Annual study also reveals a continued drop in outlets affiliated with integrated refiner-marketers, lack of growth in the "big box" sector
LONDON, Ontario, May 10 /Canada NewsWire/ - The number of retail gasoline outlets in Canada continues to decline, according to a recently released annual survey of retail gasoline facilities by petroleum consultancy MJ Ervin & Associates. The annual study, entitled the National Retail Gasoline Site Census 2010, is the only comprehensive enumeration of the number of retail gasoline stations in Canada. It identified a total of 12,710 retail gas stations as of December 31, 2010; a continuation of a downward trend in the number of retail gasoline stations in Canada since 1989, when over 20,000 retail outlets existed. The 2010 outlet count represents 3.7 gas stations for every 10,000 persons in Canada.
This trend reflects an average decline of about two percent per year, over a period of time when Canada's population, has been steadily growing. "This is a consequence of a continued lack of profitability in the retailing of gasoline", states Michael Ervin, the vice president and director of consulting services for MJ Ervin & Associates (a division of The Kent Group). Despite generally healthy oil industry profits over the past several years - at least until recently - the retail sector has always been a relatively poor performer: in 2010, the wholesale "rack" to retail mark-up on a litre of regular gasoline was less than seven cents per litre at a typical urban gas station, according to pump price statistics gathered by MJ Ervin & Associates.
Ervin notes that to be profitable, retail gasoline outlets must sell high volumes of gasoline in order to compensate for the low margins. They must also be effective marketers of pop, chips, car washes, and other non-petroleum offerings that tend to have much higher margins than gasoline. "It's the stations that lack sufficient fuel sales or sufficient non-petroleum sales that are closing", Mr. Ervin adds.
The study reveals that growth in "big box" retailers of gasoline such as Safeway and Loblaws, has stalled in the past few years. This category of petroleum marketer had proliferated in western Canada over the past decade, but had only seen limited growth in eastern Canada. The study suggests that a combination of low profit potential and some regulatory constraints may be responsible for limiting big box retailers from further expansion in the future.
The percentage of retail outlets affiliated with refiners declined from 42.5 in 2008 to 41.4 in 2010, evidence of a continued strategy of refiners divesting retail assets at a faster rate than non-refiner marketers. Conversely, non-refiner marketers (sometimes referred to as "independent" marketers) were affiliated with 58.6 percent of all outlets in 2010, compared to 57.5 percent in 2008.
As to the all-important question of who controls the retail pump prices at Canada's 12,710 gas stations, the study determined that 16 percent of gasoline stations are price-controlled by one of the three "major" oil companies (Imperial Oil, Suncor, or Shell), while the majority of gasoline outlets in Canada are price-controlled by dealers or companies who are not involved in the refining of petroleum products.
The MJ Ervin & Associates report paints a picture of the diversity of gasoline brands, with over 99 different brand names under which gasoline is sold in Canada, although most of this country's gasoline originates from 15 refineries, operated by nine refining companies. There are over 71 companies involved in the retail management of these brands.
The National Retail Gasoline Site Census is a research project of MJ Ervin & Associates. A full copy of the report can be downloaded free of charge at: www.kentmarketingservices.com
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