This might be a good time to consider in general terms what the future shape of UK forecourts might look like, following a year of yoyo-ing fuel sales due to the lockdowns, which has meant the alternative services and reasons for the existence of petrol stations have been wheeled to centre-stage.
Asian Trader looks at forecourts from the perspective of the convenience sector, of course: how far is a gas station similar to an independent grocery store; how is it becoming more or less like one at the same time that c-stores themselves are morphing into something new and strange and fabulous? In an age of food to go (FTG), will convenience eat forecourts or will forecourts gobble up convenience?
And what will happen about the UK Government’s commitment to ban the sale of new petrol and diesel vehicles by 2030, and its proposed £1.3 billion investment in electric charging infrastructure? Is this transformation plausible, with the UK’s domestic energy infrastructure already almost on its knees, and no convincing future policy plan in sight? Or is it just an electric white elephant? Do people actually understand where electricity comes from? And do they also understand the ecological illogicality of using Chinese batteries manufactured using energy generated by the filthiest of coal power-plants?
In December the first electric-only forecourt in the UK opened near Braintree, Essex,with another 99 planned to be built in the UK over the next five years by energy company Gridserve. That compares to 8,380 traditional forecourts – in 1990 there were 20,000! – only a smattering of which already have charge-points. The new electric fuel-station can serve around 40 customers per hour, compared to an average forecourt’s 400. That will be interesting.
The complete conversion of the UK to electric vehicles (EVs) is clearly a long way off, and it will be interesting to see how the UK public debt situation, which has worsened incomparably over the last year, upsets future investment plans, especially with the vast majority of UK drivers resolutely skeptical about the practicality (although perhaps not the virtues) of EVs.
If electric mobility takes off in a really transformational way, how will it affect forecourts? You can get electricity almost anywhere, after all, and it might seem silly to have to visit a “hub” as you did when accessing gasoline. If the government disperses charge points to residences, streets and charged – in both senses – parking spaces, for example, does that effectively disintermediate the fuel-hub model?
And is electricity the only energy option? Volkmar Denner, CEO of Bosch, recently criticised the EU for its EV “fixation”, arguing that saving the planet is not necessarily about the end of old-fashioned engines and that other perfectly viable low-emission alternatives to gasoline, such as hydrogen , are being ignored: “[Climate action] is about the end of fossil fuels,” he said,“and while electromobility and green charging power make road transport carbon neutral, so do renewable fuels.”
Never mind. We wrote two years ago that there were over 4,000 public electric vehicle charging points in the UK and that this figure was expected to increase to 7,900 “soon”. Nissan predicted that “public electric vehicle charging points will outnumber traditional filling stations by the summer of 2020,” and today in 2021 there are indeed more than 35,000 charge point connectors across the UK in over 13,000 locations –“That's more public places to charge than petrol stations, with around 7,000 charge point connectors added in 2020 alone,” according to EDF Energy – the USA can only boast slightly more (41,300). In the UK, at least, EV progress is being made and it remains to be seen what that means for the forecourt model.
But for the time-being we still have something like 99 per cent traditional internal combustion (IC) cars on the roads and they get thirsty, just like their drivers and passengers, every few hours. As a sector of convenience, the forecourt trade in the UK is a vital element of the grocery industry – and increasingly its allied services, such as post offices and pizza. Those elements, together with the new “live locally” ethos bestowed by the pandemic, will probably only get bigger and more important, changing the complexion and fortunes of forecourts for the better – at least in the medium-term.
An important storefront
Something like 30 per cent of independent forecourts are family businesses inherited by their current operators, and 87 per cent of these independent owners operate just one site. The entire forecourt sector provides a significant slice of employment – about 91,000 jobs – and unlike the Asian predominance in c-stores (where in London it is nearly 75 per cent) the proportion of forecourts owned by “white British” is over 70 percent - the rest, 28 per cent, being almost entirely Asian, and this could well rise as convenience merges somewhat with forecourts as grocery and FTG sales increase, and Asian entrepreneurs move in (looking at you, Issa bros, buying up Asda).
