A New BCG Report Analyzes the Rapidly Evolving Fuel Retail Landscape and Strategies Fuel Retailers Must Implement to Survive
BOSTON—The fuel industry has long been facing disruptive forces, and these have only accelerated since the beginning of the COVID-19 pandemic: electric vehicles (EVs) and alternative fuels have gained significant traction, mobility usage and attitudes have evolved, and customer behavior has changed dramatically. A new report from Boston Consulting Group (BCG), titled A New Era for Fuel Retailers, explores a fuel retail landscape that is evolving at a faster-than-predicted pace and the strategies fuel retailers must implement to survive and thrive in the face of monumental threats.
According to the report, which is based on a survey of 33 executives from 20 leading global retailers, operators with robust retail businesses found that in-store sales and online offers during the pandemic offset sharp declines in gasoline and diesel sales volumes. More recently, as geopolitical uncertainty and volatility have placed upward pressure on oil prices, many operators have realized that retail is a matter of business resiliency. As such, some 70% of leading retailers are planning to expand their network in the coming years.
“Beyond extracting the most value from their traditional core business, fuel retailers’ survival depends on investing beyond the pump,” said Mirko Rubeis, a managing director and senior partner at BCG and a coauthor of the report. “They need to make ambitious moves into new digital businesses while also adapting the service station to support EV and other alternatives fuels, capitalize on their existing real estate, and zero in on sustainable mobility.”
Leading Trends in the Fuel Retail Landscape
In the past few years, five trends in the fuel retail industry stand out:
An Agenda for Action
These developments point to the need for fuel retailers to reorient themselves: away from fossil fuel and toward alternatives, and away from the vehicle and toward the customer.
The opportunities for growth are significant if retailers pursue four strategic avenues:
“The possibilities for fuel retailers are numerous, but time is in short supply,” said Stuart Groves, a managing director and partner at BCG and a coauthor of the report. “Retailers that embrace these imperatives, seriously and swiftly, will not only retain their relevance in the low-carbon economy, but can also look forward to an expansive future.”
Download the publication here.
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