It would have been nice to end the current series of Industry Database figures by being able to point to some indicators that our industry had started to bounce off the bottom of the economic dip. But unfortunately our figures are from last November and if you cast your mind back to then, you might recall that it was around that time that pump prices were falling almost weekly. This led some operators to predict that the dramatic fall in fuel volumes experienced over the previous summer might at least be stemmed, or possibly even reversed. Unfortunately, our own volume figures continued to show a steep decline (36% down between November ’07 and November ’08) and since then we’ve started to see pump prices slowly rise again as the pound has tumbled against the US dollar.
On a slightly brighter note, however many times we look at the shop picture it still causes some amazement. Yes shop sales were still down - both in cash terms (around 2%) and in real terms (around 5%) - but it was the one area where an optimist might think that the fall had levelled off. Just stop and think about it for a moment. Since at least Christmas, if not before, the message from numerous retail analysts has been that within the next year or so the typical high street could well see between a fifth and a third of its shops empty. Woolworths, MFI and Zavvi have all gone. At the moment, everyone’s betting on who’s going to be next - you can take your pick from an electronics retailer or a DIY retailer. Yet in the middle of all this retail carnage, and despite the huge fall in sales of their core products, somehow petrol forecourt shops seem to be almost holding their own - and without any noticeable destruction of gross margins!
Talking to petrol retailers about their businesses, it’s quite clear that they’re paddling furiously below the water to keep their sales looking okay on the surface. This is the time when ’entreprenuership’ and sound business principles and controls have to be combined. Anyone who thought that their business function was just sitting in the back office all day in front of a PC screen and occasionally doing the run to the bank has either gone to the wall or has had to re-learn some pretty basic rules of retailing. These are knowing your customers and then matching those customers’ needs with the most appropriate offer that you can find in the market. Suddenly we’ve seen many retailers venture out of the back office and take a few shifts on the till for the first time in years. They’ve grumbled about the unsocial hours but in a spare moment some have quietly confessed that getting back out into a customer-facing environment has been something of a revelation. Their ’cash shorts’ have mysteriously improved - and it’s keeping their wage bills down.
As we’ve said before, there is a certain resilience to the petrol retail industry. Having seen out many crises over the years, this industry is nothing if not ’slim’ and ’fit’ - the slow and the lazy were driven out years ago. The basic range of products and services on offer may still be viewed as ’distress purchases’ in some ways, but at a time when consumers are cutting back on luxuries that may just prove to be the best market in which to survive the next couple of years, so be ready for the recovery when it eventually comes.
And on that note, it’s time to say goodbye to the Industry Database - at least in its present form, and at least for a while. Over the past year or so, we at EKW Group have been migrating our IT systems onto new platforms that enable us to provide much more flexibility and speed of information for our accounting clients in all of the industries that we serve. Coupled to our recent success in winning major new contracts with some very big names in the retail world and with our first priority always being customer service, we’ve not yet completed all of the detailed work required to produce ’petrol industry’ statistics from our new IT systems. While we’d hoped to complete the 2008 figures to December before ending this series, the additional IT work arising from the recent VAT rate change has made that a ’no-go’. We couldn’t end this series without a big thank you to the many readers over the years who’ve provided us with valuable feedback - sometimes controversial but always useful! But fear not, we hope to have a new series of articles winging your way soon.