Everyone assumes that high fuel prices equal massive profits for forecourts – nothing could be further from the truth.
As a nation, we have all seen prices rising almost daily, mostly because of the war in Ukraine which has severely impacted energy costs and the knock-on effect that this has had in manufacturing and supply chains. This has affected the way we all shop, and consumers have understandably tightened their belts as inflation has decreased their money’s purchasing power.
What we can’t see quite so visibly is that when we all make our own cutbacks, by switching to cheaper brands, driving less, and making a sandwich at home, is the massive impact this has on the local business. The local community forecourt provides essential services to Irish families by providing them with local access to everyday food basics and much needed ‘grab and go’ food items for people spending time on the roads. However, with ever increasing costs, the viability of the retail forecourt could well be in question.
Members are reporting huge hikes in energy costs; one member reported an electricity increase of 190% which equates to an additional €2,750.00 per week or €140,000 per year.
The cost of buying stock, food and consumables is increasing and yet consumers understandably aren’t willing to pay more for these products or services. Retailers can only reduce margins so far before they are offering a service that is costing the business money – that is not sustainable.
To add to the increased costs facing retailers, the Valuations Office has just issued a revaluation order for businesses in Clare, Donegal, Dún Laoghaire-Rathdown, Galway, Kerry and Mayo County Council and Galway City Council. This will revalue properties at 1st February 2022 (notably prior to the breakout of war in Ukraine and destabilising factors Europe has since faced) and rates bills will inevitably increase.
The retail sector has been campaigning for several years asking the Valuation Office for an equitable rate calculation methodology. One IPRA member advises that alongside all the other costs of doing business, their county council rates bill has risen from €4,000 to €17,000 in to the past two years. They claim that ‘Government needs to urgently review the actual cost of rates as they believe their business cannot survive with this level of cost increase’.
The IPRA is behind its members and is calling on Government to aid the forecourt sector before it’s too late. As part of its ‘Budget Submission’, the IPRA is calling for;
• Inclusion of forecourt fuel and food retailers into all existing and any future business support schemes and regulatory assistance including the Government’s electricity account credit and any future schemes.
• Forecourts should also be eligible for the Government’s €55m Green Transition fund.
• We need to develop a rebate for our sector when energy costs as a percentage of turnover increase over predefined thresholds.
• Develop a fairer way to calculate council rates for businesses in our sector as the current methodology using turnover, does not work for our low margin product and service business.
• We would advocate that a commercial rates ‘holiday’ is urgently required to prevent numerous small businesses from folding this winter. Rate payments can be reviewed in Spring 2023.
• We need to see clear guidelines on the provision of solar PV (to assist reduction energy costs) and remove the need for planning permission urgently.
• On-site generation should be incentivised, and we need Government to provide new financial support to help businesses invest in on-site energy generation.
• As we see a massive spike in drive offs, due to the high price of fuel, we would ask Government to urgently allow a nominated third party to access the NVDF (National Vehicle and Drive File) database to engage with potential fuel theft offenders to chase fuel payments, as we know a similar scheme in GB has returned an 80% payment rate.
David Blevings from IPRA said, “We cannot overstate how important it is to keep the lights on and doors open at petrol stations across the country. Without Government intervention and assistance there is a real chance that some forecourts will close. Others may start reducing opening hours and or cutting staff costs. Forecourts are major local employers and any reduction in opening hours will only affect local employment and force locals (already under pressure with the spiralling cost of living) to travel further afield to buy their daily basics”.