Fuel for thought and some tricky sums
A lot of people will shop around for the best deals but it can be a huge headache working out what is best for your site. An anonymous retailer wrote in to say that a big problem he has had in the past few months is deciding on a new fuel supply contract. He says: "Been a Texaco dealer for 25 years and never looked at other suppliers. A visit from a Shell area manager looking for business started me thinking, why not see what fuel deals are available? I am fortunate to own two of possibly the best independent fuel/supermarket sites in my area. I have had offers from Shell, BP, Esso as well as Texaco."
But he adds it has been very difficult to know which is the best deal because all the companies will only give you a Platts deal plus a pence per litre on cost. "At the end of the day, I was only interested in the best buying-in price, credit terms, credit card costs and reward card costs. With all the companies having their own method for arriving at their base Platts price plus all the extra charges they can add on, what an almost impossible task to decide which was the best deal for my sites!" He says that the credit terms varied from 10 days to 18 days and the rewards cards from .02p to almost 1p with one supplier even having a yearly cost increase for tanker driver wages rising.
He worked out that, over the five-year term of the contract, there was more than a six-figure yearly difference in the potential gross profit between suppliers.
"It was stated that the double-figure volume increase I would enjoy by changing brand from my present supplier would offset this figure. Questionable, I think."
In the end he decided to stay with Texaco because he thought it was a fair deal and they have always given him excellent service.
"Would I have made more overall profit from Shell, BP or Esso?" He isn’t sure, saying that to make the same profits, he would have had to increase both shop and fuel sales. "Then my costs would have increased along with my business rates which is based on fuel sites’ turnover."
He is calling for all the fuel suppliers to shake up supply offers. "Give us dealers a way to easily arrive at which is the best offer. Stop trying to fool us all with your low cif (cost insurance and freight), medium cif, high cif and plus premium dollar charges per barrel or ton and all of them should offer a weekly Platts deal instead of the only option of a daily Platts deal."
The retailer has now contacted the experts. The PRA was going to run the deals through its spreadsheets which will provide some impartial advice.
"This I hope will tell me I made the right choice with Texaco, all my calculations tell me I have. I’ve been in fuel 46 years and nothing has changed with fuel supply contracts to make them nice and easy to understand and show which is best for the bottom line."
I’m sure there isn’t a forecourt operator in the land who would disagree with that.
When they won’t go that extra mile
I had hoped to bring you better news about the delivery situation at Bridge Garage in Shrewton, Salisbury. As I reported in June, Carol Smith lost deliveries to her small store following the collapse of Palmer & Harvey last November. She had been shopping at Booker’s Eastleigh branch and, on noting that Booker was delivering to one of its Premier store members just four miles up the road from her, requested a similar service. After all, she sells a lot of the same sort of stock.
A great big nothing happened. In fact she was told it depended on the driver’s decision regarding this short detour, which she said gave her husband a good laugh: he’s a lorry driver. Carol also used to work in transport so she knew full well that drivers never get to dictate logistics.
She got in touch with us and I asked Booker head office if it was true that the driver called all the shots. Booker said it would contact Carol directly. They did this but she says that, after half an hour of waffle, they turned her down. "He said we know where you are and what you want but we can’t," says Carol. "I asked why do you only deliver to catering and he couldn’t say. It seems ludicrous that they deliver to a Premier just four miles from here."
The irony is that Carol now has to travel to the same branch at Eastleigh, 12 miles away, to pick up the goods herself. She says she cannot be the only one in this situation and I could at least assure her that she isn’t. I’ve come across plenty of complaints from convenience retailers that Booker just isn’t interested in the small independent any more.