Fuel Retail Consulting and Strategy

Oil and Gas

There are three primary emerging trends in the commercial fuel sector today that will have an even greater impact in the near future: evolving customer expectations, emerging digital technologies, and the rise of advanced mobility. Moreover, the oil market is extremely dynamic, with frequent price swings, requiring high-level attention on downstream channels in order to capture strong margins and gain market share.

Selling refined petroleum products to business and commercial customers has moved higher on the business agenda as digital technologies have pinpointed where and how to create value. The traditional binary choice—whether to own service stations or franchise them—has been replaced by a complex array of strategic channel choices driven more by regional supply and demand fundamentals and netback analyses.

Evolving Customer Expectations in Fuel Commercialization

The average fuel and convenience retail consumer has specific expectations and attitudes that should be top of mind for every oil retail business. According to BCG research, fuel consumers care most about:

Convenience. More important than price and brand, convenience is king.
Positive Customer Experience. Drivers don’t enjoy buying gas, but they do it frequently—especially professional drivers. A positive experience is key.
Being Ecoconscious. Consumers increasingly care about the environment and think of fuel as a necessary evil. Health-conscious, environment-focused drivers sometimes look for alternative forms of transportation.
Their Family and Kids. Parents transport their children by car more often now than ever—and need to feel that their kids are safe in the car while they buy gas.
Convenience Store Brands. Most consumers are not aware of or interested in different brands of fuel, but they are beginning to develop awareness of convenience store brands. Loyalty programs increase that awareness.
Their Time. Consumers appreciate any efforts that make fuel buying faster: pay-at-the-pump options, easy in and out, no waiting in lines.

To turn the shifts in consumer attitudes into future opportunities, retailers must reinvent the customer journey, launch digital solutions, and harness the power of innovation in fuel retail.

Digital Opportunities in Oil Retail

Players must embark on a digital transformation in order to create sustainable competitive advantage in oil retail. There are four primary ways in which retailers can use digital to revitalize the customer journey and bring lasting impact:

1% to 2%

Mobile apps can help to increase the number of transactions, encouraging customers to visit specific gas stations and establishing an interface for loyalty programs. Mobile apps have the potential to increase retail EBIT by 1% to 2%.

$15 to $30

Digital solutions can help to open new revenue streams. Targeted advertising, promotions, and offerings from retail partners have the potential to bring in additional revenues of $15 to $30 per customer per year.

5% to 15%

Improve the margin of transactions by incentivizing customers through mobile technology, loyalty programs, and other digital offerings to pay by debit card—thereby reducing credit card fees. Such incentives can shift 5% to 15% of customers away from using their credit cards.

2% to 4%

Use big data and analytics to increase revenue per customer. Targeted promotions, such as cross-selling convenience store offerings and car washes to fuel consumers, can lead to an increase in retail EBIT of 2% to 4%.

Winning Fuel Retail with Personalized Offerings

The implementation of a personalized offering system is one of the most sophisticated marketing tools available for oil retail fuels marketing:

Professional cards offer discounts to big clients.
Loyalty programs monitor customer behavior and improve the effectiveness of commercial interactions.
Dynamic pricing models depend on customer typology and regional competition.
Intradaily pricing models change by the hour, bringing in more customers who are sensitive to price.
Continuous campaigns can offer a high degree of personalization and level of segmentation, attracting the highest possible volume of consumers.

The Effect of Advanced Mobility on Fuel Retail

While technology and changes in consumer behavior are enabling new business models in oil retail, there are other major disruptive forces—autonomous vehicles, battery technology, and the sharing economy, among others—that are changing how people consume fuel. The consumer habits of millennials could also have a strong impact on the future of fuel retail.

Winning fuel retail businesses will be prepared for these disruptions. As the number of electric vehicles rises dramatically around the globe in the coming decades, for example, retailers can offer fast charging options at fuel stations.

B2B Opportunities in Fuel Retail Industry

Digital technologies create significant opportunities on the B2B side, as companies can leverage the wealth of existing data to better understand and serve clients in fuels and lubricants. For instance, companies can use advanced analytics to vastly optimize how they structure their fuel pricing strategy for fuel contracts. Most contracts for fuels and lubricants use a pricing formula, but few optimize and target the pricing mechanism for each client. By combining typical supply analysis with client clustering through advanced analytics, it is possible to segment clients and tailor the pricing and implementation strategy for each segment.

BCG’s Impact on Commercial Oil and Gas Retail

Making the Digital Push: An Oil Company's Integrated Turnaround

BCG helped a company leverage digital technology to deepen its connection with customers, including by identifying unmet needs and pain points and developing personalized offers.

Digitization in Oil and Gas: Transforming the Customer Experience

BCG partnered with a national oil and gas company in Asia to harness digital technology to transform the way it engaged with customers.

Meet BCG’s Fuel Retail Consulting Team

View more of our experts in Oil and Gas

Learn More About Fuel Retail

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