What to consider when acquiring an existing fuel retail site
It was recently announced that Euro Garages will be divesting a number of their existing sites in order to satisfy the CMA following their Asda takeover bid. This presents some real opportunities for anyone interested in acquiring or investing in fuel stations in the UK.
Elizabeth Sharpe, Kalibrate’s Sales Development Representative, asked Simon Martin, Kalibrate’s Regional Sales Director for Europe and Africa, to share some information about what to consider when acquiring fuel retail sites.
This information is specifically relevant to anyone considering one of the EG sites, but is equally applicable to businesses acquiring new sites elsewhere.
For more information on any of the topics discussed here, email Elizabeth: Elizabeth.Sharpe@Kalibrate.com
1. What should you consider if you’re interested in purchasing one of the EG sites?
A good starting point would be to understand the current reality of the site and it’s local environment. Available data can help you to calculate the annual fuel volumes and convenience store revenues so you can understand the sort of revenue you’re likely to generate.
Digging a little deeper, a trade area analysis that includes traffic and demographic information can establish how the local market is composed, and how they’re likely to behave. This will help anyone that takes over an existing site understand how and why certain products and services are a good fit for the existing consumers.
Kalibrate Planning’s proprietary scoring methodology can benchmark all the sites in the trade area to reveal their strengths and weaknesses. Helping new owners to position themselves perfectly in their competitive environments.
2. How can you tell which sites have the best potential?
Network Developers and specialist Real Estate Analysts will use their experience to determine the potential of a site — this can be enhanced with proprietary data outcomes from Kalibrate. Kalibrate’s performance potential quadrant (PPQ) looks at the existing performance and revenue of a site and plots that against the location potential, which is derived from predictive data modelling. This allows Analysts to compare current performance against potential — to determine whether the site is underperforming or has reached its potential peak performance.
3. EG have some exclusive brand agreements – so someone purchasing a site is likely to have to rebrand – what impact can that have on fuel and convenience store sales?
Brand strength has a huge part to play in why consumers chose to spend their money in one site vs another. In a scenario like this one, the acquiring party is likely to need to replace the existing brand with another and will need to understand the impact this could have on sales.
Predictive data modelling can be used to project how volumes and c-store sales change depending on the brand. Kalibrate’s Single Site Analysis provides a full volume projection analysis against multiple different scenarios.
You can read more about how one fuel station owner in California used the Single Site Analysis to determine how to make the most of a re-brand here.
4. If you’re considering a site nearby to your existing network, how do you understand the potential impact on existing sites and your overall network?
If an acquiring party has other sites in close proximity to potential new sites, being able to determine the volume and revenue loss from the existing site, also known as “cannibalization”, is critical. It’s important to understand how significant that will be, and whether it’s acceptable or not.
Kalibrate utilizes data science to identify the risk, and impact of cannibalization. Allowing businesses to quantify predicted volume losses and gains in order to manage new acquisitions and optimize their entire networks.
This article: Spotlight on cannibalization explains more about how to identify and manage this critical concern.
5. There are lots of different data points that can be analyzed — how can anyone interested in these sites put them to best use to help drive their decisions?
Most businesses are making decisions and transactions like these regularly and will have robust processes in place to help them do so.
The data analytics topics we’ve discussed today are often used as discrete components of that process, but we believe that data points like this shouldn’t be analyzed individually, but looked at holistically. By combining these data points together, businesses will be privy to the full picture before committing to any big decisions. And that’s where Kalibrate’s Single Site Analysis comes into play.
Clients that use the Single Site Analysis gain an understanding of competitive intelligence, the composition of the market they operate in, and any opportunities for growth that might present themselves.
What will your Single Site Analysis provide?
- Multiple detailed projection analyses
- Local area demographics
- Market share analysis
- Competitor outlet analysis
- Local area site fuel volumes
- Convenience store, quick service restaurants and car wash sales opportunities
- Bench marking against all 7 Elements for Fuel and Convenience Retail Success
For more analysis or information, contact Elizabeth.Sharpe@Kalibrate.com
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