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Transforming a crisis into an opportunity for service stations

technology

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16 September 2020

Demand for transport fuel has plunged and the outlook is uncertain due to the energy transition, which will depress fossil fuel sales in the long term, and the possibilities of more lockdowns due to the Covid-19 virus in the short term.  In short, a perfect storm has hit the fuel retailing industry.

Now more than ever, service station operators need to start transforming their business models. But where should they start?

Clearly, cost saving is a priority in the current climate and this is an area where modern IT systems can be a big ally.  By adopting a  cloud-based, software-as-a-service model, fuel retailers can quickly roll out new applications  across their network to enhance the operational efficiency of their service stations, improve management of stocks and orders, and better manage all aspects of their business.   

By embracing the Internet-of-Things, operators can automatically collect data from sensors and equipment in their service stations, and use predictive analytics to schedule preventative maintenance or stock replenishment.

Migrating servers and IT operations from legacy on-site hardware to the cloud brings significant costs savings for large operators with several thousand service stations spread over a wide geographic region.  Sending service engineers to each station to perform routine hardware maintenance or upgrade software is no longer necessary if the applications are in the cloud.

Of course, the biggest challenge for service stations is that their core business of selling fossil fuels has a finite future.  The pace at which individual countries transition to a low-carbon economy will vary but  operators need to start thinking now about how they can adapt to the new era, how they can fulfill  a broader range of energy needs for tomorrow’s consumers  by transforming the traditional service station in to a multi-energy site.

As well as expanding the range of fuels sold on the forecourt– adding hydrogen and fast charging points for electric vehicles, for example-- service station operators need to transform their business to be consumer-led rather than vehicle-led, competing for a bigger share of the energy needs of their customers instead of simply supplying fuel for their vehicles.

This multi-utility model is widely adopted by electricity and gas retailers, and as well as increasing customer lifetime value, it can also boost  customer loyalty, which is particularly important for service station operators if they wish to transform themselves into customer-led retail businesses.

On this last point, service station operators have made big strides in the past decade in developing the “non-oil” part of their business, with shops, carwashes and bars now a common sight on all but the smallest forecourts.  

But there is lot more room for growth, and service station operators need to transform the small shops into convenience stores and offer greater assortments so that consumers are tempted to spend more in the stores.

As operators adopt the practices of mainstream retailers, they will need to get better at using modern marketing and data analytics to precisely target promotions and build loyalty.

What does the future hold? The strategic locations of service stations give them a particular advantage not just as sites for convenience stores and fast-food chains but also for offering new types of “last-mile” services, such as Amazon Lockers, EV charging or ride sharing. 

With their traditional core business in long-term decline, service stations have to act now and invest in technologies that will help them offer a wider range of energy products and retail services, so transforming the current crisis into an opportunity.

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