Fuel retail is evolving. With a UK ban on sales of new petrol and diesel cars set for 2040, its days of relying on fossil fuels are numbered.
The future will see different types of vehicles arriving on forecourts. Whether hybrid, electric or autonomous, the needs of these cars and their drivers demand a business model overhaul for fuel retailers.
An overhaul that sees this imminent disruption as an opportunity not a threat. One that’s based on digital transformation for a connected future. And that allows them to proactively react to the steady transformation of driving habits.
The move away from traditional fuel is accelerating but this is an evolution, not a revolution. There is time to adjust, adapt and thrive.
Here we explore how fuel retailers can start preparing for change now. By understanding the risks and possibilities, they’ll know where to invest to move forward with confidence.
Our latest ebook goes into further detail on this. You can access it by clicking here.
Why Electric Car Drivers Need Forecourts
With over 20 years before the ban comes into force, petrol and diesel cars will continue driving forecourt profits for the foreseeable future.
But the move to electric vehicles is accelerating. Driven by agreements including the Paris Climate Change Treaty and the government’s Road to Zero cleaner transport strategy, the future is indisputably low emission.
Sales of ultra-low emission vehicles (ULEVs), which can be either fully electric or hybrid, are beginning to gain ground:
- ULEV registrations increased by 20% in 2018 compared to 2017 representing 2.2% of all new registrations
- Diesel registrations dropped by 30% in 2018 compared to 2017
As this figure increases, the demand for fuel at the pump will inevitably decrease. Hybrids promise more mileage from a single tank, meaning less frequent fill-ups. And their batteries can be topped up wherever a driver can access a charging point: supermarkets, office car parks, at home.
But this is exactly where the threat turns into an opportunity for fuel retailers.
With the move away from free to paid electric charging points, the obvious option is to add charging infrastructure to their energy offering. As well as becoming a driver’s regular top-up destination, forecourt charging points can be used by people who:
- Forgot to charge before commuting and need an emergency boost
- Couldn’t access a charging point as they were in use or broken
- Are undertaking longer journeys away from motorway services and need to top up
- Have a car with a low single-charge range
- Use an older electric vehicle or hybrid with ageing batteries that don’t retain their charge
And while their car is charging, they’ll be a captive audience to the retailer’s offering. They’ll need to pass the time – typically 30 minutes for an 80% charge – so could do a convenient food shop, sit and relax with a coffee or lunch, or connect to free wifi. The possibilities are endless.
BP already recognise this opportunity. Having bought Chargemaster, suppliers of charging infrastructure, they’re now investing £25m into ultra-fast charging.
Talking in FleetNews, David Martell, chief executive of BP Chargemaster, said: “Currently, people may typically take about five minutes in a petrol station; even with ultra-fast charging that is likely to increase to 15-20 minutes. That’s an opportunity for retail development.”
Mike Callender, executive chairman of global technology consultants REPL, agrees: “Drivers will be able to charge their cars almost anywhere, so fuel retailers need to become a destination.
“By providing retail rather than convenience options, they’ll help drivers make the most of their time as their cars charge, changing fuel retailers’ business models from fuel to retail first.”
The Driverless Vehicle Opportunity
Shifting further into the future, autonomous vehicles are moving closer to becoming an everyday sight on UK roads.
The speed of this change is difficult to determine, as is how these game-changing driverless cars will be fuelled: purely electric or hybrid?
However they’re manufactured, they’re only going to contribute to the decreasing demand for fossil fuels on forecourts. Which again presents fuel retailers with a new challenge to retain these customers.
Self-driving cars will need access to an infrastructure of charging points to plug in, top up screen wash, pump up tyres and update software. Assuming the technology to do these jobs doesn’t materialise, fuel retailers might see an opportunity in providing human support services.
Future-Proof with Digital Technology
To embrace the evolution, fuel retailers must invest in digital solutions. Alongside outstanding customer service, this will protect them from the possibility of empty forecourts in the years to come.
Although some future driving trends are uncertain, establishing firm digital foundations now will help to power growth:
- Create joined-up technology that attracts, creates and retains loyal customers
- Open up additional channels to communicate with and engage customers
- Be in a position to capitalise on big data, automation and mobility trends that will:
- Identify more clearly which customer segments should be included or excluded from campaigns
- Deliver hyper-personalised experiences and better match products to customers
- Pre-empt customers’ needs and behaviours to take tactical decisions to drive desired actions
- Enable gamification trends to be applied via loyalty apps
- Fuel better retail margins
The big names in fuel are already delivering digital transformation. They know they need to adapt to retain the loyalty of customers who will gradually start to spend less on fuel.
BP’s app BPme allows drivers to arrive at the forecourt, tell the app the pump number, refuel while specifying a set volume or cost, pay instantly and leave. They can also use it to order a coffee in advance and receive bespoke offers on products, tempting them to spend more when they collect their caffeine fix.
As fuelling is replaced with charging, BPme also allows company car and van drivers to pay for petrol, diesel and electricity on a single, digital fuel card at their service stations.
Shell is also making trips to the forecourt more convenient, offering coffee shops with fast internet where customers can check emails or do some work, pick up groceries and even enjoy a shoulder massage.
These improvements have resulted in 50% of Shell’s customers visiting its stations without fuelling up, proving the power of its enhanced convenience offer.
And to reward their customers, Shell has launched a new digital loyalty scheme that benefits consumers for purchases at the pump, the carwash and in store via mobile phone technology.
Alongside these loyalty-boosting services, the right behind-the-scenes tech is also essential. Like all retailers, fuel companies must also get their supply chain, POS and customer service systems operating as slickly as possible.
A comprehensive digitally-enhanced offering will allow them to compete on a level playing field. Get it right and customers will be choosing the forecourt café while they wait for their car to charge, instead of the Starbucks opposite.
Fuel Retail: The Road Ahead
The next few decades will drive major change in the role of forecourts. As the use of fossil fuels declines, they’ll need to be more than just a quick pitstop to fill up.
By understanding the changes ahead and taking advantage of the time available to adapt, fuel retailers can start to broaden their offering now.
Only by laying solid digital technological foundations to attract and retain customers will fuel retailers survive the transition.
Download our ebook to discover more about the digital opportunities for fuel retailers:
Electrification, Automation and Digital: Fuel Retail: The Future