Executive Summary
Fuel pump prices were again a sensitive issue during 2004, with the rising cost
of fuel making headlines. This happened — despite the fact that fuel duty has
remained frozen since 2000 — mainly as a result of global factors that have
led to increases in the price of crude oil.
The retail market for motor fuel has been static or falling since 2000, due
mainly to increased fuel efficiency, which means that consumers need to fill
up their cars less often.
Diesel volumes rose slightly between 2002 and 2003, but a strong decrease in
the overall volume of unleaded petrol has meant that, by the end of 2003,
retail petrol volumes were at their lowest for 5 years. However, some of this
low volume can be accounted for by a small increase in the ‘super unleaded’
category.
The continuing problem of low fuel margins, combined with falling fuel sales,
means that forecourt retailers have increasingly turned to non-fuel sales
within their forecourt outlets. The growing sophistication of forecourt retail
outlets has been led by fuel retailers’ desire to make their forecourts more
profitable, but they have succeeded because of changes in lifestyle:
consumers have less time and are more likely to feel the need to ‘multi-task’,
for example, by picking up food and other daily essentials at the same time as
they stop for fuel, rather than making a separate trip to local shops.
Key Note’s original consumer research shows that the typical forecourt
consumer is most likely to be male, working full time, in the 25 to 44 age
group and in the ABC1 social grades. 9% of consumers often go to forecourt
shops even if they do not need to visit them to buy petrol; however, the
number who say that they never do so is nearly double this, at 17%.
Looking to the future, the outlook for retail sales of fuel is not particularly
bright, although non-fuel sales growth should remain buoyant, stimulated by
continuing interest from supermarkets and major oil companies, both of
which have been working on improving their offering.
Just before this report was published, two of the major players in the market
announced very strong financial results for 2004; the Royal Dutch/Shell Group
recorded a record profit of $17.5bn (£9.3bn) while BP’s full year profit results
were $16.2bn (£8.7bn). |
