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FUEL & FORECOURT A WINDOW INTO With the turmoils and triumphs of the Covid-19 pandemic seen as largely behind us, it’s time for the fuel and forecourt sector to reflect on what’s been learned and apply this to a reimagined sector. By Peter Howard. I f necessity is the mother of invention, then a pandemic is the parent of progress. Looking at the progress made by service stations during the past 12 months, there’s no doubt the sector has come a very long way. Whether determination, innovation or survival was driving that progress, the sudden drop in fuel sales and significant changes in buying behaviour caused by Covid lockdowns were undoubtedly what triggered the sector’s reinvention. Today, fuel retailers are stronger and better prepared for the future, but with more changes on the way, this isn’t the time to relax. Speed bumps ahead Australasian Convenience and Petroleum Marketers Association (ACAPMA) is the national peak body representing the interests of the fuel wholesale, distribution and retail industry in Australia. ACAPMA represents 95 per cent of all fuel distributors and around 75 per cent of the 7300 service stations operating in Australia. Convenience World spoke to ACAPMA CEO Mark McKenzie to learn more about the challenges that lie ahead. “Being the national peak body that represents fuel wholesale, fuel distribution and fuel retail, we represent the end stream, so, everything downstream of the refinery gate, right through to the station forecourt,” he said. “This means we’re well positioned to 68 CONVENIENCE WORLD MAY/JUN, 2021 see the broader trends, and following the early threat of a decline in fuel sales, we’re seeing a recovery taking shape, driven by a servo’s location, their business model, and the balance of how much of their revenue is from fuel, as against the non-fuel convenience products at the store. “One of the things I normally deal with and have to fight on talkback radio and other media is being hauled over the coals for petrol prices. So it’s been a really refreshing experience to have news announcers say, ‘I went into the service station the other day and bought a coffee, and it was actually good, and was reasonably priced’. “So, I think Covid gave us an opportunity for the community to see us in a slightly different light. Those servos that had high- quality in-store offerings have certainly found it helped with the recovery. “We’re continuing to see that recovery building, although I think we're going forward through 2021 with a bit of uncertainty about where it’s going to settle. What we’ve really got to consider now is what the future will look like.” According to McKinsey and Company, the industry is at a crossroads, with operators needing to move quickly to develop strategies, add to their capabilities, and adapt their business models. The new balance of power While fuel retail was severely impacted by Covid-19 in 2020, with some months of fuel sales more than 50 per cent down on the same months in the previous year, operators have been encouraged by the steady recovery since lockdowns have eased. However, analysts are suggesting the current upward trend may not be indicative of the long-term future, as much of the increase is a result of people returning to private-use vehicles and avoiding public transport because of the increased risk of infection it presents. Demand is also expected to decrease with the rise in home working, the increase in consumers shopping online, and recent migration from supermarkets to convenience stores that seems to be continuing even after lockdowns have largely ended. Furthermore, the rise in electric vehicles (EVs), while insignificant today, is going to mean a growing portion of retail fuel sales will evaporate in coming years. With Ford announcing its entire range of passenger cars and two-thirds of its light commercial vehicles will be fully electric by 2030, and Mini that all cars launched after 2025 will be fully electric, it’s clear where the market is heading. Major global companies have also committed to switch to electric vehicles, with Amazon ordering 100,000 EVs, UPS ordering 10,000, and IKEA recently announcing all home deliveries will involve zero-emission vehicles by 2025. While EVs are a threat to the retail fuel market, fuel retailers are ideally positioned to take advantage of the coming demand for EV charging points. They have the real estate, the customer base and the experience of serving customers on the move, but, like Shell,