Another fact of relevance for the convenience aspect of forecourts is that over 7,300 have shops, ranging from “kiosk” to mini-supermarket, and these are fast and often becoming the focus for local shoppers in many locations where the forecourt is the most convenient destination – closer than a larger supermarket in a rural or residential area, for example. This means that the scope for grocery (together with general household goods, which have seen booming forecourt sales during the pandemic), is enormous. This potential is amplified by the possibilities of FTG sales, which have survived the Great Commuter Vanishing during lockdown, to emerge with a range of new “fairground attraction” fixtures to attract shoppers who might be filling up themselves rather than their vehicles.
The fact is that 44 per cent of forecourts have no other retail or service situated nearby, and a further 33 per cent only have five or less. That means around 80 per cent of forecourts are pretty much standalone and have the potential to monopolise sales in categories needed in a locality, but which are as yet uncatered for. As margin from gasoline is negligible, with fuel serving as an enticement for other sales (the average forecourt shop basket is £6.64 with a lot of headroom), the incentive to provide a magnetic range of higher-margin goods and services – with FTG primary among them – is immense.
Brysons Londis Forecourt, Prestwick
“The forecourt market is in growth and is set to grow by 3.8 per cent, ahead of the 3.2 per cent forecast for the overall convenience market,” says Kenton Burchell, Trading Director at Bestway Wholesale. “Overall forecourt outlets have declined by 0.2 per cent, but there has been a rise of 1.5 per cent where there is a convenience store.”
That might not sound dramatic, but is actually a seven-fold rebalancing at the margin in favour of colourful forecourt-convenience, away from the antiquated “blacksmith’s forge” village fuel-pump model, which perhaps sold de-icer, odd fan belts and a chamois leather.
The outlook is positive in terms of gasoline sales attracting customers, and that in turn is down to the pandemic, as people turn to their cars and shun the risks of public transport: there were recently an unprecedented seven million driving licence applications pending, and that is obviously the younger generation passing up the offer of trains and buses. These are the same future customers who will want Costa Coffee, F’Real milkshakes and a trip to the deli counter or Rustlers microwave (as well as loo roll and John Innes No2).
As lockdown conditions eased after April 12, gasoline sales accomplished 89 per cent of their corresponding week pre-lockdown level, gaining an average 12.5 per cent in a single week (to 18 April) according to figures from the Department for Business, Energy & Industrial Strategy (DBEIS). Clearly, the nation is keen to get back behind the wheel, even if not back on the tube.
There are also drive-thru possibilities to complement the customers who park up to refuel, and the latest trend for Delivered Convenience could have been dreamed up especially for forecourt sites, where a storeroom and loading bay could easily be put up on the extra and often unused space where a workshop or car-wash used to be.
If you add in Amazon and Hermes pick-up, a post office counter, maybe dry cleaning drop-off and key-cutting, a weekly haircutter visit and who-knows what else, a forecourt really could be a convenience and service hub instead of simply somewhere to fill the tank and the belly.
“Petrol stations have the real estate but they just need to reconfigure it to show changing needs. The pandemic has enabled petrol stations to survive beyond what looked like doom and gloom,” said BP’s eMobility innovation director, Sophia Nadur, recently.
“Serving your local community has never been so important,” agrees Burchell. “Food to go and chilled foods are always a key to a successful business, food to go and takeaway have seen growth, along with the need for home delivery. Alongside this we have seen the acceleration of digital and smart technology and its use by consumers e.g. online ordering and apps.”
He also says that there is huge scope for improvement, as the mentality changes from simple retail to service and maximising customer experience: “Businesses always need to be looking to improve. Today’s consumer expects as a minimum great customer service, high store standards, the best hygiene (toilets, functional and immaculately clean).
“Retailers need to focus on what is right for customers by offering the right product at the right price. They need to embrace the reality of electric cars and charging points with purpose-built sites, incorporating cafes, and maybe consider elements such as gyms, workstations etc.”
Practical forecourting
We talked to Nisa, who actually have around 200 forecourt sites among their 2400 stores, to get a look at what taking on a forecourt fascia really feels like and what is involved. Last year, even during a pandemic, Nisa added 60 forecourt sites to their estate.
