Forecourt retailers are characterized by fast, convenient and on the go service and while competing with other grocery retailers  such as hypermarkets, supermarkets, convenience stores and food/drink/tobacco specialists, their main advantage lies in 24  hours service. By Zsofia Megyeri, Senior Research Analyst at Euromonitor International

 Store based grocery retailing in Bulgaria in 2013 saw over EUR92 million in retail sales, of which forecourt retailers, chained and independent, accounted for 2%. The category which is according to Euromonitor International methodology made up of all retail stores that are attached to gas stations also accounts for only 2% of total grocery outlets in Bulgaria. While popular channels such as supermarkets and hypermarkets saw their sales increase in 2013 on average by 4%, forecourt retailers saw slightly slower growth of 2% with a total outlet number increase of 2% as well. 

In general chained forecourt retailers performed better than independent, with their obvious advantage in terms of wider product assortment and financial backing of large corporations.  As the chained outlets continue to modernize their premises, it is becoming increasingly difficult for independents to keep up, especially since the presence of a wide product range and attached foodservice establishments are becoming the norm.
 

The competition for all forecourt retailers from other channels is high, especially due to the low unit prices which are not typical for forecourt retailers. In general, unit prices of products can be as much as 50% higher than in other channels which put these stores at a serious disadvantage. As the effects of the economic crisis linger on, many consumers are still mindful when shopping for groceries and try to plan ahead.  This usually means that for a longer journey Bulgarian consumers make sure to shop ahead in another distribution channel and only purchase petrol at the gas stations rather than splurging on impulse products during their stop. Additionally to high unit prices, while other retailers are investing in modernizing their stores and overall customer experience, forecourt retailers are falling behind in this aspect.
 

The usual product assortments for forecourt retailers mainly consist of what we call impulse purchase items, the ones which in other retail formats are generally placed near the cash register and where purchase occurs without it being pre-planned. The most popular items are soft drinks, hot drinks, alcoholic drinks, cigarettes, confectionary products, ice cream and sweet and savoury snacks, along with some none grocery items like toys and car accessories.

The competitive landscape for the segment is quite concentrated, with only a handful of players present. The majority of the chained retailers are owned by multinationals such as Lukoil, Shell and OMV. Gazprom, through Serbian NIS Petrol, currently owns 18 gas stations with forecourt stores attached and is expected to expand to 50 gas stations by the end of 2014, with plans to operate around 90 by the end of 2015. This ambitious plan will pose a serious threat to the already established players, especially Shell and OMV who at the moment operate less than 100 forecourt retail stores and could be overtaken in terms of outlet numbers by 2015. Gazprom is also extending its network of gas stations in other countries in the region, such as Bosnia-Herzegovina, where it took over OMV gas stations in 2013 and currently operates 36 forecourt retail shops, and Romania where it currently operates 14 gas stations.

Over the next 5 years we expect to see more focus on the consumer through intensive loyalty programs and increased selection of products and services to ensure that these petrol stations are not only a fuelling station for the vehicles but also for the customers. Chained forecourt retailer will outperform the independents in terms of retail sales as the product assortment in the latter will lack behind. We also expect to see more cooperation between forecourt retailers and foodservice operators to capitalize on the increased need for all in one service locations.

As the highway system in Bulgaria continues to develop, with an expected addition of approximately 500km by 2020, we expect the network of gas stations, thus forecourt retailers to increase and become more concentrated among chained outlets. From 2013 to 2018, we expect the total forecourt retailer outlet number to increase by 2% on average each year. While this will be significantly lower compared to the 5 year period from 2008 to 2013, where we saw an average yearly increase of 4%, it is still significantly better than many of the other countries in the region, where lack of investment opportunities or a saturated market prevents further expansion of the channel.