This story was originally published in the July edition of the FUELtrac newsletter.
The largest retail fuel operators are expanding and putting themselves in a great position to take advantage of growing retail margins. This might mean more locations for fleets to choose from, but the size of the investment suggests fuel suppliers are not going to rush into price wars that will hurt their return on investment aspirations.
The past 40 years has seen a slide in the number of service stations from 20,000 to about 6,000. Fuel companies are investing more than $1 billion in the retail petrol sector.
Caltex spent $95 million last year buying Scotts Fuels which included 28 retail service stations in regional South Australia, Victoria and New South Wales. This was closely followed by changes to the CaltexWoolworths alliance where 39 Caltex operated sites that formed part of the 633 sites across Australia exited the alliance and no longer offer Woolworths fuel discount redemptions. It also has plans to build up to 25 new sites and refurbish another 20.
BP Australasia will focus on major roads, motorways and truck stops around Melbourne, Brisbane, Sydney and Perth when it looks to spend more than $450 million over the next three years to open up 60 new service stations.
Viva, which owns the Shell brand and has a joint venture with the Wesfarmers-owned Coles, plans to spend $300 million to expand and upgrade its retail business. There is also unconfirmed reports that Viva will float $1 billion of Australian petrol station real estate, giving investors alternative exposure to the $22 billion a year retail fuel sector beyond ASX listed companies such as Caltex Australia, Wesfarmers and Woolworths.
7-Eleven Stores Pty Ltd, which opened its first Australian store in 1977, operates approximately 600 convenience stores in Queensland, New South Wales, Victoria and the Australian Capital Territory. Australian Food News reported in September 2014 that 7-Eleven had opened its first store in Western Australia, with 10 stores expected to open by the end of 2015 and up to 75 stores in the next five years. The expansion into Western Australia marked the first time the company has entered a new market in 32 years.
Through its store network, 7-Eleven Stores Pty Ltd conducts more than 180 million transactions a year, serving an average six customers per second, generating sales of approximately $3.4 billion.
For companies that access retail service stations and truck stop networks via fuelcards, the challenge will be how to use this expansion in supply to achieve the most competitive price when negotiating with the fuel companies.
FUELtrac provides a wide range of fuel related services to large organisations and government agencies throughout Australia and New Zealand. Our fuel pricing consultants can also analyse your specific pricing models to determine if they are the most suitable for your organisation. Whether you need help with market intelligence, auditing, tenders, benchmarking, forecasting, procurement or carbon reporting, FUELtrac can provide a solution.