Petrol station forecourt shopping 'to grow twice as fast as high street'

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Supermarket groups are likely to launch a major charm offensive to woo petrol station owners after research predicted forecourt shopping would grow twice as fast as the high street over the next four years.

Petrol station forecourts are set to top growth rates in the buoyant convenience store market, with sales expected to soar by 4.5 per cent a year to 2007, a report by the market analyst Datamonitor reveals today. This contrasts with forecast growth of just 2 per cent for the overall food and drinks market and beats an estimated annual 4.1 per cent for the convenience store market.

Supermarkets have targeted petrol station forecourts as a way to tap into the lucrative convenience market, with Sainsbury's teaming up with Shell to open 100 mini-supermarkets on the oil major's forecourts. Tesco runs most of its 110 Tesco Express stores in conjunction with Esso.

The report found that service stations already account for one-fifth or more of convenience sales in most European markets. Swedish forecourts lead the way, accounting for 83 per cent of the last-minute shopping market.

While fuel retailers seek to supplement declining petrol margins, hit by rising oil prices and taxation levels of up to 80 per cent, by selling higher margin, non-fuel goods, their forecourts offer supermarkets an easy expansion route. Marks & Spencer needs to find space to locate 200 of its Simply Food convenience store formats and is considering petrol station forecourts along with airport terminals, London Underground stations and motorway service stations as possible venues.

The push by supermarkets into the convenience store sector - Tesco bought the T&S chain last November, two months after Co-op swallowed the Alldays chain - has threatened the hold petrol stations previously had on the market.

Datamonitor warned: "Fuel retailers must keep abreast of market developments and anticipate trends within the sector if they are to compete effectively with the grocery multiples."