How relevant would forecourt shops be if the site didn’t also sell fuel, is one of those questions being pondered by fuel retailers nationwide as the industry stands on the brink of radical change in demand for its core product petrol and diesel.
It was also one of the key themes being discussed at the recent well-attended PRA/ACS Forecourt Conference at which an array of speakers ably chaired by Michael O’Loughlin, managing director of MFG both informed and inspired. With the government’s newly published ’Road to Zero’ strategy casting a long, uncertain shadow over the future need and structure of a fuel retail network, just how can forecourt retailers prepare themselves and their businesses for a prosperous future?
There are no easy answers, because there are so many uncertainties business, politics, technology, environment but retailers should always look for the opportunities, according to Andy Davis, global strategic retail alliance manager of Shell, formerly of BP, and often described as the brains behind the BP/M&S Partnership.
"It’s about changing mindsets," he stressed. "Would our shops be relevant if we didn’t have fuel ? The reality is that’s going to happen at some point. But also our shop locations are stores that the likes of Sainsbury’s and Tesco would frankly die for. They’re in great locations en route from home and work, they’re service hubs that’s the way we need to think about it. We refuel ourselves more than we do our car I last bought fuel two weeks ago, but I’ve actually refuelled myself 10 times on the go since then, buying something to eat or drink from a service station."
While the big metric used to be about fuel/shop conversion ie what proportion of people that bought fuel also spent money in the shop, that shop-only measure is becoming more important, if retailers work on the basis that the need for fuel might sometime disappear, he suggested.
"Currently our fuel volumes peak on a lot of our sites in the afternoon and evening, but our shop sales go the other way. Coffee and food sales are high in the morning, we do lunch okay, but come the evening our relevance is almost nothing. Recent events such as the Royal Wedding and World Cup have seen people thinking about picking up some cold beers and something to eat on the way home. Some forecourts are delivering against that mission, but many are not. But that’s when our fuel volumes are peaking, so we’ve got more work to do to make us relevant more of the day, for seasons and at the weekends."
Davis also talked about the importance of partnerships which are becoming increasingly omnipresent as retailers leverage brand perception and diversify their proposition: "When there is a latent demand for products in categories that are better credentialised by someone else’s brand, that’s my strapline for when I would consider an alliance."
He gave an example of a Shell Waitrose site near Ascot, which sold 200 bottles of Prosecco on the morning of Royal Ascot. "Last year it sold three, simply because it didn’t have Waitrose on the door. Success comes when you integrate the capability of the partner with the competence we have as forecourt operators it’s the power of the integration, not just having a Waitrose or M&S. It’s how you integrate, keeping old customers and attracting new ones. These big brands would not be dealing with forecourts if we were running poor businesses."
The pace of change is supersonic, but forecourt retailers should not be afraid of it, said Matt Rich, global digital transformation manager at BP who quoted one of his favourite lines: "The world will never change as slowly as it is today. Five years ago who’d have thought you could watch a football match on your phone? The world will look very different in three years’ time we all know that. As retailers it’s up to us to start to predict that.
"The good news is that change is happening at the exact locations where we are based as fuel retailers. The way that people are changing is by migrating to cities and towns. They have less time on their hands so convenience is absolutely what they want.
"We should change with confidence because we’re already there in BP we say our best assets are our assets, and we need to make use of the fact we’re already in the right locations."
In preparing for the future, he encouraged retailers to think beyond the norm: "If you went to Hilton Hotels five years ago and said in five years’ time your biggest competitor is going to be a company who didn’t own any hotels at all Airbnb they would have thought you were mad. Ten years ago I used to love going to Blockbusters. Now I have Netflix, which knows me better than I know myself.
"What about Amazon? In December they had 158 million unique hits on their website. That’s over half of America looking at their website in 30 days. If they decided to play in fuel retailing delivering fuel to subscribers say they could do it. We shouldn’t sit on our laurels and think it could never happen. Amazon or anyone else could start to play in our world and blow it apart, just as Netflix did to Blockbuster. It’s healthy to think differently about our industry and what could come about."
Professor Sabine Benoit from the University of Surrey talked about the various technologies that have come and gone, and never lived up to their hype.
"It’s difficult, but you have to decide what technology hype to jump onto; where to make the investment.
"What they all have in common, is that companies want to learn about and engage with their customers, to ultimately enhance their business. From a consumer perspective there is always a need for a faster, cheaper and easier service.
"Technology will be coming everywhere, give yourself the resources to try things out."