The petrol forecourt or service station is far from what it was five years ago, with the morph into retailing catering to visitor needs and securing solid profit margins.
A shift in behaviour and perception of ‘the shopper’ is evident when looking at the forecourt of 2019. It is common for service stations to be focused around the retail offering, rather than the fuel sales, with sites raking in £4 billion in sales from shops in 2018.
Although forecourts have been on the decline for the past decade, they are still considered the fastest-growing part within the convenience retailing sector, demonstrating the power of the shopping experience within petrol forecourts. For some shoppers, stopping off at a forecourt store is favourable to visiting the local high-street supermarket, based on the accessibility and range of goods now available.
A mere few years ago, it was common to hear of the poor state of motorway service stations, with outdated buildings being poorly maintained, offering little to no facilities and an awful cup of coffee. Franchising, partnerships and investments have eased some of these troubles and have allowed for the reshaping of the motorway forecourt into something more all-encompassing and profitable.
At the end of April 2019, just over 8,400 open forecourts were recorded in the UK with 7,625 utilising shops on-site. Forecourt retailers have made a significant investment into their stores over the last few years, with around £12,000 spent per store on average on improvements to the business.
Not many would have expected that MFG, with 58 sites in 2012, would now be the largest UK retailer forecourt owner operator with 930 sites or that EG, who had 120 sites in 2012, would have expanded to Belgium, Holland, France, Italy, Germany, Australia and USA and now have a worldwide portfolio of over 2500 sites. Whilst many forecast the slowdown in the number of site closures, few would have anticipated the current levels of investment in the sector including over 30 new to industry sites in the last 18 months, some of which being built by the major oil companies.
Supermarkets have increased their market penetration to 1550 sites with a market share of 45% while the oil company company-owned sector having shed 900 sites in the last 5 years accounts for 1300 outlets. The notable change in the market has been the growth in the dealer sector to 5600 sites, and 37% share as independents purchased oil company site disposals. Within this sector, the top 50 independents now own over 2500 locations. Two of the largest independents, MFG and EG, are in the list of top 5 of all petrol retailers by site ownership. The top 3 independent groups, all backed by private equity investors, have been responsible for over 60% of all property transactions within the last 3 years.
A decline in fuel sales loomed upon the petrol forecourt industry, with oil giant BP admitting that half of its customers at its forecourts in Britain don’t even buy petrol – 12 years after joining forces with Marks & Spencers to enhance its offering beyond fuel.
Will petrol forecourts even sell fuel in 10 years time?
As everywhere, technology is changing fast in the retail market. Not just with site automation but also in the areas of price management, buying options, payment alternatives, loyalty systems, delivery ordering and scheduling software, shop information and stock and margin management. These developments result not just from the continued march of digitalisation and smart software but also in response to customer needs and demands. Retail Managers now have access to an overwhelming amount of management information from all these systems and the trick must be to narrow this down to a usable format rather than drown in it.
These technological developments undoubtedly increase efficiency, save cost and improve the speed of reaction, improving customer satisfaction. They also benefit retailers with operational, working capital and margin improvements but are rarely simple to install and integrate to other software systems on sites.
Payment options such as; contactless, ‘BPme’, ‘Apple Pay’, and other mobile device centred options now need to be integrated into retail automation systems on-site. Pay-at-the-pump facilities are now on most UK forecourts with unattended solutions growing steadily and no longer seen as intimidating by customers. Cash sales are decreasing fast, and both credit and fuel cards now make up most of the sales on site.
Unattended solutions are not just a part of fueling, having evolved in recent years from simple vending machines, interactive kiosks and many other payment-enabled machinery to a more technically sophisticated landscape. One filled with artificial intelligence, robotics, IOT and phigipay, the intersection of physical, digital and payments.
Rapid Retail, in partnership with UR to Go, has developed an unattended retail shop solution that offers a vending-machine style interface for fast food and beverages. Shoppers can experience a completely unattended environment where pizzas and other hot foods are prepared and served to the customer through the vending units.
A simple and easy-to-use interface allows shoppers with no experience using digital kiosks to feel comfortable and confident when making their purchases while providing a consistent revenue stream for the operators, minus the high cost of staffing.
