Despite being the largest retail food chain in the world, Spar is very clear about its goal for 2014 it wants to get more retailers in the UK selling Spar-branded fuel.
Last year it began a trial of its retail proposition to independent dealers to put the Spar brand on the pumps as well as the shop, with fuel supplied by Harvest Energy. The first forecourt was a former BP-branded site, B&M Harland of Pickering in North Yorkshire, owned by Geoff Harland. His fuel sales had fallen by 30% in recent years, and he was ready to try something different, which included revamping his store.
By all accounts it was a great success with fuel volume currently running at 32% up and shop sales up 20%. Geoff has spoken of being really excited about the sales figures, which were far better than he could have ever imagined.
"Geoff took a leap of faith," says Mark Steven, Spar’s UK business development controller. "He was concerned about the extra costs associated with BP, frustrated that the call centre was in Budapest, had seen his rep once in six years and was generally feeling unloved. He now has access to one of the most competitive fuel supply deals in the market, combined with the strength of the international Spar brand."
With 100 more sites now in the pipeline, according to Steven, Spar is preparing a major dealer recruitment campaign to kick off from May. Its mission statement is to ’offer a unique and compelling retail proposition to independent UK forecourt retailers and customers alike. Make Spar the number one entirely branded PFS solution in the UK, both by site numbers and volume’.
Spar is already the largest forecourt symbol in the UK with 700 sites, representing 30% of its estate. It is a well-established winner at the Forecourt Trader of the Year awards, claiming to win more awards than all of the other symbols put together. It has a host of statistics to prove its strength and heritage, such as £1 in every £4 spent in the grocery sector is spent in a Spar, 93% of the population trust Spar, and customers average four visits a week to their local Spar. It therefore has high expectations about establishing itself as a fuel brand.
"The forecourt sector is a marketplace we’re very comfortable with," explains Steven. "It’s a marketplace we’ve demonstrated we can work in and achieve tangible results for retailers. We have a number of prominent retailers like Euro Garages, Kay Group and David Charman at Parkfoot Garage. They are at the cutting edge of what they do."
Spar is taking advantage of what it sees as a gap in the market, where independent dealers have become increasingly disenchanted with their service from the oil majors.
"The market seems very much in a state of flux with refiners making significant changes," says Steven. "Esso is moving out of direct retailing; Conoco has moved out of the south west; Murco is still seeking a buyer. Out of the big oil companies, those still looking for dealers are looking for groups. The number of smaller, independent guys who were getting a good deal, maybe five or six years ago, has greatly diminished.
"National fuel branding is becoming something of a rarity, with supermarkets swallowing up independent volume."
Spar undertook some market research, interviewing a cross-section of fuel retailers from different forecourt brands: "The feedback we got was that there was no longer this attraction to the big-brand oil companies, because of the shift to supermarket fuel. Companies like Asda and Morrisons have created a fuel brand out of nothing. Consumers have got used to going to supermarkets to buy fuel and trusting it and are less concerned about the big brands.
"What also came out in the research was that forecourt independents want to bring the shop brand out onto the forecourt and remove the confusion of dual branding. They also have huge frustrations with the service provided by their current oil major fuel supplier and want to be able to compete at the pump."
Armed with this information, Spar spoke to several fuel supply companies and the one that ticked all the boxes was Harvest Energy: "The brand has national coverage, and has created a new image from nothing, as the supermarkets did, and now it has 100 or so dealer forecourts," explains Steven.
"Harvest Energy opened up the books and showed us the figures from sites that had come over from the major brands they had not just held but increased their volume. It showed that shifting away from major oil company branding doesn’t have a negative impact.
"Another big factor was the transparency of the Harvest Energy fuel deal there’s no smoke and mirrors. So the business sits very well with us, as that’s how we like to work. We are upfront with dealers about what the deal is."
Steven says the Spar-branded fuel deal should appeal to most dealers, firstly through the attraction to a more competitive price at the pump which comes through the deal with Harvest; and secondly through the recognition and trust within the Spar brand.
The retailer can choose whether they have the shop and forecourt branded Spar, or the shop Spar and pumps branded Harvest. But Spar believes it has an offer that will be attractive to putting the Spar brand on the whole site.
"We’ve already achieved excellent results with our two trial sites, (the second was Hathersage, see page 21), and have a third coming on stream before our new financial year at the end of April.
"When our campaign gets underway in May we’ll be doing roadshows, engaging with the PRA, and doing industry events. We’ve identified some 2,500 sites we could go after. That’s the opportunity.
"We want to create such a compelling proposition that dealers will choose Spar. We have this phenomenal brand that is 80 years old, and when you see the recognition and the trust that people have in it, it’s an amazing starting point to have.
"Spar is instantly recognisable the world over. The deal we have with Harvest is giving dealers a better price at the pump. We’re also giving retailers a toolkit to develop sales and profitability in a very challenging sector. We’re creating a proposition where the two offers are really complementary.
"It also means the customer is benefiting from that service.They’re not just getting fuel, when they go in store they can do a proper shop. Their needs are being met whether it’s tonight’s tea or today’s lunch or a breakfast meal deal in the forecourt sector we have nailed the meal deals. We have a modular offer which includes coffee, food to go, parcel collection that can be tailored to an individual’s business needs. We cover all the bases and execute them very well.
"In other words we’re giving the retailer the tools to capture as much business as possible.
case study: Spar Hathersage
Spar Hathersage in Derbyshire previously had a Pace-branded forecourt. It is a small rural site pumping just over 1mlpa. It moved to Spar-branded fuel in August 2013.
Since the changeover:
Sales volume +10%
Cash profit mprovement +50%
Overall an improvement in cash profit of over £20,000pa
Owner Richard Baron says: "I’m very pleased with the service I receive from Harvest and Spar. I’m also delighted with the increase in sales volume and significant increase in cash profit."
Spar deal components
Aligned five-year fuel and shop contract
Access to powerful Spar branding
Cross promotions linking fuel purchases to shop goods
National coverage dedicated tanker fleet 24/7 operation
Competitive credit card rates and health & safety advisory service offered through Suresite
No product premiums over Platts
No winter quality add-ons
No additional CSO costs
No break reviews (transport cost or drivers)
Full 7-day cover on pump maintenance arrangements
Weekly lagged pricing avoids the lottery of daily pricing and matches the independents pricing to that of the supermarkets
Annual site spring clean