We break down the 6 key challenges that forecourt retail faces, as well as 5 great opportunities.

Here at CADA we’re currently helping a disruptive European fuel retailer to evolve their offering across their retail portfolio. Non-fuel is more important than ever before in forecourt retail, so if what you’re about to read sparks your interest and you’d like to arrange a 45 min slot to speak with us about transforming your retail offer to meet evolving customer expectations, get in touch.

Customer missions are changing as a direct result of the pandemic. There’s an increasing emphasis on service, convenience and improving the non-fuel offer in forecourt retail.

Covid has accelerated this pace of change, as in other sectors and introduced an element of reprioritisation.

Let’s look at six challenges facing forecourt retailers:

1: Fluctuations in demand

A huge surge in demand for food retail resulting in initial out of stock situations, followed by regular fluctuations.

2: Supply chain disruptions

Supply and demand shock in oil sector leading to poor profit margins and lower revenues. On c-store front, throttled supply leading to disruption of brand loyalty and demand for own-brand, cost-effective substitutes.

3: Direct store operating expenses

New safety measures and regular deep cleaning leading to increase in DSOE and lower(ing?) operational margins.

4: Liquidity implications

C-store format is relatively strong from a balance sheet perspective. It’s a profitable industry with healthy leverage and sufficient liquidity. However, lenders and investors are being more selective.

5: Workforce challenges

Increased labour requirements to meet demand for click-and-collect, ecommerce, delivery, as well as health and safety staff. 

6: Changes in long-term buying patterns

Potential for the pandemic to alter consumer habits permanently, increasing online grocery shopping, demand for curbside pick-up / contact-free delivery and more.

These challenges might seem daunting, but retailers are seeing opportunities. So, which areas are worthy of attention?

1: Store image

The store image is now more crucial than ever before. Strategically investing in your store portfolio and differentiating them from the competition to address customers’ new expectations around health and safety, supply and the new and emerging customer missions (click and collect, etc.) will put your sites ahead when it comes to recovery.

2: Infrastructure

Across all sectors, weak components in infrastructure and service are being ‘stress tested’. This is revealing vulnerable weak links, aggravating network rationalisation.

3: F&B offer

Open food is on the down, whereas meal kits are on the up (US customers spent $100 million on meal kits 4 weeks till 11 April). Self-serve and food service are being scaled back and coffee is moving back behind the counter.

4: Partnerships

Third party partnerships are strong and–in some cases–growing, due to increased requirements for technology and logistics.

5: Breadth of offer

Fuel stations that have no or little non-fuel offering are likely to be more heavily impacted.

If you’d like a dive a bit deeper into these challenges and see how we could help you, get in touch.

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