For several years now, UK drivers have been broadly able to count on supermarkets to provide them with significant price savings on fuel. A succession of price wars, often linked to vouchers and loyalty schemes, have often (but not always) seen supermarkets offer fuel at the lowest prices around.
However, in a surprising development, it seems the supermarkets have decided to edge away from this price battle.
We’ve noticed this phenomenon at PetrolPrices.com over the past few weeks, when familiar searches on our apps have pointed us to brand-name petrol stations instead of the supermarkets we’ve become used to seeing (and using to fill up!)
It’s not only us who’ve noticed. The AA’s own Fuel Price Report has confirmed that the gap between supermarket and name-brand fuel pricing is narrowing significantly, a fact reported on by several news sources including The Daily Mail.
The AA’s report specifically highlights Jet forecourts, which in recent times have started to undercut Sainsbury’s petrol stations in some places.
Have supermarkets abandoned the price war?
This interesting development has caused us to wonder about possible reasons for the apparent strategy change from the supermarkets.
Potential reasons that spring to mind include:
- Supermarkets finding themselves with less flexibility to tweak their prices “on the fly” due to relatively stagnant exchange rates and oil prices.
- A concerted effort from other fuel retailers to narrow the pricing gap.
- A policy change dictated by customer behaviour. Essentially supermarkets often discount petrol to lure customers into their stores for other purchases. However, doing this is less compelling when consumers are economising and paying off Christmas debt in February, than when they’re filling trolleys with seasonal goods.
A report in The Sun suggests something along the lines of the third scenario, saying that the supermarkets seem to have decided to stage their price wars around the items on the supermarket shelves rather than the liquid in the petrol pumps.
What happens next?
Obviously the big hope is that this lull in supermarket activity is merely the calm before the storm of a petrol price war, but there’s not really anything beyond optimism that points to this being the case.
The Sun’s report quotes one retailer saying that fuel sales fell “off a cliff” last month – something not particularly surprising when comparing December with January. However, only time will tell how long people will tighten their belts for.
The one thing that is for certain is that finding cheap fuel is not as straightforward as heading for the nearest supermarket. It’s now quite possible that you’ll save money by heading to an independent forecourt or even one of the “big name” petrol stations instead. Make sure you use our free service before you next fill up.
Have you noticed local garages undercutting the supermarkets in your area? Share your experiences in the comments below.