Food fight on petrol station forecourts

BP plans dozens of new M&S shops to trounce its rivals

BP is planning an expansion of its tieup with Marks & spencer to drive profits on the petrol station forecourt and fight off the threat of rivals.

The oil giant has been cashing in on the change in British shopping habits which has seen consumers opt for smaller convenience stores over huge supermarkets.

While the cost of crude oil has collapsed, BP has been able to bank on its deal with M&s to increase profits from drivers.

There are currently 248 M&s stores on the forecourt of BP petrol stations, with the number growing steadily since they first began working together in 2004.

But now BP is hoping to grow this by a fifth in the next year – opening an average of around one every week.

This will tally with a change at M&s, which is planning to shut 60 food and home stores over the next year, but also to open hundreds more of its simply Food outlets. Tufan Erginbilgic, chief executive of the refining and marketing division of BP, said: ‘In a hectic world, customers want easy, they want speed, quality and range.’

on the forecourt, M&s selects which products to sell, but BP operates the stores and earns an undisclosed share of the profit on everything sold. It currently has 6,200 staff in these outlets.

BP doesn’t separate out its earnings from its so-called ‘downstream’ profits of which retail is a part. But while the oil price collapse sent the drilling side of the business into the red, retail sales were rising.

Analysts were told in the summer that the business had made around £1.6bn from ‘fuels marketing’ (which also includes aviation fuel) over the previous 12 months, with retail ‘the most material element’.

And profits in this arm of the business are up 35pc since 2013. Not only is this boost linked to the deal with M&s, but also the shifting habits of UK consumers that want more convenience stores.

Research from Mintel earlier this year found that 45pc of Brits regularly visit convenience stores. of those, some 59pc use the shops at least twice a week while 5pc visit daily.

The sector grew by 1.8pc to £38.7bn in 2015 and is anticipated to grow a further 13pc over the next five years. It’s a market estimated to be worth £43.8bn by 2020.

BP, which opened the first M&s at a petrol station at London’s Hammersmith Flyover, says sites with an M&s simply Food incorporated tend to have higher income. Up to half of customers visit these sites for the food stores alone.

With 17,200 petrol stations globally, their opportunities for expansion are endless.

By early 2018 the firm plans to have 300 stores in the UK and could roll out the concept to some of its 900 franchised sites. It is also looking to export the idea overseas.