. This includes promotions, full training of staff, a quality, service and cleanliness audit four times a year, and ongoing support from a district manager. Wimpy also pays for a mystery shopper service by an independent company. “Results are reported to the franchisee so they know how customers view the business,” explains Ahearn.
The Micro unit costs £20,000, compared to £45,000 for the Wimpy kiosk. These figures include the franchisee fee, a £5,000 one-off fee and a 10-year franchise agreement. “We also analyse the site through a free site survey and five-year cash-flow forecast so that before the retailer has invested any money, they have a good idea of how successful it will be.”