The impact of evolving consumer demands and the energy transition on conventional fuels

How can fuel retailers future proof forecourts?

More change is expected to happen in the fuel retail and convenience industry in the next 20 years than in the history of the sector so far. Until recently, service stations were predominately seen as stops to simply refuel, with motorists occasionally visiting the c-store to buy a coffee or a snack. Fast forward to today and the forecourt is vastly different – in fact, it’s constantly evolving. Consumers want to make the most efficient use of their time, expecting service stations to be destinations where they can accomplish multiple tasks in a single trip – refuel their vehicle, grab lunch, buy groceries… the list goes on. The days of the traditional “fuel and go” model have long gone.

Between now and 2035 (the expected target for ending the production of Internal Combustion Engine (ICE) vehicles), forecourts will evolve even further as the world moves closer to the impending deadline; however, ICE vehicles are still prevalent in most markets and, according to some reports, will still be in use long after 2035. As the world, and fuel retail industry, moves towards decarbonization, it’s important for fuel retailers to look at ways in which they can future-proof their forecourts.

It might seem obvious but conventional fuel dispensers, equipped with the latest technology, are still required to service consumers who have yet to replace their ICE vehicles with electric cars, (or other clean fuel vehicles). This shows that the demand, and need, for conventional refueling will be instrumental in helping to bridge the gap as the industry moves to a greener future. In terms of longevity and low total cost of ownership (TCO), offering a mix of both clean and conventional fuels on one forecourt is a sure-fire way to satisfy consumer trends while staying one step ahead of the competition.

Topics covered in this white paper:

Challenges facing fuel retailers during the energy transition
Investing in conventional fuels for the future
What would it cost to change?
Future-Proofing Forecourts

Challenges facing fuel retailers during the energy transition

The landscape of the forecourt is different now. Gone are the days of a quick pit-stop and go. Today, motorists are opting to refuel at locations which provide convenience and a high-level of overall positive consumer experience. With the traditional forecourt business model slowly being phased out, how can fuel retailers stay relevant in an ever-evolving industry? In the next section, we go into detail about some of the challenges many fuel retailers are likely to face over the coming years.

Meet Changing Consumer Wants and Needs

The consumer profile has shifted, moving from a vehicle-focused to a driver-focused experience – meaning the consumer is in the driving seat (quite literally) when it comes to purchasing power. Long gone are the days of “stressed impulse purchases” at service stations, with limited options and limited quality products on offer.

Consumers expect more – more choice when it comes to food and beverage options, and a wider range of additional services, for example ATM, car wash, postal services, 24/7 grocery stores, and loyalty programmes. Across the board, forecourt operators are investingheavily in non-fuel retail (NFR), with Shell having set itself
the ambitious target of reaching 50% NFR profit by 2025, and making network trade-offs to facilitate a broader offering to attract a wider set of customers. Retailers need to recognize consumers are prepared to travel further or pay more to fulfil their needs at their preferred service station. Today, loyalty goes a long way.

Unfortunately, not all forecourts are geared up to handle growing consumer needs. Not only does that leave them at a disadvantage against newer service stations and their competitors, but it limits the opportunity for them to invest in electric vehicle (EV) charging. When drivers look for convenience retailing, in the broadest sense, it comes down to where they want to spend their EV charging time.

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