Convenience Channel Is Preparing for the Future

NATIONAL REPORT — While the United States is at least 10 years or more away from a time when electric vehicle (EV) charging will become more popular than traditional fueling — with recent estimates stating that 45 percent of new car sales could be electric by 2035 — the EV market continues to grow.

The Alternative Fuels Data Center, which is part of the U.S. Department of Energy, listed almost 50,000 EV charging stations in operation in the U.S. as of October 2022, with 93 percent of them publicly accessible and 99 percent of them direct current (DC) fast chargers.

"We are seeing year-over-year increases in new vehicle sales transitioning over to electric," said a spokesperson for Dover Fueling Solutions, based in Austin, Texas. They noted that 5 percent of new vehicles purchased in 2022 were electric, up from 3 percent in 2021, and the number of EV registrations hit 7 percent in January 2023. "We are reaching a crucial inflection point and being shown in the marketplace up to 30 percent of new vehicles will be electric likely before 2030."

In the convenience store industry, retailers across the nation are announcing plans to either introduce EV charging at their sites or expand upon already established networks. Travel centers are implementing EV charging, too, especially since they often cater to highway drivers.

Pilot Co. announced last year that it was building a network of 2,000 fast charging stations across its 500 travel centers. It is still in the process of doing so — in partnership with General Motors and EVgo chargers — with the aim of having 200 charging stations available by the end of 2023, said Matthew Dunn, head of mergers and acquisitions for the chain.

"The automotive industry has shifted into heavy EV production to meet its pressing goals and the national electrification infrastructure is doing its best to match that pace," he explained. "Consumer interest is steadily increasing as more makes and models are available. However, widespread EV adoption is limited by lack of chargers nationwide in the places people travel most. Pilot is well equipped to meet the needs of American highways and offer drivers of all vehicles a safe and seamless road trip experience."

[Read more: C-stores Have Opportunity to Fill EV Charging Infrastructure Gaps]

While home and workplace represent the majority of where charging occurs, the remaining 20 to 30 percent will be shared not just by c-stores, but also by restaurants and other retailers, making for a competitive environment, according to Campbell, Calif.-based ChargePoint Inc., a provider of networked hardware and software solutions for charging electric vehicles.

"There are also a lot of companies entering the market that had nothing to do with fueling because they are looking at it as a complement to their business," a ChargePoint spokesperson said.

One way Pilot is seeking to differentiate itself is by offering charging stations with a pull-through design and canopies that protect from the weather, similar to fuel pumps, as many charging stations that exist today at municipal buildings and parking lots do not provide the various amenities a travel center or a convenience store can offer.

"[Other] locations do not provide shelter from the elements, clean restrooms, Wi-Fi or refreshment offering," said Dunn.

Leveraging Grants & Incentives

Retailers can gain access to grants and other funding to install EV charging at their locations through a number of programs that started with the passing of the Bipartisan Infrastructure Law in November 2021. This created new U.S. Department of Transportation programs, including the National Electric Vehicle Infrastructure (NEVI) Formula Program offering $5 billion in funding, and the Discretionary Grant Program for Charging and Fueling Infrastructure offering $2.5 billion in funding.

"The biggest difference between this year and last year is all the funding, which is surging right now," said Peter Rasmussen, CEO and founder of Convenience and Energy Advisors, a strategic consulting firm based in Boston. He noted that the first year of federal funding was released to establish EV charging every 50 miles on state travel corridors.

"If a c-store doesn't apply, one of their competitors will get the funding and it might not even be another c-store," Rasmussen cautioned. "For Level 3 fast chargers, you are talking over $100,000 and if a chain has multiple positions and needs a new transformer from the utility company, it could be close to a million dollars to invest."

In March 2023, Global Partners LP, the Waltham, Mass.-based operator of Alltown Fresh convenience stores, announced that it had secured more than $800,000 in grants to deploy DC fast chargers at six locations. The company said it used an electric innovation strategist to educate and guide its strategy in the electric space, which helped it secure the funds.

Key Considerations

There are many decisions a convenience store operator needs to make before jumping into the EV charging market. The first one is whether to own the charging stations or have them operated by a third party. If an operator chooses to own, they have more control over the entire ecosystem, which is essentially an extension of their brand, according to ChargePoint.

"Owning allows you to control the guest experience and when a company spends money to build out a brand and customize the guest experience, this is an important piece to also own. And it's even more important because of the dwell time charging offers. The EV driver will be on your property for a longer period of time than most conventional fuel customers, so loyalty integration becomes super important to draw them into the store and push them toward certain products," the company spokesperson explained.

Going with a third party may make sense for those operators that don't want to manage the process, but they will give up control of the guest experience. It's important to negotiate with a third party to determine contract length and if a store will get access to any of the data captured.

Another key consideration that operators must prepare for is a possible demand charge from their electric company if they pull too much electricity at one location. To avoid this, Dover Fueling Solutions' spokesperson said it's important to investigate if there is a need for a power upgrade, while also understanding the different rate structures because that will impact profitability.

"How much is it to purchase the electricity and then what do I sell it for are the two calculations needed to ensure return on investment," they explained.

Pilot's Dunn recommends each location in a chain be evaluated to see where grants are available, what electric companies are in the area, and where stations should be installed. This all takes "substantial resources and hours of collaboration and planning," and can bring up challenges unique to each location, he acknowledged.

"Each site and location present a unique set of challenges that need to be solved — think of each site as its own complex Rubik's Cube," he said. "Now, imagine solving 500 Rubik's Cubes in 500 different locations throughout the country, working with separate utilities and local government agencies in each, developing plans for each site based on their layout and available square footage."

Capitalizing on Dwell Time

When entering the EV charging space, retailers must also consider the dwell time this offering brings into the picture and how they will capitalize on the added time a customer is spending onsite — with the goal of getting them into the store to make a purchase.

"Nobody is getting rich selling EV [charging], but the average dwell time is 23 minutes compared to five for gasoline, so you want to have good-quality public restrooms, packaged goods, an experience like a café or quality foodservice to entice them in the store," Rasmussen said.

Just as fuel pumps offer video and audio aimed at enticing motorists to come inside the store, this can be done at an EV charger as well. Additionally, for retailers with an app, customers can be notified of offers while they're charging and given rewards when they buy an in-store item.

Pilot is working to fully integrate its myRewards Plus app to allow for EV charging transactions and loyalty rewards, said Dunn. The app is designed to provide professional drivers, motorists and RV travelers with ways to save money and time during every stop made in its network.

"We want EV drivers and passengers to feel welcome at our locations, access all of our amenities and have the same experience they were accustomed to when they were filling up with gas," he said.