July 12, 2023
Digital Transformation at Service Stations: What Does this Mean for Fuel Retailers and the Industry?
Digital Transformation is no longer “just around the corner”, it was here yesterday and is happening right now, globally. The fuel and convenience retail industry is a great example of an industry where digital transformation can make a huge impact to overall business performance. The opportunities and value it can bring to a fuel retail business and its customers now and in the future, are limitless…if implemented correctly.
So, what drives digital transformation on the forecourt? Well, the answer is simple: it is driven by both the fuel retail business and consumers.
One of the primary drivers of digital transformation was the COVID-19 pandemic (BlueOptima, 2022). It drastically changed how society functioned, which eventually led to changes in consumer behaviour, highly influencing their wants and needs when it comes to service stations. For example, many consumers found contactless and online payment to not only be faster, but also safer (Global Payments, 2021). As a result, online shopping grew, and so did the advertising spend from companies worldwide, which according to Statista reached growth rates as high as 16% in 2021, compared to -3.7% in 2020 (Statista, 2023). To be a successful business during such challenging time was incredibly difficult. No service station could afford to sit back and simply wait to see what happened, ride out the storm so to speak. Continuing day-to-day operations with their long-standing and traditional business model, just wasn’t going to cut it. Instead, fuel retail businesses had to re-evaluate their position and adapt their business model to meet the changing business environment and consumer trends. That is, if they wanted to be successful, stay competitive in the market, or to simply survive.
While society and unforeseeable events can play a huge role in shaping and creating how businesses operate, it’s important to remember that for most fuel retailers, it’s in their ‘nature’ to innovate and look for opportunities that could keep them one step ahead of the competition. It’s no secret technology is transforming fuel retail business at a rapid pace, as smart, cloud-enabled connected solutions and products create differentiating opportunities for both retail and commercial fleet fueling owners and operators – something that Dover Fueling Solutions (DFS) is no stranger to, and has been delivering for many years, to many customers worldwide.
In this article, we lay out some of the key benefits digital transformation can have on the fuel retail industry and, as we look ahead to the future, evaluate trends and opportunities that could arise as technological advancement continues and consumer behaviour alters.
Digital Transformation works in the Fuel Retail Industry and We Can Prove It
Many forecourts across the globe have demonstrated how digital transformation can positively impact and improve how fuel retail industry operates. Take a look at a standard fuel dispenser (image above); what once was an elegant and straightforward dispenser, years later is much more than that. Yes, its main function is to refuel a vehicle, but it also offers a digital consumer experience, enabling fuel retailers to engage with their customers during the refueling process, which in return can help boost sales and profit margins.
From digital screens at the pump, digital billboards, technologically advanced vending machines and self-checkout kiosks, it’s not only the market for retail technologies that’s booming, but also the concept of having technology-enabled personalized media and advertising. Identifying shopper characteristics (e.g., demographics, psychographics, behavioral history) through loyalty schemes and improving the shopper’s cycle through retailing innovations (e.g., multichannel marketing, in-store merchandizing, digital activities etc.) has been, and still remains, a core activity for fuel retailers. In fact, personalized advertising at the pump, to some extent, is expected today. It has been proven that such marketing strategies can add excellent value for many motorists and businesses. In fact, customers of DFS have said it has helped them increase retail traffic, profits and at least a 30% increase in loyalty scheme registrations (Dover Fueling Solutions, 2021).
For customers who step inside a convenience store (c-store), retail technologies such as self-checkouts are a great solution for retail business looking to reduce waiting times and improve the overall forecourt and refueling experience. The fast-paced nature of a self-checkout kiosk makes the retail experience quicker, enabling consumers to avoiding long queues and continue their day with minimal disruption. Today’s average consumer wants to complete their transaction in less than five minutes (CStoreDecisions, 2022), giving c-stores a short window to not only promote their latest offers, but to also help strengthen the consumer shopping experience. Now, what would be even more impressive, is a forecourt that offers consumers the ability to pay for shop items, car washes, and fuel (or clean energy alternatives) in one transaction. A connected mobility and convenience hub can do exactly that – bringing new possibilities to a fuel retail business. Furthermore, this type of hub can make on-site and remote control easy, further enabling fuel retailers to optimize their customer’s experience, while ultimately presenting opportunities to maximize site profits.
