Exploring fuel station convenience retail

Oil companies are no longer divesting themselves of fuel stations. In fact, this trend has almost reversed. As International Oil Companies (IOCs) around the world start to reclaim and reimagine our fuel stations of the future, there are some very important trends from supermarket retailers to note that impact their supply chains. Here are my top five tips.

Lesson 1: Expect little and often

Shopping trolleys are getting smaller for a very good reason. Supermarkets understand that ‘doing the weekly shop’ is outdated behavior. Customers now like to shop for smaller quantities, and will pop back several times during the week for additional items whenever they realize they need something.   As fewer people cook their own meals and the line between food retail and fast food restaurants is becoming blurred,  ‘food to go’ is on the rise and a new term has been introduced:  ‘foodvenience’.  This preference will most certainly be seen in the retail environment of tomorrow’s fuel station.

Lesson 2: Maximize customer experience

Cheap turkeys at Thanksgiving as well as bananas, eggs and milk all year round – supermarket retailers used to know how to entice customers with extra low prices on must-have items.  As average purchases become much smaller, this strategy becomes less effective and the emphasis on convenience and customer experience increases.  It will allow companies to pursue higher margins, to the point where petrol stations that offering a better experience will even charge more for fuel.

Lesson 3: Earn loyalty every day

Loyal customers are likely to visit more frequently and spend more per visit. And of course there are many ways to increase retention – give customers excellent service, better products, and relevant new stuff, for example. Data indicates that over time loyal customers in a fuel station are likely to spend up to four times more on fuel and, while on the premises, these people are also likely spend more on convenience retail. The lesson for IOCs is to get closer to customers, leveraging the retail footprint to realize more value from the real estate footprint.

Lesson 4: Give more reasons to return

Product breadth, depth, and assortment in the supermarket are highly strategic decisions. Retailers seek to provide continuity and familiarity for customers while also giving them more reasons to revisit the store. This will be fundamental to the success of fuel station convenience retail. What can be sold in addition to groceries and motor-related items? The answer is much, much more. Fuel stations occupy a unique position between the physical and digital worlds and this intersection is ripe for innovation.

For example, IOCs could offer you parcel delivery work with discounted fuel as compensation.  As vehicles entering the forecourt will increasingly share details on their journey, algorithms will enable providers to suggest you pick up and deliver a parcel to a location that’s on your route. Taking this further, IOCs could use their fuel stations as a base for autonomous vehicle fleets, enabling vehicle dispatch, refueling/recharging, and secure parking.

Lesson 5: Plan more

These days, supermarkets and IOCs share an urgent need to create value wherever they can. Expansion of fuel station convenience retail to include additional services will require much more planning. Logistics-intensive already, the fuel station of tomorrow will be characterized by new types of merchandise, different product flows, some requiring cold-chain processes, and many deliveries that cannot be combined and consolidated (food/fuel). With increasingly stringent green policies and regulations, the fuel stations of tomorrow will also require better planning for outbound waste management and recycling logistics. And to avoid on-site congestion during busy times, transport flows may need to be scheduled with high precision throughout both day and night.

Getting it right – the supply chain and integration of mobility and transport – will be essential to the success of fuel station convenience retail in the future. You can hear more from me in this four-minute interview. Meanwhile, I’d really like to know your thoughts on this topic. Please add your comments below.

Published: Mai 2018

Image: DHL