Taking the forecourt fight to the supermarkets

Q Is it possible to compete with supermarkets on petrol prices and still make a profit?

GM: Yes and no. No, if you plan to compete with fuel alone in mind. Don’t look at it as a level playing field - you need to recognise the differences between the two types of business operation and structures. The independent filling station has far more flexibility and adaptability than the supermarket station. Provided you are willing to trade a reduction of fuel margin per litre with additional volume and profit derived from other areas of business, then it is quite possible to compete. That said, no solution will fit all and a degree of tailoring to your market is always going to be necessary - something that supermarkets can’t necessarily do in such depth.

JT: Yes, we can compete with supermarkets, but it’s not all about the pricing. Having a major fuel brand like BP or Shell is important as you get a quality fuel. There is a difference in the fuel quality of major fuel brands against supermarkets, giving you more miles per tank, which works out cheaper in the long run. Customers are understanding this more and more now.

Q How can you compete?

GM: This is entirely dependent on individual circumstances. In an ideal world you would be able to ‘buy right’ and purchase fuel at a price that allows the business to make its target margin while undercutting supermarkets. Sadly, we don’t live in an ideal world. There is always room for negotiating better terms with suppliers, but room for manoeuvre is always going to be limited. Being able to demonstrate a benefit to the supplier always helps, of course.

JT: At Symonds, we focus on offering a better service to attract customers. All our staff will always go out and help customers with anything they need, from helping with pumping up a tyre to carrying their shopping to the car. You have to think about what the customer wants and react to it, that’s the beauty of being an independent: we can change quickly to our customers’ needs. Having great everyday offers, coffee and food to go are also very important.

MI: I’d advise independents to look at their relationship with their fuel brand as a long-term partnership. There’s a common interest to grow profitable volumes and make the relationship a success. It’s an approach that has helped engender trust and long-term strategic thinking. You also have to look to protect and build margins in other non-fuel areas. That’s why our retail partners and food franchises are so key to our forecourt strategy. Fuel is only part of the customer experience.

Q How else can forecourt owners differentiate their operation?

GM: Learn your market, experiment and give trials time to establish. New ideas rarely take off overnight. Do things properly, or not at all. In transient trade locations, food-to-go and coffee can be a sure-fire winner. Make sure time-pushed customers can grab a bottle of wine and something for tea - offer what they need. Use outside space and make the place look different from normal, mundane supermarket stations.

MI: The past 15 years in forecourt retailing have shown us that people reward quality with loyalty. Quality in service standards means a huge focus on staff training and development, quality and variety in offer are a reflection of your brand partnerships, quality in location identifies sites that will give the visibility and volume your business plan needs. It’s about getting the mix right then serving it up again and again, while keeping an eye on innovation to stay one step ahead.