They said that retailers have the option to operate under a symbol fascia, Nisa Local, Nisa Extra or Nisa Express, or they can go “dual branded”, whereby a Nisa partner can maintain their own identity whilst also benefiting from the Nisa brand. Alternatively, a retailer can trade under their own independent branding.
Nisa’s latest fascia development, Nisa Express, provides a dedicated fascia option and store format for forecourt and smaller convenience sites up to 1,000 sq. ft, offering three unique format options – forecourt, food-centric and essentials – each with a design and range tailored to the store’s specific market.
The new forecourt format ensures all key categories are included for on-the-go and impulse shoppers, including FTG, a vended coffee solution, comprehensive snacking range and a core offering of products to satisfy a top-up customer mission.
Delivered by Nisa, its retailers have a range of more than 13,000 SKUs, including over 2,400 Co-op own-brand products, that offer a recognised quality brand for shoppers. They say the roll-out has been a big success and has included Co-op’s extensive festive product range and the innovative plant-based GRO range. Nisa has also announced an improvement dramatic for H2 2021, a new electronic proof-of-delivery system (e-POD) that will enable a simpler paperless sign off process on delivery.
New Nisa forecourters are provided with a complete support package comprising a strong retail focused team, a staff training facility and a comprehensive marketing package incorporating social media and PR support, bespoke leaflets, point of sale material, a personalised Nisa FM radio network and national advertising – as well as a dedicated induction team to support them during their first 100 days.
Data reveals that forecourt owners investing in new and upgraded stores are enjoying average sales uplifts of 12 per cent.
John Stevenson, Stevenson Forecourts of Northallerton, says:
“We joined Nisa in 2010 and were developing one of our forecourts we’ve had since the mid-80s. We were looking to change our supply partner to one who could supply the best products and range to maximise store turnover.
At the time, Nisa supplied us with a store turnover report, looking at the demographic and competition in the area. Basically, report that Nisa produced we were able to determine the retail size that was required, so we ended up with a 3,000 sq. ft. store, and because it was a good turnover figure from the demographic report we were able to design the merchandising to maximise turnover of the store.
I’m pleased to report that all of our stores are performing as they were predicted to. My family’s been retailing in petrol for over 40 years now and we’ve really been able to personalise the store with things that were important to us and how we wanted it to look. This is our first store that we’ve put a Subway in – we’re now seeing people come trolley shop in a forecourt, get a coffee and now that we’ve got a Subway, sitting down, taking half an hour out, using the wi-fi. Our forecourts are evolving, they’ll always evolve and providing we embrace this we should always stay relevant.”
In the end, though, perhaps the most “electrifying” conclusion is one we highlighted in our last forecourt report: that FTG is the new fuel, along with all the other household needs that can be sited in a relatively spacious local hub you can drive to and charge or fill up at. Thinking again of Blackburn’s dynamic duo, Mohsin and Zuber, with their takeover of Asda (currently under review by the CMA) and their outright purchase of healthy fast food chain Leon a few weeks ago – not to mention their attempt to grab Caffè Nero last November – and it really does appear the writing is on the wall.
Local shops will face significant new pressures as a result of today’s Budget, the Association of Convenience Stores (ACS) has warned.
Chancellor Rachel Reeves' budget's impact will be felt unevenly across the UK’s 50,000 convenience stores, with some measures such as business rate relief and the increased employment allowance mitigating costs for smaller independent stores, while providing no help for chains and larger independent businesses.
The key measures for local shops announced by the Chancellor, and the costs for local shops associated with them, are:
National Living Wage to increase to £12.21 per hour
National Minimum Wage (18-20 rate) to increase to £10 per hour
Cost to the convenience sector next year: £7.739bn (increase of £513m)
Employers’ National Insurance Contributions to rise to 15 per cent
Threshold for Employers’ National Insurance contributions to fall to £5,000 per year
Employment Allowance to rise to £10,500 a year
Cost to the convenience sector next year: £397m (increase of £85m)
Retail and hospitality rate relief reduced from 75 per cent to 40 per cent
Small business multiplier frozen for 2025/26
Cost to the convenience sector: £267m (increase of £68m)
Total cost of main announcements (year-on-year difference): £666m
ACS Chief Executive James Lowman said: “The cold hard facts are that the measures announced in the past 24 hours have added two-thirds of a billion pounds to the direct cost base of the UK’s local shops. At a time when trade is tough and operating costs are stubbornly high, this will be challenging for our members to absorb and there will be some casualties on high streets and in villages and estates across the country.
