Valli Forecourts’ strategy is straightforward: take an old, traditional forecourt and knock it down to build a modern site with a strong convenience offering, lots of parking, a good valeting offer and a free ATM to give customers good value for money in these cash-strapped times.
The Top 50 Indie company is operated by brothers Farook and Haroon Valli. Four of their nine sites have already been transformed, another is being rebuilt now, with a further two in the pipeline for 2011. "Our main criteria is to drive value for the consumer," says Farook.
"The perception of value on forecourts is a major challenge consumers automatically think forecourts are expensive. We have to drive that value more than ever before because it’s getting tough out there."
The brothers first ventured into fuel retailing when Haroon became a commission operator in 1993 for forecourt developer Margram, running a site in Holmfirth in Huddersfield. After observing his brother’s progress, Farook decided to follow suit and joined Shell in 1995 as an agent.
Next Haroon joined Total and took on two more sites and Farook a couple more forecourts with Shell, before Haroon became a BP licensee. "In the meantime I joined Esso as a commission agent and left Shell because the Shell contract was getting challenging to operate," explains Farook. "The Esso contract was far better so I took on a site in Sheffield."
It was BP’s decision to sell its network in 2002 that proved to be the turning point for the Valli brothers. "When BP started disposing of its assets, we got our big break," says Farook. "We took on four sites in and around Leeds, and six months later got two more. After a year or two we bought another two sites from BP and in 2007, Esso shut my site down so we are now exclusively with BP. We were originally committed for five years and have signed again for another five years."
At first, the Vallis experienced some fruitful years, but sales eventually levelled out and they set upon a change in strategy to get the sites back into growth. "Initially the businesses were growing but in 2007-2008 we found that growth had plateaued so we started to think about what we could do next to change that," says Farook. "We looked at the industry and what was happening elsewhere and decided that the only way forward was to redevelop the sites with a modern design and modern convenience offering."
The first site to be redeveloped was in Ripon in 2008. "We were very close to selling that site to a major supermarket but that didn’t work for a number of reasons," explains Farook. "Dealing with a supermarket was quite a challenge they are very hard negotiators and try to get a very keen price. We decided in the end to develop the site ourselves."
That’s when Farook found Architectural Design Services (ADS) in Skipton and worked with them to come up with a design that would become the basic template for future developments. "ADS has done a very good job for us," says Farook. "We wanted a modern design with all the key sales drivers to give the business another 15-20 years of life. Ripon was going down; fuel and shop sales were down, and the tanks and pumps were 35 years old. It was a site destined to come out of the industry it was an ideal plot for retirement flats but we turned it around."
Farook admits that initially the planners were very reluctant to give permission to develop the site but a sudden u-turn gave them the green light. "All of a sudden the planners couldn’t be more friendly and helpful in getting the site developed. We think that somewhere in the background some people in the local community went to the council and expressed concern because a number of filling stations in the area had shut down and people thought it would be a problem if another one closed."
The planning process for Ripon took nine months but other sites have taken as long as three years. "Planning is a major challenge and certain areas are more difficult than others. Ripon is a conservation area so the design was sympathetic to the area with traditional stone walls. That can make a development more expensive but planners are more open to an application if the building blends in with the local area. We have thrown a lot of resources at the planning process but it’s worth the hard work and challenge. And it’s only going to get more difficult as more and more legislation comes into effect."
The group’s St Chads site in Headingley, Leeds is the latest to get a revamp. The rebuild saw the Spar-branded 750sq ft c-store transformed into a 3,000sq ft detached shop with a large range of fresh and convenience foods along with plenty of special offers.
With four of the nine-strong Valli sites complete, the next to be redeveloped is in Ackworth. Building work started in December and is due to be completed by the end of March. "We’ve had some building issues so it’s going to take a bit longer than usual," says Farook.
"The bad weather in December has delayed the diversion of a gas main we’ve been waiting since December 14. The good thing is we’ve not had to shut the existing site because we acquired some extra land at the back so we’ve been able to build the new shop while continuing to trade from the old one. We will only need to close for two months when we rebuild the forecourt."
Two more sites in Sheffield and Leeds have had planning approved, and the development strategy is clearly paying off. Taking into account the downtime from construction, sales are up by 3%. But Farook is not about to sit on his laurels. All the new stores are Spar-branded and the existing estate is Mace but the Vallis are open to other symbols.
"Consumers are demanding value, choice and the right offering. You’ve got to give more for less. Symbols need to help us do that better.
"We do it now, but we need to do it even better. The motorist is more sensitive to fuel prices than they were a while ago. I think they understand that it’s not us that’s making it so expensive but they will still look for the cheapest price.
"There are challenging times ahead so we’re looking for new developments to help us through those challenging times," adds Farook.
"We are now looking for a food-to-go supplier and considering BP’s Wild Bean café, which will mean a rejig of the stores. We would also like to offer pay at pump. This January was much tougher than last year and 2011 is going to be challenging on all fronts fuel, margins and in the shop. Developing the shop helps you to cope better in these turbulent times."