Global Impact of COVID on Retail Petrol Stations
Many nations and industries have had an unprecedented impact of COVID on their business, and the oil and gas industry have also not been able to escape from its effects.
Today, the fuel and convenience retail industry faces a critical inflection point. Two main factors are accelerating industry disruption: the onset of COVID-19 driving a substantial decrease in demand, and an increase in oil supply, triggering a significant drop in oil prices.
There was good news in that petrol filling stations were able to remain open as the Government deemed them ‘essential retail’. The bad news was that travel restrictions meant a significant reduction in traffic volumes on the roads during the initial lockdown period.
Consumer habits are shifting from in-store to virtual purchases. New competitors are emerging. Store consolidation is squeezing margins. And with improved fuel efficiency, the advent of electric vehicles, and an increase in ride-sharing, demand for motor fuel has been on the decline.
What path lies ahead for the industry in the coming months and years?
State of the fuel and convenience retail industry.
Continued operations also became increasingly difficult due to workforce shortages as employees are infected by the coronavirus and the practical difficulties in many cases of social distancing. Companies had to operate with skeleton crews to continue operations, with disruptions expected across many of their activities. This had a monumental financial cost to the oil and gas sectors.
Significant drop in fuel demand and non-fuel offerings.
The fuel demand destruction – and the pandemic more broadly – is also hurting retailers’ “inside sales”. Fewer customers purchasing fuel means, all else equal, fewer customers purchasing food, beverage, and other merchandise in the convenience store.
Most fuel stations depend on their non-fuel earnings to survive. In fact, selling petrol and diesel has become – even before the pandemic – something of a secondary priority for many retailers.
These retailers receive the majority of their convenience store traffic from customers who just happen to be there purchasing fuel. Other convenience stores, whether because of their location, their cleanliness, and/or the quality of their non-fuel offering, are more “purposeful” shopping destinations
Fuel stations are now facing never seen before challenges.
Fuel and convenience retailers will need to account for the additional overhead that comes with owning or operating a c-store in both the near-term and long-term. Ultimately, strategies need to be implemented to limit operational issues, keep employees and consumers safe, and position their businesses for the next wave of change.
Fuel stations will have to prepare for the future.
Retailers will need to be more agile and adapt to shifting purchasing patterns. Key areas for fuel and convenience retail to focus on now and next.
Navigating with solutions for consumers and employees
How do fuel and convenience retailers’ transition through these challenging times to ensure their company thrives into the future?
1. Be aware of crisis -Take immediate actions to focus on safety while addressing government guidelines.
2. Navigate the crisis – Reimagine new ways of working and how to serve consumers while sustaining operations during the crisis.
3. Restore confidence -Establish new normal standards, focusing on quick-win opportunities that boost confidence.
4. Enable growth – Transform the future of convenience and grow consumer loyalty through new and innovative offerings. Fuel and convenience retailers must act now to address the far-reaching implications of COVID-19 and the oil market impacts to preserve the business and ultimately enable growth.
- Prioritize which initiatives will create a positive consumer experience and become part of daily life.
- Determine which consumer behaviours will stick is a combination of the industry disruptors that accelerated new behaviours, like focusing on sanitation/safety, and how positive the experience was for the consumer during the crisis.
- Consider how to improve the consumer experience for those behaviours that did have a high impact (like delivery services and contactless fueling) to increase the likelihood that they’ll become a permanent behaviours and drive consumer loyalty.