Future Forum Keynote Predicts Channel Survivors

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Future Forum Keynote Predicts Channel Survivors

NEW YORK -- With traditional petroleum demand peaking and decreasing, successful industry retailers are preparing to build various fuel options within their system, reported Joe Petrowski, president and CEO of Gulf Oil, speaking as the keynote yesterday at Convenience Store News' Future Forum Virtual Conference & Expo. He said understanding fuels and diversifying the entire fueling spectrum is of the utmost importance now for the channel.

From 2009 to 2016, Petrowski predicts an 11-percent decrease in traditional petroleum consumption and a 22-percent decrease in gas stations. What’s more, a station will have to sell 15 percent more gallons per year in order to maintain its cost structure, he said.

The good news is Petrowski foresees many survivors, namely, single-store operators and the largest chains (of 70-100 stores).

"We are a unique industry, we have a lot of single-site operators and I don’t think they’ll be as challenged moving forward," he said. "They have a lot of unique characteristics that will allow them to survive—some tailor products and presentations to their local communities and local site, something large chains can not do especially as tobacco is being increased in price."

The largest chains "have the wherewithal to survive," he stated. Chains with 70-100 stores have "the right concentration for getting a distribution of economics."
The ones he sees threatened are chains "somewhere in the middle—they’re not big enough to get the economic of promotion advantages" nor are they able to narrow down too keenly to the local level. "So the threatened chains are those that are below 60 stores," said Petrowski.

Larger chains with good brand names, as well as those with branded QSR programs also have a "better chance of selling and capturing channel market share" moving forward, Petrowski said. "Brand counts as you’re trying to do [quick-service restaurants] foodservice. We’ve been very successful at Cumberland with our coffee, which we changed significantly."

According to him, the chain’s blend was improved as well as how often it produces the coffee "so it remains fresh." Coffee sales at Cumberland Farms are now "up dramatically, year-over-year—close to 80 percent."

Petrowski also believes that loyalty programs and private label will grow in importance for the channel moving forward.

View this keynote presentation in its entirety, and view panel discussions on retail store innovation, foodservice and technology.

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