Sainsbury is to open 100 convenience stores on Shell forecourts in the next three years. With the forecourt shop segment growing even faster than the convenience market as a whole, the extension of the Sainsbury/Shell alliance represents an excellent opportunity for Sainsbury. Meanwhile, the allure of high quality grocery shopping on the forecourt is expected to drive fuel sales growth for Shell.
Having successfully trialed Sainsbury’s Local store format at six Shell sites in the UK since October 2000, the supermarket giant is to open 100 new outlets within the next three years. The rollout is due to begin in the autumn, with the stores stocking the usual convenience items, plus Shell’s car care and lubricant products. The rollout will involve the creation of around 2,000 jobs.
The Local format has been a successful one for Sainsbury, with Locals accounting for 11 of the company’s 20 best performing stores in terms of sales per square foot. Three of the eleven are located on Shell forecourts. The addition of 100 sites will almost triple the number of sites from the current 58.
“We believe our convenience store offer is the best in the UK,” said Sir Peter Davis, Sainsbury’s chief executive. “By working with Shell we can bring Sainsbury’s quality convenience food shopping into new areas of the UK and within easy reach of millions of new customers.”
The new venture is expected to position Shell well against its rivals BP and Esso. Esso is already in an alliance with Tesco, and over the past four years oil majors have increased the number of forecourts at which there is a convenience store run by a high quality grocery retailer. This helps to attract motorists while also reflecting a consistency in brand perception.
Meanwhile, Sainsbury’s rival Tesco has already upped its investment in the convenience market, recently announcing its intention to convert 450 of the 870 T&S stores it acquired in October to the Tesco Express format over the next four years. It is important for Sainsbury that it increases its Local sites and maintains pace with its competitors in what is becoming an increasingly important segment.
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