Focusing on Moving Juice
The Petroleum Industry has a tremendous amount of fragmentation, from Brand representation, to supply chain economics, to terminal locations, dealer contracts, trucking and delivery, to promotions and retail operations. Within this fragmentation loop, technology, and the appreciation of technology, has been traditionally absent.
Distributors, or Jobbers, want to do one thing: sell. Whether that means selling to a new terminal, a new dealer location, or simply increasing raw gallons the goal is to continually sell product to enhance ratability and gross profit. Within the distributor industry, it’s called moving juice.
Acceleration is Lost in the Message
As a distributor, technology and other program initiatives are often viewed as an obstruction to the progress of selling more juice. Because of this, technology initiatives are often perceived as a chore. Very few industry personnel have a true appreciation for program research and execution. Sure, the Brands are “pushing” a distributor to execute a loyalty program, or a new image enhancement standard, or a technology stack that the distributor may not understand or appreciate, despite it being a part of the brand’s “agenda.”
There is significant value associated with these Brand programs that habitually receive sincere push-back. In truth, these programs are accelerators, but their power to accelerate is often not communicated clearly. As a result, distributors have focused solely on moving juice. There has been little effort to “fill up” these potential vehicles for growth, which results in the stalling of these programs.
If the goal of these programs were communicated clearly, distributors may recognize:
- Brands are trying to enhance their image to accelerate subsequent programs and increase awareness, hoping to assist in gallon growth and gain fuel demand from their competitors.
- Brands are generating loyalty programs to help retain customers and understand more of their habits or tendencies. They are doing this by offering customers incentives outside of price and/or location, through the use of loyalty programs.
- Brands are developing a deeper technology stack— from Point Of Sale and Network devices, to ancillary components such as pin pads and NFC readers— to help accelerate consumer readiness. Technology updates are often required to enable new consumer engagement programs.
Understanding C-Store Technology: Brand Programs Are Often Accelerators
Understanding the technology stack upgrades takes a true understanding of what is coming in the near future. The technology on-site at gas stations has been relatively untouched for the balance of 15 years. In many sites, legacy equipment/hardware remained in place, while Brands and retailers pushed other products, promotions and incentives.
Consumers are changing, and changing quickly. Sure, EMV pushed some massive site technology upgrades, but consumers are looking for a “bump”. It seems like the retail fuel industry has been the only segment untouched by the retail revolution that has been enabled by the recent enhancements of mobile, omni-channel commerce, and data analytics.
The Petroleum Industry is simply trying to prepare for the consumers’ expectation. In an environment in which we order food, transfer money, pay bills, and buy meals through our phones, the Petroleum Industry needs to be ready to develop enhancements around what is already in place. That said, the industry needs to view technology as an accelerator. Sure large technology initiatives may slow down the short-term progress of selling more juice, but the larger overhaul within the industry has been viewed as extreme to many due to the fact that we have been viewing technology as an inhibitor to growth.
In the “new normal” of excess fuel supply and reduced fuel prices, C-stores must adapt to 1) control costs, and 2) increase sales of higher-margin C-store goods (both of which will be aided by the adoption of new technology) to remain profitable.
The sooner we can recognize technology as an accelerator, the sooner our industry will be on pace with general retail to understand how new technology enhancements will optimize the consumer experience, thus increasing gallons and profitability.
For further discussion, contact Jon at [email protected].