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Retailers right on track

26 July, 2010
Excellent speakers and some spectacular driving experiences made last month's Top Indies Track Day an event to remember. Linda Harrison reports
Page 10 

Forecourts will evolve into a "showcase of brands", retailers at last month's Top Indies Track Day were told. Speaking at

the Forecourt Trader event at Prestwold Hall, Leicester, forecourt design guru Robert Onion revealed his vision of how sites may look in the future. He made his comments alongside fellow speaker Ed Wheeler, managing director of Eurotank Environmental, who highlighted some of the serious implications due to the introduction of biofuels into standard road fuels. Also presenting was Amanda Barber, partner at property advisory firm Barber Wadlow, who spoke about factors affecting the valuation of forecourts; while Dr Andreas Jonason, director of oil and gas at strategy and marketing consultants Simon-Kucher & Partners, looked at how to improve fuel margins.

 

 

All in the brand

 

 

Retailers were treated to a look into the future of fuel retailing with speaker Robert Onion, owner of London brand design company Circle. Onion explained how he'd worked on forecourts in many parts of the world, particularly in the Middle East, and drew on this for his presentation.

 

Ideas surrounding sustainability, such as letting natural light into stores and using renewable energy, were highlighted with these becoming emerging trends on sites in countries such as Kuwait. Onion also predicted that there would be more than one type of fuel available on sites in future, such as electric recharge points and hydrogen.

 

He added: "It could quite easily be that you'll have your traditional oil company, your gas supplier and electricity supplier. And given that customers are so brand-savvy these days, it may be that sites become much more of a showcase for brands. And the kind of fuel company branding that's been so prevalent over the past 30 years is much less relevant. What customers actually want is to relate to a brand, whether it's a Vue cinema or a Starbucks."

 

Retailers also heard ideas on architectural format and design, including putting pumps at the back, behind the store and adding a range of brands and services around a site located in 'pods', such as a hairdresser, café and even a bank.

 

 

Adding value

 

 

Amanda Barber's presentation looked at site valuations. Barber said declining fuel sales didn't have to affect forecourt valuations as long as margins stayed stable and there was a good shop offer.

 

And she said a small change could reap big rewards: "It could even be that a change in brand or a fairly inexpensive refit will produce enhanced sales. But even if it requires a bigger investment, it would probably be worth making that investment because it can add very substantially to the value of the property." Another factor was alternative income streams, such as food-to-go, ATMs, valeting and hand car wash operations. For example, installing a Subway could add up to £330,000 to the value of site, much more than a hand car wash operation at about £165,000.

 

Barber also mentioned business rates, describing them as "potentially one of the most damaging issues the sector is facing". With the average site's increase in rateable value at 56%, Wadlow estimated this could knock 5% off the capital value of a site.

 

 

Biofuels

 

 

Ed Wheeler's talk highlighted a major issue for retailers in 2010 bio diesel and ethanol in standard road fuels. He said retailers were having to navigate the tricky problem of how to manage their fuel storage systems to ensure no water gets into the mix. The audience heard how bio diesel was the perfect breeding ground for micro-organisms even if there was no "puddle" of water in the tank, there was condensation. He warned: "To a bug, each droplet of water is like the Atlantic." In addition, bugs might not be detected until too late, leaving equipment clogged. Wheeler recommended retailers used the correct type of water detection equipment and have pump samples tested annually.

 

He also advised on how to proceed if phase separation did occur, including draining lines back to the tank and taking samples from the pump. His main advice was: "Don't wait until it's too late. Get someone to verify if it's a bug infestation and employ a contracter to deep clean the system."

 

 

Fuelling profits

 

 

Andreas Jonason, director of oil and gas at Simon-Kucher & Partners, looked at some of the key issues and challenges affecting margin and pricing for fuel retailers in the UK. He also gave advice on how retailers could raise their fuel sales and margin at the same time.

 

He said one idea followed research which showed that most people made their fuelling decision in the morning but the actual purchase in the afternoon. Jonason said retailers could use a system that changes fuel prices automatically throughout the day increasing prices in the afternoon. Jonason highlighted a trial where prices were changed on a site in this way and the retailer had reported a 10% rise in overall sales.

 


 

 

driving force

 

Top marks for Holliss

Fuel retailers found themselves in the driving seat at the Top Indies Track Day.

As well as hearing about some of the key issues affecting independents at the event's conference, and getting the chance to network with some of the biggest names in the business, there was the opportunity to get behind the wheel of a range of supercars. This included driving laps at the impressive Prestwold Hall Race Circuit in a fantastic Audi R8, equipped with 4.2 litre V8 race engine and a maximum speed of 187mph, or a sleek Lamborghini Gallardo.

Drivers were also invited to test out their skills off-road on the gravel track and navigate the tarmac course in a Subaru Impreza WRX Sti or Mitsubishi Evolution.

Retailers, including Top 50 Indies HKS, Spring Petroleum, Park Garage Group, Carsley Group and Valli Forecourts, were put through their paces and evaluated on their individual driving performances. The event was sponsored by Air1, Burger King, Eurotank and Scheidt & Bachmann and closed with an awards ceremony for the day's winners. The biggest accolade went to Devon-based retailer Julian Holliss who was named the Best Driver of the Day.