“Not all shops will be impacted the same. The smallest retailers, with low NICs bills and lower rateable values for their shops, will benefit from the welcome increase in the employment allowance and the retention of 40% of the retail, hospitality and leisure business rates relief. Retailers with a larger store, a number of sites or those operating a chain will receive limited benefit from these mitigations, and this will impact their ability to invest and to continue to offer services in the communities they serve.
The following additional measures were announced by the Chancellor in the Budget speech today:
Flat rate levy on vaping liquids from October 2026 of £2.20 per 10ml
Fuel duty frozen and the 5p cut extended for another year
A new commitment to tackling shop theft and funding directed to tackling organised gangs
Lowman continued: “The Chancellor’s commitment to tackling shop theft will be warmly welcomed by our members, but they are interested only in action and in crime against their stores and their colleagues being tackled effectively. We stand ready to help implement a new, and better-funded strategy to stop shop theft, abuse and violence against our members.”
Convenience store body Association of Convenience Stores (ACS) today (30) has warned the Chancellor about the negative effects of the new National Living Wage (NLW) increase, a day after the Chancellor announced a pay rise for over 3 million workers next year, with NLW rates rising by 6.7 perc cent.
From April 2025, the NLW will increase from £11.44 to £12.21 while 18-20 National Minimum Wage will rise by £1.40 per hour to £10 - the largest increase on record, marking the first step towards a single adult rate.
ACS chief executive James Lowman said, “Our members are grappling with how to afford this inflation-busting increase in wage costs. The market remains tough, with many retailers reporting flat or declining sales while expenses like banking charges, credit card processing fees and energy bills are eating away at their profitability.
"More than ever, we need help from the Chancellor in the Budget. Without sustained and enhanced help on business rates, a reduction in National Insurance Contributions, and effective incentives to drive investment, our sector faces a challenging future. For some communities, this could mean the viability of their local shop is put at risk.”
Evidence provided to the Low Pay Commission by ACS earlier this year already found that to handle the increases in national wage increases, 53 per cent of retailers have reduced the amount they invest in their business, 53 per cent have been forced to increase their prices in store, and 47 per cent have had to take lower profits.
Baroness Philippa Stroud, Chair of the Low Pay Commission (LPC), stated that data already shows signs of employers finding it harder to adapt to minimum wage increases.
SPAR North of England retailer Dara Singh Randhawa’s family store has been awarded £100,000 of free stock after hitting all his targets since moving to the symbol.
Dara and his family, who have their SPAR store in Patrington in the East Riding of Yorkshire, joined SPAR through its association with James Hall & Co. Ltd in August 2023 having taken the decision to maximise the store’s potential.
It is a decision they have not looked back on, with sales increasing by up to 25% and margins also showing significant uplift in the last 12 months.
Key to the store’s improved performance is the complete overhaul of products available in-store, particularly the fresh food range, to better support people who live in Patrington and the surrounding area.
A new store layout and refrigeration, better Food To Go and meal deal options, a coffee machine, and a Calippo slush machine were also installed during a major refurbishment prior to launch.
Dara said: “Our move to SPAR has been excellent. We have seen fantastic sales uplift and the support from the team at James Hall & Co. Ltd has been brilliant. The £100,000 of free stock is the cherry on the cake.
“We have been very impressed with the Price Locked promotions, in particular. These give customers confidence to do bigger shops with us as they see value on our shelves and the products at the same prices for longer.
“At times over the summer when tourists and visitors to the area add trade, we have seen sales £6,000 a week higher than our average. This is against a backdrop of the popular caravan park in the village being closed almost all year.
