It is a rare thing for me to drive my electric vehicle (EV) in to a petrol station. Believe it or not, I have done it though. Why? I have needed food while on a road trip. In a traditional model of a petrol station, the petrol is what gets you in the door. The confectionery is what makes the operator money.
The Boston Consulting Group (BCG) released a report on the future of service stations.
Without a change in business model, the estimate is that a minimum of 25 per cent of petrol stations will be unprofitable by the year 2035 with a worst-case scenario sitting at 80 per cent. This is backed by their data that shows EVs will outsell combustion vehicles (ICEVs) as early as 2030.
There has been a gradual decline in petrol stations across this nation over the last 50 years. Australia hit its peak in the early 70s with 25,000 locations but that number has since dropped to 6500. That has been driven by increasing size and diversity of petrol stations as opposed to the future uncertainty being driven (sorry for the two puns) by electrification.
With this spiralling forecast, why did EG Group pay $1.73 billion for 540 petrol stations across our nation. That would value each station at $3.2 million.
The crucial words in the report from BCG are “without a change in business model”. The clever operators see petrol stations as prime real estate with a history of convenience selling to clients. It may be petrol and chocolates today, but if they get the model right, they will be continue to be profitable.
Consider who owns the highest market share in the petrol station space. Coles Express is number one and until the sale to EG Group, Woolworths was number two. The EG sale involved a 15-year deal for Woolworths to supply the convenience store side of the petrol station. BP and Caltex sit next in line but then at number five is 7-11. Like the top of the list brands, 7-11 is a brand normally associated with food rather than fuel.
A petrol station at a convenient location is really a convenience store with a reason to visit.
It would seem overly simplistic to just install EV charging equipment at petrol stations. It is more nuanced than that.
Locals fill up at a petrol station and then buy some additional goods, but EVs are typically charged at home so an EV charging centre would be more likely to service travellers. Those centres need something else to attract locals.
The possibilities are endless. Drive through convenience shopping. Grab some milk and bread while still in your jammies. What about a hand style car wash while you work out at the gym? Coffee locations are incredibly popular so build a café or drive-through coffee location at a service station.
If you accept that EV charging will be part of the solution then a restaurant with better food or more extensive shopping makes more sense. You have the shopper captured for longer while their car charges. Build in tourism offerings for the travellers that use your charging stations.
What about a meeting centre with video-conferencing? Laundry services? Post office? Their future value is not in fuel: it’s in their strategically significant locations.
Politicians in this nation may continue to bury their heads in the sand, but the electrification of the national car fleet will change many aspects of our lives – including our petrol stations.
Extracted from The Canberra Times