Leverage Digital Transformation to enhance safety and security
Although “digital transformation” on forecourts is predominantly glamourized for marketing purposes (media, loyalty, payment) and enhancing the overall consumer journey, many don’t realize it can also be leveraged to improve the safety and security of retail systems, both indoors and indoors.
In the first instance digital transformation can help efficiently measure and monitor fuel. Today’s technology allows for real-time analysis in case any fuel loss occurs, meaning the smallest of losses can be automatically picked up and sent to specialists for evaluation. Subsequently, providing the highest level of forecourt protection. Secondly, forecourts can utilize digitization to facilitate a secure managed network. With a new and improved forecourt structure derives new challenges and security risks. Whether it’s theft or breach of data, neither are acceptable, and should be protected with a secure network, which ideally connects c-stores, fuel dispensers, site controllers, Electric Vehicle (EV) chargers and more. A strong and secure network can quickly transmit large amounts of data, informing the station’s owner or operator of any potential concerns around the customer and business-sensitive data. A connected forecourt – whether wired or wireless – can not only enhance consumer experience, but help a forecourt become more safer and more efficient.
What are the trends and opportunities fuel retailers should look out for?
New Forecourt Infrastructure
You could say, the future of fuel retail is looking clean, and with that, the fuel retail industry can expect a new forecourt infrastructure to come into play. The scale to which a service station will change will vary, as this will depend on individual fuel retailer capabilities, partnerships, market needs, as well as their personal and professional willingness to adapt to the changing times. Not only will fuel retail businesses need to follow and keep up with the ever-changing patterns in consumer behaviour, they will also have to align with government and environmental policies as they become more prevalent and the world moves towards decarbonization and global sustainability and energy targets are set in place.
On a global scale, the proliferation of clean energy offerings such as hydrogen, electricity, compressed natural gas (CNG), liquefied natural gas (LNG), and liquefied petroleum gas (LPG) differ from region to region. Nevertheless, as consumers become more conscious about their carbon footprint and look for ways to reduce it, fuel retailers have no choice but to modify their traditional forecourt structure and provide energy offerings to meet this demand.
Further Collaboration and Partnerships
Digital Transformation will continue to stimulate collaboration and partnerships. Whether the goal is to deliver powerful real-time analytics; create a connected forecourt; establish solutions that allow for remote management; or offer cleaner energy options for motorists, the best practice in achieving such targets will very often be through collaboration, and combining technology from two or more companies that have the same objective. With great partnerships, comes great results. Partnerships could make all the difference between delivering something new and useful to the end user, the motorist, and standing out from the competition or being left behind as the world, and your competition, continues to advance.
Greater Focus on Consumer Experience
From easy-to-use dispensers, contactless payment, self-checkout kiosks, personalized ads and loyalty schemes, it’s fair to say many fuel retail owners and operators have established a solid way of delivering an outstanding customer journey and a way for creating digital conversations between themselves and their customers. While none of that is expected to change – at least in the coming years – fuel retailers do need to be prepared for consumer habits suddenly changing. Expectations of the future forecourt could have a lot to answer for. Thus, the need for products and solutions which provide convenience, and safety and security, to the everyday consumer – alongside alternative ways to powering vehicles – is more important than ever before.
The current and the future forecourt structure, solely relies on what digital transformation has in store, how it is integrated into the service station infrastructure and the new technologies that are yet to evolve over the years. This era of technology is no longer a surprise to the fuel retail businesses nor their customers. In fact, it could be argued, that in some cases, it’s consumers who are shaping and creating business opportunities. Consumers are having the final say in how fast or personalized their shopping experience should be and what types of products and services they expected at a service station. In order to stay relevant and be one step ahead of the competition, fuel retailers need to re-evaluate their business needs and determine how they can best utilize digitalization. For the gap between today and tomorrow, is digital transformation.