Highest-ever fuel prices could increase distribution costs but also boost footfall, retailers say.

Prices at the pumps have hit a record average of £1.20 a litre, and industry experts have warned that the price could rocket to £1.50 this summer.

However, not all retailers are feeling down about the escalating fuel prices – some believe that they will be good for business.
“Sales in my store jumped by 15% in 2008 when fuel prices reached £119.7 a litre,” said Vincent Bohannon of Post Office Stores in Handcross, West Sussex. “People decided to leave their cars at home and walk to their local stores which was great for business. People also tend to try online shopping when prices at the pump rise, but that benefits local stores too, as they invariably forget something and then have to visit us for a top-up.”

Retailers believe they can promote the economic, physical and environmental advantages of frequent visits to a neighbourhood shop, and highlight how much customers will save in petrol if they leave the car at home.

While store owners expect wholesalers facing higher transportation costs to pass on the increase, Nisa-Today’s managing director of central distribution trading & logistics John Sharpe told C-Store it had no plans to do so in the near future. “We will continue to be vigilant on cost control and efficient in our delivery schedules, but clearly we will need to continue to monitor the situation,” he added.

Newspaper wholesaler Menzies Distribution said it would stick by its promise to freeze carriage charges for a year from September 2009. “This guarantee was made in anticipation of a rise in fuel prices such as that which we have recently seen,” a spokesman said. 

Earlier this month The Co-operative Group announced that it would be trialing the use of rail to reduce the road miles covered by its distribution fleet.