September 8, 2016

Declining Demand in Gasoline: How C-Stores Can Still Thrive

Fuel Retailing

Among the fuel and convenience retailing crowd, there's a constant fear that fuel demand will suddenly or sharply decline, leaving retail sales crashing in its wake.

Though the fear is real and pervasive, the threat of declining demand doesn't appear to be a current reality: According to the Short Term Energy Outlook released in June by the the U.S. Energy Information Administration, "Motor gasoline consumption increased by an estimated 240,000 b/d (2.7%) in 2015 to an average of 9.16 million b/d. Gasoline consumption is forecast to increase by 170,000 b/d (1.8%) to 9.33 million b/d in 2016, which would be the highest annual average gasoline consumption on record."

But even with a positive forecast for demand and consumption, relying on a characteristically volatile fuel market and forecourt inertia to drive sales isn't the best way to ensure that retail locations remain thriving businesses of their own, especially in the face of big-box-store competition. If not fuel, though, what can you count on?

While the gas guzzlers of yesteryear don't seem to be giving your locations the sales boost they need, a rise in demand for convenience can help you float above fuel demand and become a destination location — if you know how to respond to it.

How to Overcome Declining Demand with Convenience

Every customer is important, but keeping your retail locations on top requires you to target your most important audience. Knowing what audience your stores and brand needs to appeal to is a matter of heavy analytics and a strong understanding of market trends. For example, today Millennials are the strongest drivers of the demand for convenience. But don't count out Gen Xers or Baby Boomers (the first generation to demand convenience). Strategies and products should match the needs of the people who come through your doors.

Whoever your audience comprises, though, one thing is certainly true: becoming a destination is a must. Here's where to focus your attention to help your retail locations thrive all the time — not just when fuel demand is high.

Presentation

Brand, aesthetics and merchandising are key factors in purchasing decisions and in individual spend, as well as in likelihood of recurring visits. Presentation doesn't just mean in-store product arrangement. It also includes forecourt cleanliness, clerk uniforms, product photography and everything in between.

How can you ensure your locations are keeping their presentation up to your corporate standards?

  • Institute secret shopper programs and scoring
  • Implement incentive programs for locations
  • Include presentation as a factor in managerial performance reviews
  • Train staff through a consistent, company-sponsored program
Food and Beverage

It's no secret that QSRs, coffee bars, bakery sections and other dedicated food/beverage offerings bring in sales. But making your stores a destination requires more than just adding a new donut case. The biggest trend for the last few years? The intersection of fresh, healthy and convenient. Add in a local twist, and people will see your store as a place that reflects the best of where they live.

Testing out new offerings with your audience is critical to food service choices. Don't get caught investing in a new Cajun roller grill menu for locations in the Northeast, only to discover those customers want familiar foods, like a classic ballpark frank.

Capitalize on Impulse

If your footprint or other constraints prevent you from becoming a destination, you can shift your focus to value pricing and getting more spend from each customer and transaction. Capitalize on impulse by optimizing merchandising choices for low-value, high-demand products like gum and promotional/seasonal items such as sunscreen or firewood.

Customer Service

To encourage destination visits and higher spend during pit stops, make excellent customer service a central component of your offerings.

According to NACS, "convenience stores have an unmatched speed of transaction: The average time it takes a customer to walk in, purchase an item and depart is between 3 to 4 minutes." Not only will good service help staff create relationships with customers and keep them in store longer, but it can also keep customers coming back to your individual locations and your chain time and time again.

To encourage better service at every location, offer incentives and secret shopper programs, much like your solution for presentation. After all, customer service is definitely part of your image and your reputation.

Destination: Your Convenience Stores

Where you can, encourage destination visits to overcome declining demand. Where you know you can't, consider increasing purchase value per customer. And always remember: Your retail locations can thrive, even in the face of declining demand.

Read more about how you position yourself to thrive in the market by downloading our 7 Elements for Fuel and Convenience Retail Success white paper.

Download 7 Elements White Paper

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