BOSTON — Disruptive trends are forcing fuel retailers to reorient themselves away from fossil fuels and cars and toward alternative fuels and customers, according to a new report from Boston Consulting Group (BCG). The report, A New Era for Fuel Retailers, explores a fuel retail landscape that is evolving at a faster-than-predicted pace and the strategies fuel retailers must implement to survive and thrive in the face of monumental threats.
Operators with robust retail businesses found that in-store sales and online offers during the pandemic offset sharp declines in gasoline and diesel sales volumes, said the report, which is based on a survey of 33 executives from 20 leading global retailers. More recently, as geopolitical uncertainty and volatility have placed upward pressure on oil prices, many operators have realized that retail is a matter of business resiliency. As such, some 70% of retailers surveyed are planning to expand their networks in the coming years.
“Beyond extracting the most value from their traditional core business, fuel retailers’ survival depends on investing beyond the pump,” said Mirko Rubeis, managing director and senior partner at Boston-based BCG and a coauthor of the report. “They need to make ambitious moves into new digital businesses while also adapting the service station to support EV and other alternatives fuels, capitalize on their existing real estate, and zero in on sustainable mobility.”
Many industry changes have only accelerated since the beginning of the COVID-19 pandemic—electric vehicles (EVs) and alternative fuels have gained significant traction, mobility usage and attitudes have evolved, and customer behavior has changed dramatically.
The report details five trends in the fuel retail industry that stand out:
- Alternative fuels are no longer optional.
- Advancing mobility forms are changing usage patterns.
- COVID-19 has changed consumer behavior.
- Digital technologies are expanding retailers’ capabilities.
- Sustainability is taking root.
The study recommends four strategic avenues to pursue:
- Rethinking future networks for a world in which hydrocarbon fuels no longer dominate.
- Reimagining the station as a mobility and convenience hub.
- Revamping their loyalty and personalization programs.
- Driving new growth areas beyond the service station.
“The possibilities for fuel retailers are numerous, but time is in short supply,” said Stuart Groves, managing director and partner at BCG and a co-author of the report. “Retailers that embrace these imperatives, seriously and swiftly, will not only retain their relevance in the low-carbon economy, but can also look forward to an expansive future.”
Members help make our journalism possible. Become a CSP member today and unlock exclusive benefits, including unlimited access to all of our content. Sign up here.
Want breaking news at your fingertips?
Get today’s need-to-know convenience industry intelligence. Sign up to receive texts from CSP on news and insights that matter to your brand.