“New mobility retail will be good for most [fuel retailers] . . . but the skill set for success will change and if you are going to play the EV game you need to get serious and invest for the future.” A leading McKinsey advisor challenges fuel retailers to shift from a ‘glass half empty’ to ‘glass half full’ mindset when crafting their electric vehicle (EV) strategy.
I recently had the pleasure of attending a keynote presentation by Klaas Mantel from McKinsey during the ReFuel Forum APAC event in Bangkok. Klaas spoke about the future of mobility retail, and how to successfully play in the charging infrastructure business.
It was a thought-provoking talk during an excellent event which boasted many stellar speakers and attendees. So what made Klaas’ views stand out? Here are the three things that most resonated with delegates and what they could mean for your fuel retail business:
Does your fuel retail business have a ‘glass half empty’ or ‘glass half full’ mindset?
Klaas suggested that many fuel retailers take a ‘glass half empty’ view of the emerging opportunity in EV charging. It’s not surprising.
Only 15% of EV charging is currently done ‘on the go’, and EV penetration is driving down footfall at retail stations. It’s an immense undertaking to transform the standard business model, and there’s formidable competition from new operators, including home delivery platforms like Uber Eats and Doordash who are redefining our perception of convenience.
However, Klaas firmly takes a ‘glass half full’ view, emphasising the opportunity to drive growth with expanded grocery offers combined with the potential value of EV charging.
He shared that today only 2% of grocery sales are via forecourts – giving our industry a massive opportunity to capture share from other retail channels, such as traditional (62%), modern (31%) and convenience (5%) grocery retail.
While traditional fuel sales are declining, this will be offset by gains in EVs and non-fuel retail (eg convenience, car wash, hospo, etc.). McKinsey predicts that the non-fuel retail value pool will grow 3% pa to US$40 billion, up from US$24 billion in 2019. The EV charging pool is estimated to rise from negligible to US$15 billion by 2030.
And forecourts are uniquely positioned to develop new business models to become home delivery hubs.
There are three key areas for ensuring success
Klaas explained that ‘new mobility retailers’ with both recharge and non-fuel destination offerings will have the best chance of future success.
The successful new mobility retailers will be characterised by three things:
Multiple non-fuel retail destination offers synergistic with EV to provide an exceptional customer experience during longer stays
Superior cash generation per location enabled by a real estate management mindset
No longer reliant on liquid fuel income ensures resilience to future decline of the fuel value pool.
That means developing a compelling CX and investing in the right locations with the right offering, with Klaas adding: “That may mean acknowledging that EV won’t work on some sites, it will mean investing in convenience retail, charger access and building a customer experience that is safe, welcoming and appropriate.”
How will you successfully play in the charging infrastructure business?
Klaas acknowledged that this new world of mobility retail is not for everyone. Convenience players are actively acquiring fuel retail assets, and the integrated majors have concentrated their footprints while focusing on organic growth in priority markets.
And unlike ICE (internal combustion engine) vehicles, EVs have multiple options to ‘refuel’ and won’t be primarily recharging at public stations.
However, forecourt retailers are well positioned to win Klaas says, and here’s why:
Knowledge of the mobility customer across B2C, B2B and B2B2C
Already know and run a network business
Able to drive energy transition, including hybrid offers (fuel, bio, EV, H2)
Benefit from EV charging being an incremental business (and thus incremental investment) to existing network
Access to capital.
Klaas closed by urging delegates to take the glass half full approach and act now to capture a fair share of ‘electron sales’ and remain competitive.
Here are three questions he encouraged fuel retailers to consider as you evolve your business model to meet changing usage patterns:
Can you capture share of grocery sales from other retail channels?
What is the value pool outlook in your region, and what share can you capture?
Can you develop new business models?
Is EV charging a priority for your retail business? Or do you have other priorities? I’d love to hear. Please send your thoughts to kelly.brown@triquestra.com.
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