Canadian C-Store Count Down

Canadian clown count down, as well, thanks to Couche-Tard

CALGARY, Alberta -- The number of retail gasoline outlets in Canada continues to decline, according to the National Retail Gasoline Site Census 2008, a new annual survey of retail gasoline facilities by petroleum consultancy MJ Ervin & Associates Inc. It identified a total of 12,684 retail gas stations as of Dec. 31, 2008, a continuation of a downward trend in the number of stations in Canada since 1989, when more than 20,000 retail outlets existed.

This trend reflects an average decline of about 2% per year, over a period of time when Canada's population has been steadily [image-nocss] growing. "This is a consequence of a continued lack of profitability in the retailing of gasoline," said Michael Ervin, the president of MJ Ervin & Associates.

Despite generally healthy oil industry profits over the past several yearsat least until recentlythe retail sector has always been a relatively poor performer: in 2008, the wholesale rack to retail markup on a liter of regular gasoline was less than seven cents per liter at a typical urban station, according to pump price statistics gathered by MJ Ervin & Associates.

Ervin noted 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 nonpetroleum offerings that tend to have much higher margins than gasoline. "It's the stations that lack sufficient fuel sales or sufficient nonpetroleum sales that are closing," Ervin added.

The study reveals that growth in big-box retailers of gasoline such as Safeway and Wal-Mart 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 46.2 in 2006 to 43.7 in 2008, evidence of a continued strategy of refiners divesting retail assets at a faster rate than nonrefiner marketers. Conversely, nonrefiner marketers ("independent" marketers) were affiliated with 56.3% of all outlets in 2008, compared to 53.8% in 2006.

The study determined that 15.8% of stations are price-controlled by one of the three "major" oil companies (Imperial Oil, Petro-Canada, 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 more than 98 different brand names under which gasoline is sold in Canada, although most of this country's gasoline originates from 16 refineries, operated by 10 refining companies. There are more than 66 companies involved in the retail management of these brands.

The National Retail Gasoline Site Census is a research project of MJ Ervin & Associates Inc.Click here for a full copy of the report.

MJ Ervin & Associates is a Calgary, Alberta-based consultancy specializing in the petroleum refining and marketing industry.In other Canadian c-store news, Laval, Quebec-based Alimentation Couche-Tard Inc. said it is comfortable with an Internet advertising campaign featuring a clown being hacked to pieces, spurting balloons and confetti (click here). Another ad has the multi-colored clown being put into a wood chipper and coming out the other end in the form of balloons and confetti (click here). The two online ads are promoting the 10th anniversary of Sloche, Couche-Tard's slushy drink, reported the Canadian Press.

Company spokesperson Jacinthe Harnois said the campaign is aimed at teenagers and that the ads are appearing only on the Internet because that's where it's easiest to reach them. "They really like our campaigns, so I don't care if older people don't like them," she told the news agency.

Giovanni Iuliani, a retired clown known as "Patapouf," called for a protest and called the campaign "disgusting" and "in very bad taste." He told the news agency, "Why do they use my profession? We don't want to look like insane people."