Australian convenience store sector boost as BP announces expansion

Posted by AFN Staff Writers on 4th May 2015
Australian convenience store sector boost as BP announces expansion
Australian convenience store sector boost as BP announces expansion

Global oil giant BP has plans to expand its network of service stations in Australia over the next three years.

It has been reported that BP Australasia will spend more than $450 million over the next three years to open up 60 new service stations. The expansion will be funded with money that was previously spent on BP’s Bulwer refinery in Brisbane, which has officially shut down.

BP Australasian president Andy Holmes told The Australian newspaper that the company was also planning refurbishments across its national network of more than 1,400 BP branded sites. The Company operates 350 of these sites directly.

Mr Holmes told The Australian that BP would focus on the major roads, motorways and truck stops around Melbourne, Brisbane, Sydney and Perth. BP plan to open eight new sites in 2015, but the number could rise to up to 20 new sites a year in coming years.

Australian service station convenience stores increasing

The expansion is likely to have a big impact on the convenience store sector in Australia.

Both major supermarket groups Coles and Woolworths have a stake in the convenience store sector. Coles Express operate in conjunction with the Shell brand. Until recently, Woolworths operated in conjunction with Caltex.

Private company 7-Eleven Stores Pty Ltd, which is owned by the Withers and Barlow family, also operates convenience stores in Australia. The Company has a license to operate and franchise 7-Eleven stores in Australia from the US based 7-Eleven Inc.

In October 2014, Australian Food News reported that the Australian convenience store sector had recorded a strong growth rate of 4 per cent for the first half of 2014, according to a State of the Industry report from industry body the Australasian Association of Convenience Stores (AACS). This growth continues a trend from the previous few years.

In April 2013, Australian Food News reported that service stations with convenience stores – defined as those with more than a very simple food and beverage offering – increased almost 10 per cent from an estimated 3,162 outlets in 2010 to an estimated 3,450 outlets in 2012. Service stations without a convenience store declined from an estimated 3,471 stores in 2010 to 3,168 outlets in 2012, suggesting that most service stations were moving towards offering more food and beverage options.

Other service station convenience store major operators

Coles operates 654 Coles Express convenience stores in Australia. Australian Food News reported in April 2015 that total Coles Express sales, including fuel, for the third quarter  were $1.6 billion, a decrease of 16.6 per cent on the previous corresponding period driven by lower fuel prices which more than offset higher fuel volumes. Total sales for the financial year to date decreased 9.4 per cent to $5.6 billion.

Coles’ rival Woolworths announced changes in December 2014 to its alliance with fuel company Caltex, with which it operated 633 sites across Australia, including 131 Caltex-operated sites with the remainder operated by Woolworths.

Under the revised arrangements, 92 of the Caltex-operated sites were to be rebranded as ‘Star Mart’ or ‘Star Shop’ convenience stores while continuing to offer the Woolworths fuel discount redemption.The remaining 39 sites, which are located in close proximity to Woolworths Petrol sites, exited the Caltex-Woolworths alliance and no longer offer Woolworths fuel discount redemptions.

In March 2015, Australian Food News reported that Woolworths Limited Chief Executive Officer Grant O’Brien had said Woolworths would continue to focus its efforts on its operated petrol sites to “deliver further improvements to our convenience offer” after the changes to the supermarket group’s agreement with Caltex.

7-Eleven Stores Pty Ltd, which opened its first Australian store in 1977,  operates approximately 600 convenience stores in Queensland, New South Wales, Victoria and the Australian Capital Territory. Australian Food News reported in September 2014 that 7-Eleven had opened its first store in Western Australia, with 10 stores expected to open by the end of 2015 and up to 75 stores in the next five years. The expansion into WA marked the first time the Company has entered a new market in 32 years.

Through its store network, 7-Eleven Stores Pty Ltd. conducts more than 180 million transactions a year, serving an average six customers per second, generating sales of approximately $3.4 billion.