…but it doesn’t mean that change isn’t coming…
On the 11th June, the BBC posted an article essentially announcing the imminent death of the forecourt. Their justification, to summarise rather bluntly, is the incoming UK legislation around the ban on the sale of new fossil fuelled cars by 2030, with the exception of plug-in Hybrids (PHEV) until 2035.
Now, I would and could point out a few minor details here; namely:
- UK legislation is not exactly in line with other countries. Yes, some have European countries have announced similar legislation, but the dates are not aligned.
- Car owners want to get at least three (3) years out of their cars before they resell to the second-hand market. That means we can assume a diesel PHEV vehicle will need to work until 2038 before being sold to the second-hand market where it will need to function for another five to seven years, preferably more. Ergo, fossil fuels must still be around by 2045 at least.
- EV cars are not exactly the environmental saviour right now, and lithium mining doesn’t really do us many favours. Couple that with the fact that the question of disposal remains uncertain, I don’t see how EV is the win-all answer to the environmental question.
- The second-hand market for EV is flat. People are scared to buy a second-hand EV car because essentially, they know the batteries will need replacing and that’s a huge cost.
- What about tomorrow’s technology? Here-in lies the million-dollar question! What will we be filling/charging with in 2030? We cannot work with EV charging as it is today because that is not an answer. Hydrogen could work, so long as we can fix the green aspect of that by then.
So I think we can all agree that there is no way the forecourt is dead, nor is it going away anytime soon. However, it is going to change. As 2030 (or other years in other countries) approaches, we will be forced into the “next generation” vehicle. JLR recently announced their move for Jaguar to a complete EV range, which is quite a bold move given the success, or lack there-of, of the i-Pace. What it all means is that fossil fuels are becoming less relevant (not irrelevant). And I use are because this is not a new phenomenon; it’s been going on for a while now, from the advent of the Toyota Prius to the use of the one litre TSI engine. The fact is, there are fewer stops required, cars are more fuel efficient, and oil companies have become QSR, Coffee and Convenience Store leaders in order to bridge the gap, such as Shell’s plan to cover 50% of their profit from non-fuel by 2025.
This needn’t be a bad thing though. Change is, after all, inevitable. Change can lead to some pretty fantastic things, and the fact is, we have been missing our Concorde moment in the retail industry; yes, we’ve seen some amazing ideas, singularly, but when do we get to walk into a store and truly experience omni-channel as was promised to us? When will we really get recognised and rewarded just by turning up on the forecourt? When will we really see these powerful computers we call mobile phones put to decent use?
Well actually, maybe it’ll be sooner than you think.
As a retailer, you maybe just now thinking about installing QSR areas. You maybe looking a mobile payment at the pump. If you are super-forward thinking, you maybe thinking about Self-Checkout…you know, those things the supermarkets have been using for a couple of decades now? That’s nice. But you still have a number of large storage tanks under all that concrete filled with fuel, and yes, you do still need/want to sell it. So the question is, do you still want to make a profit? Do you still want to compete with fuel?
Artificial Intelligence is an opportunity for you to begin to address the issue of falling margins and volumes. It is a lightbulb moment where you have to say, the market is becoming too complex now, and I need help finding the missing pieces. With AI, you can actually address the wants, needs, and behaviours of the consumer, and isolate opportunities to find success, rather than spend hours looking at Excel sheets, visual charts and data, or even trusting legacy competitor-follower solutions which use high-school mathematics to guess what the competitor might do with their fuel price.
Let’s face it, our Concorde moment is here, and that is trusting true machine learning to understand and target customers in a relevant and timely manner. Over the coming months, AI is going to help us more and more on the forecourt, as we transition from traditional retailers to customer-centric retailers; and by that we mean better granularity in our data, better ways to interact with our customers on a one-to-one level; private pricing, dynamic car-wash pricing, even ways to better couple the forecourt to the c-store by leverage dynamic pricing in-store and even AI assisted replenishment.
AI is already changing the game on the forecourt. Retailers already understand that it’s not a case of wait and see, but a case of do or die. No, the forecourt is not going anywhere, but we are beginning to operate in a changed world – The Last Mile Forecourt. Do you want to cut your journey short and cut your losses, or do you want to see it through to the last drop of fuel?