Petrol Stations in the UK Industry Market Research Report Now Updated by IBISWorld

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The negative effect of rising fuel prices and environmental trends will offset the return of consumer and business confidence, leaving fuel sales volumes stagnant over the five years through 2018-19. For these reasons, industry research firm IBISWorld has updated its report on the Petrol Stations industry.

IBISWorld industry market research
Tanking: Competition and rising input costs drive operators from the industry

Over the past five years, a thick smog has descended on the Petrol Stations industry, as operators have tried to navigate through rising oil prices and vigorous competition. Soaring oil prices early in the period led to sharp increases in transport fuel costs and stagnating demand. Although oil and fuel prices declined during the recession, weak activity and fears of future price increases curbed retail fuel sales. Drivers have been gradually switching to more fuel-efficient diesel-powered cars, which has damaged the industry because it means motorists can drive further on less fuel.

The market is completely saturated and a large number of firms hold similar shares. According to IBISWorld industry analyst Patrick Ross, “Supermarkets have expanded despite this tough environment due to their ability to offer lower prices on average and capture demand through established loyalty schemes.” Intense competition has eroded the industry's already-fine profit margins. Many petrol stations rely on selling non-fuel items to generate a profit, as firms have had to contend with large fluctuations in revenue resulting from shifts in fuel prices. IBISWorld expects industry revenue to fall at a compound annual rate of 6.1% over the five years through 2013-14 in response to lower demand. This is the industry's lowest total revenue figure in more than a decade. Industry revenue is projected to contract by 4.4% to £16.1 billion over the current year.

Similar trends will affect the industry during the next five years, although the economy is expected to improve and help to lift the industry out of the gloom. Ross adds, “The negative effect of rising fuel prices and environmental trends will offset the return of consumer and business confidence, leaving fuel sales volumes stagnant.” Profit is expected to creep up, although oil prices will remain inherently volatile. Supermarkets, which compete the most vigorously on price, will continue to increase their market share. Oil companies are expected to retreat from the industry, focusing instead on more profitable upstream oil pursuits. Supermarkets and independent operators will buy up some of the vacant locations as confidence in the sector begins to pick up. IBISWorld estimates that higher prices will soften industry revenue contraction over the five years through 2018-19.

The top four players in the Petrol Stations industry are estimated to generate 53.2% of revenue in 2013-14 giving the industry a medium level of market share concentration. Supermarkets have rapidly gained market share over the past decade, with Tesco leading the way. Although the number of petrol stations owned by supermarkets is relatively modest, the volume of fuel sold by their sites is much higher than the average. Supermarkets use low fuel prices as a mechanism to win customers for their broader retail offerings, making up for low fuel margins on other sales. Oil companies, which have a much narrower focus and cannot offset lower profit margins on fuel with gains elsewhere, have lost market share. The supermarkets' market share is expected to continue growing as oil companies slowly retreat upstream while securing permanent supply arrangements. This will result in a dramatic industry reshuffle, with independent forecourt owners given the opportunity to re-establish themselves. Major companies include Tesco, BP, Royal Dutch Shell, ExxonMobil and Morrisons.

For more information on the Petrol Stations industry, including latest industry trends, statistics, analysis and market share information, purchase the full report from IBISWorld, the nation’s largest publisher of industry research.

IBISWorld industry Report Key Topics

Companies in this industry retail automotive fuel such as petrol, diesel, autogas and alternative fuels. Most petrol stations operate a convenience store on top of their forecourt fuel services and some stations provide car wash services. Petrol stations sell directly to consumers. A significant proportion of sales to drivers of heavy goods vehicles, buses and coaches are not included in this industry as many obtain fuel directly from wholesalers.

Industry Performance
Executive Summary
Key External Drivers
Current Performance
Industry Outlook
Industry Life Cycle
Products & Markets
Supply Chain
Products & Services
Major Markets
International Trade
Business Locations
Competitive Landscape
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
Major Companies
Operating Conditions
Capital Intensity
Key Statistics
Industry Data
Annual Change
Key Ratios

About IBISWorld

Recognised as the nation’s most trusted independent source of industry and market research, IBISWorld offers a comprehensive database of unique information and analysis on many UK industries. With an extensive online portfolio, valued for its depth and scope, the company equips clients with the insight necessary to make better business decisions. Headquartered in London, IBISWorld serves a range of business, professional service and government organisations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.co.uk or call (020) 7222 9898.

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Danielle Goodman
IBISWorld
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