The Penetration and Performance of Supermarket Sites in European Fuel Retailing

Publication Date	August 2007
Publisher	Datamonitor
Product Type	Report
Pages	18
ISBN Number	not applicable
Product Code	DAT07403

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Summary

Introduction

In certain European countries, supermarkets have dramatically increased their share of the fuel retailing market over the last four decades. In order to maximise fuel sales, traditional and supermarket fuel retailers alike need to understand the factors behind this success and how, by copying best practice, they can grow their own business.

Scope

A review of supermarket service station penetration rates in 8 key European markets, with site numbers of the leading supermarket fuel retailers.
An outline of price differentials between traditional and supermarket fuel retailers and the reason behind supermarkets' pricing strategies.
An understanding of supermarkets' supply chain and the extent to which it differs from that of traditional fuel retailers.
Analysis of the respective competitive advantages of supermarkets and traditional fuel retailers with regard to fuel products and promotions.

Highlights

Supermarket fuel retailers account for 35% of service stations in France, the highest penetration of any market. The leading supermarket fuel retailer in France, Intermarch owns 33% of these service stations, followed by Carrefour which owns a further 26%. Both of these players have a fuel retailing presence in other European markets.

Supermarkets' key motivation for selling fuel is to enhance turnover in the grocery sector of their business. Given that the main objective for supermarkets involves using fuel retail to enhance the performance of other parts of the business, they are likely to be in a position to continue undercutting traditional retailers on price.

Fuel cards provide traditional fuel retailers with a competitive advantage with regard to business customers, although supermarkets compete more closely with regard to their promotions to private customers. In order to generate more loyalty from private customers some traditional fuel retailers have entered into multi-retailer loyalty schemes.

Reasons to Purchase

Compare the presence of supermarket fuel retailers across 8 key European markets through penetration rates and site numbers.
Understand the extent to which supermarket fuel prices differ from those of traditional fuel retailers and the reasons for this.
Gain an insight into the competitive advantages of supermarkets and traditional fuel retailers through an analysis of their fuels and promotions.

Companies mentioned in this report:

BP Plc

Content

Catalyst
Summary
Analysis
- Service stations owned by supermarkets account for a significant proportion of the European fuel retail network
- Supermarket service stations have the highest penetration rate in France
- Intermarch is the leading supermarket fuel retailer in western Europe
- Tesco and Carrefour are the leading supermarket fuel retailers in eastern Europe
- Supermarket service stations have a higher volume throughput than traditional fuel retailers
- Eastern Europe will be the main focus for supermarkets
- In western Europe, growth in supermarket service stations has been limited
- Large supermarket chains are very price-competitive in fuel retail
- Fuel sold by supermarkets is cheaper than that sold by traditional fuel retailers
- In France, price differentials between traditional fuel retailers and supermarkets can be significant
- Despite varying price differentials over time, supermarket fuel remains cheaper than that of traditional fuel retailers
- Service station profitability is not the core reason why supermarkets sell fuel
- Supermarkets combine a strong product offering with promotions and convenient service station locations
- Supermarkets source fuel via imports or direct from national refineries
- Supermarket fuel retailers in western Europe have gone beyond selling regular fuels
- Supermarket fuel retailers often have a similar product portfolio to traditional fuel retailers
- Supermarkets compete strongly on fuel quality and location
- Some supermarket fuel retailers have started offering businesses fuel card-style loyalty schemes
- Supermarkets operate both stand-alone promotions and loyalty schemes for private customers
- Supermarket fuel retailers' promotions for private customers are closer to those of traditional fuel retailers
Appendix
- Definitions
- Further reading
- Ask the analyst
- Datamonitor consulting
- Disclaimer
List of Figures
- Figure 1: Supermarkets account for 35% of French service stations
- Figure 2: Intermarch has the most service stations of any supermarket fuel retailer
- Figure 3: Tesco has 75 service stations in Poland, the Czech Republic and Hungary
- Figure 4: Supermarket service stations' average volume throughput is up to four times higher than traditional fuel retailers
- Figure 5: The number of supermarket service stations in Hungary has risen faster than in Poland and the Czech Republic
- Figure 6: In 2006, there was an increase of only eight supermarket service stations in the UK
- Figure 7: Supermarkets generally sell fuel 1-2% cheaper than traditional fuel retailers
- Figure 8: In July 2007, there was a 3.6 euro cents price differential between the most expensive and least expensive fuel retailer
- Figure 9: Over the last two years, supermarkets have maintained a three euro cent price differential over traditional fuel retailers
- Figure 10: Profiting from fuel sales is considered of average importance to supermarket fuel retailers
- Figure 11: Supermarkets' fuel retail supply chain
- Figure 12: Although most supermarkets do not offer premium fuels, Tesco and Carrefour have started to sell biofuels
- Figure 13: Carrefour is one of the few supermarkets to sell LPG
- Figure 14: Supermarkets' fuel cards have less functionality than those offered by traditional fuel retailers
- Figure 15: Standalone discounts on fuel are rare at supermarkets