When consumers stop by their local gas station to fill up their car, they usually spend more on fuel than they do on other items, such as the drinks and candy they might grab from the attached convenience store. But that description seems primed to change, especially in economies that are more actively working to limit carbon emissions from vehicles. In response, the big oil and gas corporations are signaling a shift in their focus too, toward a far more retail-oriented strategic plan.
In Europe in particular, government regulations and public opinion are pushing companies to find alternatives to conventional fuel sources. Electric vehicles are expanding in their capacities and popularity, which implies that gas stations as they exist today would undergo substantial changes. According to some estimates, oil consumption has already reached a peak and will persistently decrease in the future. If people are not buying gas, will they still stop at their local gas station?
Companies such as BP and Shell are betting that not only will they stop, but they also will be more prepared to shop. That is, if drivers need to pause for a time to charge their electric vehicles, they will have time to kill, which they might spend browsing the offerings of a nearby convenience store. Accordingly, these companies are aggressively expanding their store and retail operations. In addition to building more stores throughout Europe, they are integrating more charging stations to existing locations. For example, Shell predicts an expansion of more than 20 percent worldwide, leading to approximately 55,000 retail locations by 2025. For BP, the plan is a 50 percent increase in the number of stores, along with a simultaneous expansion of its charging network to include 70,000 charging stations.
Even if they attract drivers with electric vehicle charging stations though, these firms need to convince them to spend money in other ways. The profits available for charging stations are substantially less than those that the companies historically have earned from gas sales. To do so, the producers-turned-retailers have expanded the offerings in their convenience stores, such as packaged foods from the U.K. grocer Marks & Spencer or deli foods touted by the celebrity chef Jaime Oliver. As a result of its ongoing efforts, profit margins earned in BP’s convenience stores have increased 8 percent per year since 2015. Thus, even before the substantial shift toward retailing that is taking place today, the companies recognized the value of retail.
Furthermore, the oil companies are determined to use their vast retail operations and many consumer touchpoints to gather data that would be unavailable anywhere else. As one consultant put it, for the oil and gas industry, retail operations offer the primary link to customers, so “if you want to have insight into the future trends of mobility, energy transition, and so on,” retailing is the key to get relevant data, and “customer data is the new oil.”
Discussion Question:
- What other options might companies such as BP and Shell consider to get customers to stop and shop at the convenience stores currently attached to gas stations?
- What does it mean to say “customer data is the new oil”? Do you agree with this assessment?
Source: Ron Bousso, “The New Black Gold? Big Oil Bets on Retail Networks in an Electric Era,” Yahoo! Finance, December 2, 2020