The retail landscape across the US is shifting and the pace of change is accelerating. Across retail industries, US consumers are increasingly expecting a personalized digital experience, a connection with a brand identity, and a sense of purpose or belonging to a community.
Within the fuel retail industry, there is increasing hype surrounding the disruption from electric vehicles, autonomous vehicles, ride sharing and even mobile fuel delivery. While not at the tipping point to have a significant impact yet, the eventual certainty of these disruptions provides a call to action today. In addition, there is increasing competitive threats in the convenience market from companies like Walgreens, Starbucks, and Amazon Go, all of which are expanding their offers and targeting the next generations of consumers.
Fuel retailers can remain competitive by embracing disruption and:
Measuring performance. Evaluate how well the current business strategy aligns with customer and consumer behavior and purchasing history across channels and product categories. Leveraging advances in data storage, analytics and visualization can enable ongoing evaluation and creation of insights.
Expanding the definition of competition. Other fuel retailers are not the only competition. Non-traditional competitors are now targeting the same consumers. For example, Starbucks’ management team has set a goal of doubling its food business over the next few years (including further enhancements to their Bistro Box line). Starbucks, in particular, is also seen as a mobile payment leader in the U.S. where a third of its transactions come through the mobile channel compared to less than five percent at most retailers.1 The importance of mobile payments to fuel retailers has also been confirmed by Accenture’s recent Digital Fuel Retail Survey which found that 58 percent of respondents are investing in mobile fuel payments at individual forecourts/filling stations in the next to three to five years.
Innovating along the way. Defining a successful future will require a mindset committed to continuous innovation including building innovation capability. Developing and piloting innovative business models and market-driven strategies today will enable a more successful pivot as consumers and competitors change over time.
As the pace of innovation accelerates and agility is required to adapt more quickly to disruptive threats, enabling the business with digital technologies will become increasingly critical for success. The Digital Fuel Retail Survey mentioned above found that 80 percent of respondents are already planning on increasing investment in digital technologies and 50 percent are creating strategic partnerships to access innovation and technologies.
Fuel retailers should act today, defining their ambition for the future, measuring performance across business models and channels of trade, and building the innovation muscle that will be required when electric vehicles, autonomous transportation, mobile fuel delivery and non-traditional convenience retailers disrupt their existing business models.
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1 “As Starbucks ' mobile strategy stalls, a smaller rival pounces”, Payments Source, 27 April 2018, © 2018 Payments Source Factiva”