Don’t be ahead of the curve, just ride the wave.

May 12, 2023

Written by: Mark Truman

3 min

Don’t be ahead of the curve, just ride the wave.

Before 2020, the fuel market was fast consolidating. These bigger players were able to tap into economies of scale that a small-to-medium independent could only dream of.

In the UK, many of these big players decided to retain a respectable margin rather than sacrifice profits to drive volume. But, they built big new shops, added coffee and started drawing volumes from smaller players. If they decided to be aggressive on price, this would squeeze retailer margins, which in turn leaves less for their own reinvestment.

And then add to that the supermarkets. Working on 2-4ppl margins and on favourable supply terms, they have always been able to eat up around 40% of the country's fuel volume between them without too much thought. They were cheaper, and 40% of consumers loved that.

But the tides were already changing. The consumer began to value convenience over price. Over in the US, the number of consumers who cited price as the main reason for visiting a station dropped from 72% to 52% in one NACS survey.

This shift in consumer behaviour would have been hard to predict, but in reality was happening right under everyone’s noses. Deliveroo, UBER, Amazon etc. Convenience IS their product. They were growing not because they were the cheapest option, but because they offered the consumer the convenience they desired.

Amazon and Deliveroo image

Retailers who realised this escaped the clutches of the “2ppl above the supermarkets” pricing strategy early on. They started investing these profits (as well as taking advantage of low cost loans and investment) earlier than their competitors. They now have better shops, better brands and more customers than them too. They have protected themselves from the recent challenges fuel supply issues brought, the volatility we have seen since the war in Ukraine started and of course, the biggest business killer of the day, rising costs.

Market trends, hey?  Sure, you are in one of the most data-rich industries in the world. But it isn’t just about your data. There is a swath of it out there that tells you enough about the future to make key business decisions today.

But what is it and how do you find it? What are the key trends you should be looking out for?

Well, to get you started I’ve outlined three key trends that are already happening in today’s market:

Personalised Experiences:

Consumers are seeking personalised experiences tailored to their individual needs and preferences. A survey by Salesforce found that 72% of consumers expect companies to understand their needs and expectations. Furthermore, Accenture reports that 91% of consumers are more likely to shop with brands that provide relevant offers and recommendations.

72% and 91%? This is important stuff, because how do you personalise the experience of filling up?

The easiest thing to alter is the pole sign. A couple of EdgePetrol customers have started offering ‘School run discounts’, where between the hours of 3-5pm on weekdays they drop the price by two pennies. This is a relevant offer for those on the way to or from picking up their kids from school and seems to work well. They can then personalise this experience further by stocking school equipment, healthy snacks and toys that might catch a parent’s eye.

The ‘pay in three’ experience:

Do you accept Klarna at your sites? Probably not, as it does not integrate with your shop in many cases. But it wants to, and the demand from consumers is there.

What is Klarna you ask? It’s a pay later card favoured by young consumers that want to spread payments for everyday items such as fuel and food. They don’t charge the user interest for this service, rather a small subscription amount monthly.

Sure it is still early days for the BNPL (buy now pay later) market, but if you want to know whether this is actually going to be a thing, you just need to look to the US where Klarna is posting over 100% of YOY growth.

It is worth noting though that banks are now beginning to offer this service as it is becoming expected of them by their customers, so you may not need that Klarna integration just yet.  

Image of Klarna app

Online shopping and E-Commerce:

The rise of e-commerce and online shopping has been a significant trend in recent years, accelerated even further by the pandemic. According to Statista, global e-commerce sales reached $4.28 trillion in 2020, and it is projected to reach $6.39 trillion by 2024. This indicates a growing preference for the convenience of online shopping among consumers.

So what does that mean for your stores? Well, simply put, the things that bring consumers to your site today simply might not do that tomorrow. I know one retailer- who would probably rather remain anonymous due to the OCD I am exposing- that uses seasonal weather patterns to determine when to buy BBQ charcoal on the cheap. They buy it in bulk and store it throughout the summer. Imagine laying out all that hard earned cash and then realising everyone gets their coal from Amazon orders now?

If you aren’t moving, you are standing still.

These trends are all important as they will play their part in shaping the fuel industry in the future and you should ignore them at your peril. Retailers with their fingers on the pulse are gaining advantages in the market, and whilst rising costs is the challenge of the day, the future challenge of reducing volumes is really going to separate the strong from the weak. Make sure you are the former!

The Weekly Wrap

Get our best content on fuel pricing and retail in your inbox weekly.

Close weekly wrap signup icon

Sign up to
The Weekly Wrap