Page 1: Introduction
In the closing decade of the 20th century, the UK retailing industry has witnessed massive change mainly due to an increasing domination of major supermarket chains. Fundamental developments include:
- the continuing decline of the corner shop
- the disappearance of the filling station selling just petrol and oil.
Organisations have seen a need to make appropriate responses to these environmental changes. This case study examines how organisations with strong traditional
retail presence, such as Murco and SPAR, benefit when united. The ability to adapt enables them to serve local communities through such innovations as ‘convenience trading’. Consequently, they have benefited from synergy based on their shared experience. Murco ‘piloted’ the new concept by creating a convenience store in Haverfordwest, Dyfed which almost tripled the size of the existing retail sales area.
Background to Murco and SPAR
Murco is the UK subsidiary of Murphy Oil Corporation of the USA and supplies 400 service stations in England and Wales. Murco’s UK system is based around both its North Sea crude oil production and its oil refinery interest at Milford Haven, from which oil product terminals in Bristol, Reading and Birmingham are supplied. Product exchanges with other oil companies extend Murco’s marketing reach into northern and eastern England. the Murco service station network is located in neighbourhood and rural areas as opposed to major highways, serving the local market rather than long-distance motorists.
The SPAR organisation is a voluntary retail organisation founded on the principle of mutual confidence and co-operation between independent retailers and retail distribution companies. Originating in Holland, 1932, it was designed as a practical way to help the small private grocer compete against the ‘multiples’. The retailers voluntarily purchase most of their goods from one retail distributor in return for beneficial terms resulting from economies of scale. They also benefit from enhanced marketing impact, trading under one name, which has since become the premier brand in convenience and neighbourhood retailing.
In 1957, five wholesalers applied to SPAR international in Amsterdam for the franchise to run SPAR in the UK. Today SPAR is the world’s largest food store chain, with almost 19,000 stores in 28 countries and over 2,655 SPAR stores throughout the UK serviced by six independent retail distribution companies.