Loblaw Cos. Ltd. is mulling the sale of its gas station business, bucking the trend of large retailers doubling down at the pumps. The Brampton, Ont.-based grocery and pharmacy giant said Friday that it had started a process to talk to potential buyers about the sale of its 212 gas stations, which have been established alongside 20 per cent of the company’s locations, such as Real Canadian Superstore, No Frills and Independent grocers across most provinces.
Loblaw’s move to siphon off its fuel business would be at odds with competitors who are increasing their focus on their gas bars in Canada and south of the border. Michael Medline, chief executive officer of Canadian Tire, has said he wants to bolster the company’s gas business because it helps drive customers to the retail and financial services divisions of the company. “We really like this business,” Mr. Medline told analysts earlier this month. “Our plan is to ensconce the petroleum division even stronger into our group of businesses.”
In the U.S., Wal-Mart Stores Inc. plans to build and run more of its own gas stations, according to a report in The Wall Street Journal. The company’s long-time partner operator Murphy USA Inc. will be left to tend the more than 1,000 stores it has partnered with Wal-Mart on so far. On both sides of the border, Costco Wholesale Corp. has become an aggressive competitor in the gas business, offering discounts that customers will travel further to get and line up for on weekends. These stations typically exceed the industry average litres pumped per year by a wide margin.
Grocers, Canadian Tire and Costco have grown their presence in the retail gas-fuelling business significantly in the past decade, contributing to an overall decline of the number of locations in Canada as smaller competitors are squeezed out. While there were about 21,000 gas stations across the country 25 years ago, now there are about 12,000, said petroleum industry consultant Michael Ervin, who monitors the retail gasoline industry. Loblaw gas stations are branded under various names that respond to their adjacent stores, such as Gas Bar, At The Pumps and A Plein Gaz. The gas bars have loyalty systems that allow customers to earn rewards through the company’s PC Points cards, as well as a legacy rewards program called Superbucks.
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