SUBSCRIBE

Breaking News on Food Marketing and Retailing

Headlines > Retail

Read more breaking news

 

 

Supermarkets tap CEE fuel retailing sector

By Leah Vyse , 01-Nov-2005

Supermarkets are seeking to exploit the underdeveloped fuel retailing sector in Central and Eastern Europe (CEE), claims a new report by market analyst Datamonitor.

Datamonitor's energy market analyst, Karl Lindstrom told FoodandDrinkEurope.com: "The decision to make CEE a core focus for fuel retailing is a judicious move. Demand for fuel in the region as a whole grew by an annualised average of 2.8 per cent between 2000 and 2004 compared to growth of less than 0.4 per cent in Western Europe over the same period."

Lindstrom was keen to point out however that the main reason leading retailers are moving into CEE markets is to supplement their supermarket operations.

"Supermarkets don't make money on the actual fuel sales, there are hardly any margins on their cheaper fuel.

"Supermarkets only sell the fuel to attract customers into the supermarket, where the profits are made by selling products to higher margins."

The move has also been attributed to a combination of increase in demand and low levels of existing supermarket fuel penetration.

At present only one per cent of fuel sales in Poland and six per cent in the Czech Republic are made by supermarkets. This means Western European supermarkets can use their existing knowledge, built up in their home markets, to take advantage of this huge retail opportunity.

Tesco, who are based in the UK where 33 per cent of fuel sold is on supermarket owned forecourts, has a market leading position in the CEE. Its current expansion involves the development of four further retail sites in Poland, one in Slovakia and five in Hungary.

The UK's leading retailer recently opened its first fuel retailing outlet in the Czech Republic, where Ahold, Globus, Makro and Carrefour also operate similar sites with further plans for expansion.

Currently France is the only market in Europe where more fuel is sold by supermarkets than by oil companies or independent retailers. The number of supermarket fuel retailing sites there has grown by an outstanding average of 48 per cent each year since 2000, compared with growth rates of less than 10 per cent in other EU markets.

"In France, the market opening was gradual until 1985, when a European court ruled that hypermarkets could import cheaper petrol from foreign refineries. Since then, E Leclerc, Carrefour, Auchan and other retailers have bulldozed established players," said Lindstrom.

"French fuel retailing has traditionally been characterised by the supermarkets focus on price competition and the oil companies focusing on non-price competition (more environmental friendly fuels etc)."

Key Industry Events

 

Access all events listing

Our events, Events from partners...