Many forecourts are now utilising a variety of digital solutions to enhance the shopper experience; however, technology is not the only factor that adds value and appeal to the location. Tebay services in Cumbria, operated by Westmorland Ltd, is a family-owned motorway service station and is the only service station in England to be built and operated by local people. What began as a small petrol forecourt with just 28 members of staff back in 1971 became a multi-site operation, employing over 500 people by 2005.
Local people and commuters alike will choose to stop off at Tebay services for their fresh local produce and cooked food – something that you won’t find at many other service stations. Westmorland’s unique approach to the service station forecourt provides customers with the perfect alternative to fast food and coffee machines.
The development of similar environments comes at a cost, and for many involve closing their operations all together whilst refurbishments take place. But what options are available to minimise the downtime and maintain revenue income?
Modular solutions not only provide a temporary option during store closures, but also offer a reliable permanent alternative to traditional brick & mortar construction with several advantages. For example, modular builds do not always require assembly on-site, and although some may entail some on-site configuration, maintaining the functionality of the forecourt with minimal downtime is critical.
When using modular as a temporary solution, the costs involved pale in comparison to lost revenue during the period of closure. Not only is the revenue stream suspended, but in cases where these locations are the go-to shop for locals, these customers are let down and inconvenienced as they make their way to a competitor store. Any supermarket chain will tell you, handing your regular customers over to rival chains is the last thing that should be done, meaning any and all provisions must be made to ensure the retainment of these valued shoppers.
On the other hand, there’s always the opportunity to produce modular solutions as permanent fixtures that are equally functional to their bricks and mortar counterpart. Many forecourt operators and franchises are already looking to modular for their latest projects and its no surprise with what can be achieved.
On behalf of Euro Garages, Rapid Retail’s latest forecourt deployment sees a Greggs bakery open up at the Kinmel Park services. Constructed from 2 modular sectioned and configured on-site, this solution provides an efficient set-up with minimal disruption to the service station.
Compared with traditional buildings, there are little to no disadvantages when utilising modular. All options for customisation remain very much available, and in most instances, modular offers a more tailored and personalised product. For example, if you take a look at the inside the Greggs store, you will notice there are little to no differences from a traditional high-street outlet. Although you may find the store looks exceedingly modern compared to your local Greggs, this can partly put down to its recent construction, utilising the latest branding elements and store fit-out of the Greggs brand.
Externally, there are several ways to enhance the visual appeal, and for the most part, it wouldn’t differ too much from your bricks and mortar building. It is worth noting, however, that the approach with modular is far more flexible and provides a greater allowance for retroactive fitting and branding. With a huge franchise like Greggs, a rebrand can be a long-winded and lengthy process. These types of build enable a simple interchangeable branding opportunity that may not be so straightforward with their traditional counterpart.
There are endless ways in which these modular units can be utilised to create a better forecourt, and when partnered with the technology of today, we reach a new level of retailing. As demonstrated with the Ur to Go kiosk, unattended solutions, although somewhat futuristic, are fast evolving and are soon to become commonplace in forecourts, shopping centres, supermarkets and restaurants all over.
Petrol forecourts and service stations are ever-expanding and are at the forefront of new technology and solutions to create a greater shopping experience, alongside the essential services and facilities that they are known for. With expansions and developments taking place consistently and changes to the formula forever taking place we wonder, what will the forecourt of the future look like? Will it sell fuel? How will it compare with future supermarkets? How will forecourt operators fare with the latest trends, customer demands and fuel purchasing habits?
References and image sources: https://www.acs.org.uk/; https://www.fuelsupplysolutions.co.uk/the-evolution-of-uk-petrol-station-retailing-from-2012-to-2018/; https://forecourttrader.co.uk/files/Fuel_Market_Review/Fuel_Market_Review_2019.pdf; https://www.standard.co.uk/business/retail-s-bright-spot-how-forecourt-stores-are-fuelling-profits-a3856621.html; https://www.telegraph.co.uk/foodanddrink/11577221/Is-this-the-best-motorway-service-station-in-the-UK.html; https://www.saga.co.uk/magazine/motoring/cars/using/2016/4-must-visit-motorway-services; https://ios.gadgethacks.com/how-to/which-stores-accept-apple-pay-always-up-date-list-0158076/