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Fuel price shock hits shoppers

Published:  21 March, 2011

Exclusive research shows that high fuel prices are now having a real impact on shopper behaviour with almost half of shoppers thinking twice before using their car

With Chancellor George Osborne about to deliver his 2011 budget speech – the third in less than a year – fuel prices have been high up the domestic political agenda. Pricing petrol in litres means the fact that prices have smashed through the £6 a gallon barrier has been largely ignored. However every motorist knows that it now costs more than ever to fill up the tank.

The AA monitors prices on a monthly basis, and its research confirms that average pump prices for both petrol and diesel have continued to rise to new record highs. At the end of February, average unleaded prices had risen to 128.8p per litre. And average diesel prices stood at 134.0p per litre.

According to the AA troubles in the Middle East threaten even higher oil prices, although a stronger pound has so far cushioned some of the blow. And the organisation points out that the UK now has the eighth highest unleaded price in Europe and the second highest diesel price.

There are substantial regional variations in fuel prices. Northern Ireland recorded the highest price for unleaded at 129.9p per litre while Yorkshire & Humberside recorded the lowest price at 127.8p per litre. Northern Ireland recorded the highest diesel price at 135.0p per litre while Yorkshire & Humberside has the cheapest diesel at 133.2p per litre.

And motorists’ ability to shop around is now severely curtailed because supermarkets are no longer offering big discounts. Supermarket prices for unleaded rose during February to 127.4p per litre. The gap between supermarket prices and the UK average for unleaded has fallen to 1.4p per litre.

So what does this mean for the shopper? To find out Shopping Centre has partnered market research specialist ROI Team.

The ROI Team researchers interviewed more than 400 shoppers in The Mall’s properties in Uxbridge, Blackburn, and Luton using ‘next available’ methodology. All interviews were carried out face-to-face inside the shopping centres between February 25 and 27, 2011.

The research found that four in 10 shoppers intend to limit use of their cars for shopping as a result of the high cost of fuel. Of these shoppers almost one half intend to reduce the number of shopping trips that they make.

And looking more closely at those shoppers who had arrived by car on the day of the interview – more than half of our sample – almost one quarter intend to reduce the number of shopping trips they make.

This clearly has the potential to have a real impact on shopping centre footfall.

The study also found that shoppers in the North were far more likely to use their car for shopping trips (accounting for three-quarters of trips) than southern shoppers (where cars were used for half of trips). Worryingly one third of Northern shoppers are intending to limit their car use for shopping.

An age difference also seems to be opening up: shoppers over 45 are almost a third more likely than younger shoppers to reduce their number of shopping trips because of high fuel prices.

Among younger shoppers, aged under 45, only one in 10 is planning to go to out-of-town centres less.

And ROI Team managing director Andrew McCall pointed out that different demographic groups may also be impacted differently. “Lower socio-economic groups tend to live in areas that are less well served by public transport, and are forced to use their cars more for shopping trips, so they are likely to be harder-hit,” he said.

Tax – both excise duty and VAT – makes up a large component of the price of a litre of fuel. But the parlous state of government finances means Chancellor George Osborne only has limited room for manoeuvre.

Another hike in duty is due at the beginning of April, but the Chancellor has already hinted this may be dropped.

Speaking at the Conservative Party’s Spring conference in Cardiff at the beginning of March, he told delegates he was fully aware of the problems fuel prices were causing and said he would do “everything I can to find a way to help”.

It remains to be seen if this will be enough to help shopping centres.