Fuel players positive on FAL market play

INDEPENDENT petrol station operators are seeing opportunity rather than disaster in Foodland Associated Limited’s pending move into petrol retailing.

This sentiment is surprising, given the battering some of the smaller players have taken with the recent entrance of Coles and Woolworths into the petrol retailing market. 

WA’s two main ‘independent’ petrol retailers, Gull and Peak, are optimistic about FAL’s move.

Gull director Neil Rae said it would be “business as usual” for Gull petrol retailers and that he was relishing the challenge.

“At the retail level, these events [such as Coles, Woolworths and now FAL entering the petrol market] push us to be more innovative,” he said.

Mr Rae said such challenges had allowed Gull to thrive over the years.

Ironically, Gull and Foodland are partners in New Zealand in a similar petrol-supermarket tie in.

Peak chief Mark Quackenbush said the change would have little effect on his company’s return from fuel sales because of the reduced margins.

However, he considers the convenience store side of things to be the core of the business, with petrol sales a sweetener to draw people into the shops.

Wesco Bayswater operator Arthur Rosenwald said FAL’s entrance into the market could reignite interest in a deal he and other independent operators had been putting together.

The Wesco group members have now disbanded and are trying to set up their own petrol supply arrangements.

Mr Rosenwald said several independent operators were dealing with FAL over either buying their sites outright, acting as commission agents or sourcing their product by Mobil.

Market players say Mobil’s sites are too few for FAL to make its move into petrol retailing pay, so it is likely the grocery player will acquire more sites.

“They will need more sites so maybe we have a chance of getting our deals up,” Mr Rosenwald said.

However, there is market speculation that Gull, which was widely touted as an FAL petrol partner before the Mobil deal arose, and even BP could be in the frame.

BP has neglected to enter into any arrangements with supermarkets but has increased its presence around the city, with a new site being added in East Perth near the East Perth Redevelopment Authority area, a larger site in Kelmscott, and a few other players changing over to the BP banner.

Mr Rosenwald said FAL’s entrance into petrol retailing would mean little for the small sellers.

The reasoning is that one more player added to the two already undercutting them will not make that much difference.

Those petrol stations linked to Coles and Woolworths are, in some cases, selling at about eight cents a litre less than the wholesale price.

It is expected FAL will acquire Mobil’s Perth sites in June and link them to its franchise stores, such as Dewsons and Supa Valu, through a discounting scheme similar to that being conducted by Coles and Woolworths.

An FAL spokesman said it was unlikely the deal would be carried over to Action stores because of the cost of running petrol discounts alongside their current loyalty program.