A powerful shift for the fuel retail market
The fuel and convenience retail industry is facing disruptive threats, spurring a strategic shift for the industry.
Analysis shows fuel demand could shrink by as much as 26% (40 billion gallons) within the next 15 years.
Disruption will be more acute among developed economies—across the dimensions of technology, society, policy and business models.
We continue from the last blog to share a few more critical steps fuel retailers can take to actively address disruption today.
The first step is to understand what’s driving disruption in your market. For example, it may be that drivers are increasingly using electric vehicles (EVs). This is a challenge for convenience store-based stations because they do not have access to electricity for charging purposes; their customers’ needs must be addressed at another location or through another means—such as wireless charging pads located on site.
The shrinking demand for diesel fuel
The industry facing an all-time low in trust as consumers, employees and investors seeking a lower carbon footprint, greater business integrity and higher returns.
While diesel demand has been growing steadily over the last decade, it is expected to decline in light of upcoming emissions regulations and the rise of EVs. Fuel efficiency of light-duty passenger vehicles is expected to receive greater focus as emissions-reduction of light-duty passenger vehicles is targeted. Light-duty EVs will likely reach total cost of ownership parity with internal combustion engines (ICEs) in the next five years—and leave them completely behind by 2030.
Diesel demand will be impacted by a focus on decarbonization of freight and heavy transport via substitutes: biodiesel, renewable diesel and renewable natural gas. The proliferation of these new technologies could lead to 40,000 fuel retail stations being closed or converted into other uses.
Facing disruption? You’re not alone.
Fuel retailers can actively address disruption today by transforming the heart of the business, increasing efficiency and unlocking trapped value to reinvest in growth, growing the heart of the business with new technologies, applying new technologies to fuel; continued innovation and investment; expanding faster than expectations and outpacing expectations. Finally, reimagining the value proposition and business models for energy consumption by embracing new technologies, creating innovative products and services
As the world continues to change, fuel retailers need to adapt in order to stay competitive. They must seize opportunities that will allow them to carve out a role in the lives of consumers around the world. If they do, they’ll not only survive but thrive in the years ahead.
A little bit of self- assessment is required to:
- Identify your sources of disruption: What are your most pressing challenges and opportunities?
- Identify your strengths and weaknesses: Where do you excel? Where do you need to improve?
- Identify your opportunities: What can you do to create value? How can you use your strengths to address challenges?
- Develop a specific strategic plan: How will you achieve your goals? How will you measure success?
Transform the value proposition
- Enhance the customer experience, create cost transparency and discipline, and make portfolio-based decisions.
- Reduce operating costs to draw investment.
- Re-engineer the old business for new growth.
- Manage distributed assets as a portfolio.
The retail industry is undergoing massive changes, and it’s critical that you evolve with the market. Here are some questions to ask yourself:
- What measures are you taking to ensure sustainable growth?
- Can you respond to disruption on multiple fronts?
- How will you participate in the retail industry of tomorrow?
- How aligned is your leadership team on the strategic vision for the next 5-10 years?
- What actions are you taking to capture market share from competitors?
So what do you think is the future of retail? What measures are you implementing to keep staying ahead of the game? Stay tuned for our next article.
(Source: BCG, Petronas, ACAPMA)