“We are really pleased with the position we are in, and we will be looking to achieve more in 2025.”
Peter Dodding, Sales Director at James Hall & Co. Ltd and Chairman of the SPAR Northern Guild, said: “Congratulations to Dara and the Randhawa family on hitting their targets and earning £100,000 of free stock.
“We recognise switching brand is a big decision for a retailer which is why this isn’t a gimmick, and we offer this to all retailers who join the SPAR family with James Hall & Co. Ltd.
“As well as our £100,000 incentive, we also offer retailers the chance to achieve up to an additional £5,000 of free stock if they successfully refer a friend.
“These opportunities provide additional motivation to retailers alongside the comprehensive benefits that joining the SPAR brand brings with it.”
James Hall & Co. Ltd is a fifth-generation family business which serves a network of independent SPAR retailers and company-owned SPAR stores across Northern England six days a week from its base at Bowland View in Preston.
The government has on Wednesday announced its acceptance of the Low Pay Commission’s (LPC) recommendations on the rates of the National Minimum Wage (NMW), including the National Living Wage (NLW).
The rates which will apply from 1 April 2025 are as follows:
NMW Rate
Increase (£)
Percentage increase
National Living Wage (21 and over)
£12.21
£0.77
6.7
18-20 Year Old Rate
£10.00
£1.40
16.3
16-17 Year Old Rate
£7.55
£1.15
18.0
Apprentice Rate
£7.55
£1.15
18.0
Accommodation Offset
£10.66
£0.67
6.7
The recommended NLW rate is expected to equal two-thirds of median earnings and to have the highest real value in the history of the UK’s minimum wage. The increase in the 18-20 Year Old Rate narrows the gap between that and the NLW, in anticipation of the adult rate being extended to 18 year olds in future years.
“The government have been clear about their ambitions for the National Minimum Wage and its importance in supporting workers’ living standards. At the same time, employers have had to deal with the adult rate rising over 20 per cent in two years, and the challenges that has created alongside other pressures to their cost base,” Baroness Philippa Stroud, chair of the LPC, said.
“It is our job to balance these considerations, ensuring the NLW provides a fair wage for the lowest-paid workers while taking account of economic factors. These rates secure a real-terms pay increase for the lowest-paid workers. Young workers will see substantial increases in their pay floor, making up some of the ground lost against the adult rate over time.”
Stroud admitted that the data show some signs of employers finding it harder to adapt to minimum wage increases.
“The tightening of the labour market since the pandemic has unwound, but the overall picture is similar to 2019. The economy is expected to grow over the next year, although productivity growth remains subdued,” she noted.
Business secretary Jonathan Reynolds said:
Good work and fair wages are in the interest of British business as much as British workers. This government is changing people’s lives for the better because we know that investing in the workforce leads to better productivity, better resilience and ultimately a stronger economy primed for growth.
The recommended increase in the 16-17 Year Old Rate restores that rate to its original value relative to the adult minimum wage. In line with previous recommendations, the Apprentice Rate will remain equal to the 16-17 Year Old Rate.
SPAR UK has announced the appointment of Michael Fletcher as its new managing director.
Fletcher spent 22 years at Tesco plc, where he held numerous senior commercial roles in the UK, Ireland and Asia. He joined Co-op Retail in 2013 where he held the position of chief commercial officer before moving on to become CEO of Nisa Wholesale, a role he held until 2022.
Since leaving Nisa, Fletcher has taken on several non-executive director and board advisory roles. He is also the founder and chief executive of Sleet Brush Limited, where he focuses on designing and implementing innovative solutions to complex retail and wholesale challenges.
“Michael has outstanding credentials in commercial, retail and FMCG sectors, with experience across various trading environments,” Nick Bunker, non-executive chair, SPAR Food Distributors Ltd, said.
“His professional capabilities and high standards consistently drive excellent business performance and operational resilience. We are delighted with his appointment and look forward his lasting and positive contribution to the SPAR business.”
Fletcher added: “SPAR is a globally recognised and respected brand, and I am thrilled to join the team. I look forward to supporting the ongoing strengthening and development of the SPAR proposition in the UK.”