High-Octane Changes to the Gas Station Customer Experience
Gas prices aren’t the only thing in flux in the fuel retailing industry. The next generation of technologies is driving digital transformation across the marketplace. According to an industry trade association, more than 85 percent of gasoline sold in the United States is from self-service gas stations, and most of these stations rely on touchscreen devices and mobile apps.
In the not-too-distant future, self-driving cars will alter the way refueling is done at gas stations, incorporating automation and speedier refueling. With growing adoption of electric vehicles, there will be a need for more charging stations. Gas stations can offer a convenient and logical location for electric “refueling.” These changes and more will present new opportunities for an industry that has had to deal with tremendous volatility in fuel prices.
A recent study found that industry sales in 2018 were up nearly 9 percent, but in-store sales only increased 1.7 percent. This tepid growth was attributed to a decline in in-store foodservice sales and stagnant new customer traffic. This same study found trip frequency is down 28 percent since 2014, which has made improving per-trip basket size all the more important.
Digital transformation efforts in this space have largely focused on improving the speed and convenience of the customer experience but, more recently, the industry has begun to look at how digital technologies can help drive more business into stores.
There is no doubt digital technologies can improve throughput and flow, but operators are keenly interested in getting customers to come into their stores where the margins are higher and the yields richer. The key is to push timely offers and deals to customers that entice them into the store. That is the promise of connected commerce, which brings together the convenience of online technology and brick-and-mortar locations.
Connected commerce combines the digital and physical realms across the entire consumer journey. The petroleum industry is ripe for this type of transformation because of the evolution of the connected vehicle. Today, more and more drivers are either using in-car connectivity or smartphones while in their vehicles. Connected commerce takes advantage of this connectivity to deliver real value to the consumer and merchant alike.
Automotive manufacturers are increasingly viewing themselves as “consumer-in-motion” companies, working to incorporate digital technologies that enable a more complete customer experience. For example, the vehicle’s infotainment center might alert the driver that his or her car is running low on fuel, and then offer navigation to the nearest, preferred fueling station. The car might also offer to pay for the fuel, simplifying the purchase process.
In addition, based on a promotion being offered, the connected commerce system might remind the driver that the station’s convenience store carries a previously ordered snack, meal or beverage item at a discount. The driver then has the option of preordering and prepaying for these items, so after fueling, they will be ready and waiting inside.
This technology not only streamlines the payment process, but also drives increased traffic into the store and grows per-trip basket size.
One of the more important aspects of connected commerce is creating a frictionless consumer experience. By vaulting accounts securely in a mobile application — whether it be Apple Pay, Google Pay, Samsung Pay, PayPal, Visa Checkout, or a card on file — merchants can use tokens to authorize transactions in a secure way that doesn’t require customers to reenter card details for each purchase. This simplifies the transaction and dramatically improves the customer experience.
Connected commerce also enables merchants to promote lower-cost payment options to consumers, such as ACH, in exchange for loyalty offers and other promotions. This provides another win/win for customers and merchants as patrons earn rewards, while merchants drive down the cost of payments.
Another innovation is the ability to have transactions initiated on a mobile device yet processed on behalf of the store where the purchase occurs. Using geofence technology, these transactions can be linked to a physical location instead of on an e-commerce merchant ID. This allows for better inventory management, thereby reducing reconciliation and settlement challenges.
As previously mentioned, loyalty programs are becoming increasingly important for the petro industry. As point-of-sale data is combined with personally identifiable information (PII) that reveals customer habits, activities and preferences, merchants can gain invaluable insights that allow them to improve personalization, make real-time offers, and provide a more attractive product mix.
A customer survey revealed that 73 percent of shoppers will shop more frequently (51 percent) or even exclusively (22 percent) at the convenience store where they are a loyalty member. The study went on to show that two out of every five loyalty shoppers will spend more than $10 in the store.
Digital transformation holds tremendous promise for the petro industry as new digital technologies open the door to a better customer experience that drives more in-store purchases. The gas station of the future may evolve into a centralized location for consumers to receive packages sent by drone from Amazon, or groceries delivered by a nearby supermarket, or dry cleaning from the neighborhood cleaners — making for a convenient one-stop shop in a burgeoning sharing economy.
There is no doubt disruption is already underway in the industry. How fuel retailers respond to the changes and new opportunities will be crucial in the months and years ahead.
Dave Conroy is senior vice president of Petro Solutions at Fiserv Inc.
Editor’s note: The opinions expressed in this column are the author’s and do not necessarily reflect the views of Convenience Store News.