Datamonitor: UK - a decline in service station numbers and fuel sales signals a testing 2010

April 15, 2010 - PRLog -- The situation for fuel retailers is set to remain testing throughout 2010, as high global oil prices and an increase in taxation will further erode fuel margins, which will inevitably lead to more service station closures.

In its latest Retail Marketing Survey, the Energy Institute has revealed that the number of service stations in the UK fell to 9,013 at the end of 2009, a fall of 270 sites in comparison with 2008. The largest decrease came from unbranded sites, with 120 closed throughout 2009. However, the major oil brands were not immune to site divestments either. Indeed, BP's branded network decreased by 21, although the fuel retailer still maintains the largest branded network, with 1,179 service stations.

The decrease in service stations can be attributed to both high global oil prices towards the end of the year and an increase in taxation, both of which squeezed fuel retailers' margins considerably. In addition, high pump prices and a more considered approach to spending by consumers across the board contributed to a reduction in gasoline and diesel sales of 2.4% on the previous year, falling to 37,002,000 tonnes in 2009.

This decrease in sites, coupled with a growth in registered cars, increased the number of cars per service station in the UK to 3,499 in 2009, the highest number of cars per site in Europe. The average volume of fuel sold at each service station in the UK also increased slightly, to 4.14 million liters per year. This remains high in comparison with other key European markets, including France and Germany.

Last year was not about site divestments for all fuel retailers, however. The number of supermarket sites increased by 12, with Tesco, Morrisons, Sainsbury and Asda all adding to their networks. Fuel sales through service stations also bucked the market trend, increasing by 1% in 2009 on the previous year. Indeed, Datamonitor's own research found that at the end of 2009, 30% of motorists had been increasingly using supermarket sites to fill up.

With the duty on fuel sales set to increase in 2010, and global oil prices expected to remain high, the margin that retailers make on fuel will continue to be eroded. In addition, fuel sales will undoubtedly continue to fall throughout 2010. Consequently, Datamonitor predicts that the number of service stations in the UK will fall by 238 sites throughout 2010, to 8,775 sites by the end of the year.

In order to survive in an increasingly difficult market, fuel retailers must look to other revenue streams. Indeed, Datamonitor's research found that motorists that are loyal to oil-branded service stations value non-fuel services such as food-to-go and coffee highly, both of which are possible areas for oil companies to exploit. Going forward, if oil companies are unwilling to match the supermarkets on price, then they must offer their own compelling convenience offer in order to counteract declining fuel sales, prevent consumers switching to supermarkets and, ultimately, avoid further site closures.


Datamonitor: Service Station Retailing in the UK:
http://www.reports-research.com/market-surveys/service-st...

Datamonitor: Service Station Retailing Database 2009: UK:
http://www.reports-research.com/market-surveys/service-st...

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