Friday 25 March 2011

Food Drives Fuel Sales

To develop a competitive food offer at a petrol station makes sense not only because the profit margin is much higher than on fuel sales. According to Steve Tremlett of UK supermarket brand Somerfield a third of customers at petrol stations come for fuel, a third come for food and a third come for food and fuel. So for the food and fuel customers, having a proper food offer also drives fuel sales.

This more or less coincides with research undertaken service station analyst Datamonitor who reckon that 50% of visitors to a service station buy a food to go product, the remaining 50% just fuel. With an average sales per store of £550,000 in the UK this equates to 11.5% of total sales. Datamonitor see a greater potential to capture some of the 50% of customers who do not make a shop purchase.

Anecdotal evidence from around the world suggests that the market for food sales at service stations has increased across the board due to more established brands entering the market such as Tesco. It seems that in the same way as smaller brands profit from the presence of major anchor tenants at shopping malls, a similar dynamic works with petrol stations where the likes of Tesco have educated us all that a petrol station is not such an unlikely place to make impulse food purchases at the very least.

Despite the international oil company brands making considerable advances in developing their own brand C-stores they still have not managed to make as credible a food offer as the major supermarket chains. For the oil company brands such as Esso’s ‘On the run’ clearly the focus has been transient customers evident from the predominance of snacking and food to go offers inside. Somerfield feel the potential is greater and see much opportunity in offering a higher proportion of top-up purchases and food for later aimed at local neighbourhoods. Not helping the oil company brands is the large proportion of dealer owned sites who may differ in the range of products sold and consistency with which the brand is applied and presented. The prize for oil companies who get it right is attractive with Statoil reportedly achieving 25% of gross retail profits attributable to the convenience store.

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