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Supermarkets are 'fighting like dinosaurs', says Madderson
Published:  15 October, 2014

Supermarkets are fighting like dinosaurs for shoppers to visit their massive out-of-town stores, according to PRA chairman Brian Madderson. He was commenting on the last round of fuel price cuts announced this week, which have led to fuel prices reaching their lowest level for four years.

The AA says a tank full of unleaded will cost motorists £2.50 less than it did a year ago, and diesel about £4 less

The fall in fuel prices follows a period in which oil prices have tumbled from circa 115 dollars a barrel to around 87, a contributing factor being that Saudi Arabian oil companies are continuing production despite weak demand, which could lead to further falls in prices. Another contributor to falling prices is a weakened pound against the dollar.

The major supermarkets have reacted with highly publicised fuel price cuts. However, their tactics have not paid off so far this year, in terms of sales: “Surprisingly during the first half of this year, the big four supermarkets - for the first time – lost 1.1% of their fuel volumes compared to the previous half year,” said Madderson. “That very clearly confirms the view of market analysts who say people are not driving to the out of town stores. That evidence is in front of us with this 1.1% drop.”

He said that shoppers are preferring to visit convenience stores – including the increasing number appearing on forecourts – with their quick and easy access to a comprehensive range of food to go, meals for tonight, fresh fruit and veg.

“The convenience sector is growing at the rate of 5% a year. It’s growing because people want to be able to park, to shop get what they need, quickly instead of going to the big supermarket, where they might spend more than they intended. So those big out- of-town supermarkets are almost becoming dinosaurs in their own lifetime.”

As far as the independent forecourt retailer is concerned, he said retailers would rather sell a cup of Costa Coffee with a £1.70 margin on a £2 cup, compared with £1.60 on £40-worth of fuel .

“Which would you rather have? If you can sell lots of cups of coffee, lots of bottles of water, lots of sandwiches and so on, the margin coming out of these forecourt convenience stores is good.”