1. 1
Because this
was once the
future…..
….and so was this
Where to
next?
Thoughts on Australian
Petrol & Convenience
Retailing

2. Market trends internationally indicate an ongoing
decline in performance of traditional Petrol store
performance.
Rising costs of fuel, improving vehicle fuel efficiency,
increased regulatory impact and changing
consumer behaviour has resulted in fuel sales that
are in decline across or at best static across the
developed world. In Australia a contracting fuel
market has for many years been partially offset by
a rationalisation of outlets. This has stabilised and
as a result fuel volumes per outlet look set to now
decline at an increased rate.
By 2030 our population will number as many as 30
million. Despite ongoing increased urban density
the majority of growth will be in the suburbs.
Infrastructure limitations will mean more time spent
commuting.
Our lifestyle is built around the car. By 2025 an
additional 5 million vehicles will be on our roads.
Only the US has a higher vehicle penetration at 820
per thousand versus Australia at 800 by 2018
The Necessity of Change – Risk & Opportunity
More People, More Cars but
Less Time.
Running on Empty – Fuel
Volume Continues to Decline

3. To offset the decline in fuel only performance retailers have for
many years been developing a more diversified offer, placing
greater emphasis on in store categories to supplement falling
income from the forecourt.
Now many of these categories that have formed the core of this
diversification are them selves in decline - tobacco, liquor (in
some markets) along with an decreasing consumption of
impulse snack product – Confectionery, Salty Snacks and high
sugar content beverage. This is partly changing consumer
behaviour (BFY), part regulation (cigarette tax and display
restriction) and part increased competition from alternate
channels seeking to greater exploit consumers increasing desire
for convenience.
Changing consumer preference for product is also apparent as
is the stark rise in offer quality from competing channels -
channel blurring - QSR’s developing full day part and
diversified menus . The continuing rise of Australia's coffee
culture whilst providing great opportunity for growth has also
underpinned the development of a new raft of competitors.
This will precipitate forced change in the Australian
fuel and convenience market. Yet based on the
international experience the Australian market is
proving slow to change and as a result the channel
runs the risk of increasingly losing relevancy to
changing consumer needs and behaviours.
To grow successfully the industry needs to refine its
existing offer and develop new categories to both
capture increased business from those already
shopping with it and from those who’s current and
future needs are not currently being adequately
catered for.
The Necessity of Change –
Risk & Opportunity

4. In Europe & North America
petrol & convenience are
seeing changes…..

5. What Can We Learn from
international experience?
There is no shortage of inspiration but there is a
shortage of time to evolve the Australian Petrol and
Convenience offer.
What follows are a collection of ideas

6. make the
days last
longer
Access is convenience
24 x 7 access will become the operators ticket of admission
This could mean unmanned fuel dispensers or vending machines offering drinks and
snacks.
What it will mean is that when you shut your competitor probably wont.

7. Updated October 22 2012 7
develop sites
that are
advantageous
to doing
business
Developing outlets relevant and specific to the market opportunity.
It could be an unmanned location in the car park of a supermarket,
or a large forecourt capable of catering to increased numbers of
commercial vehicles or RV users.
Sites can satisfy the top up shop or even full shop need of time poor
commuters weary from more time spent in their cars for less
distance travelled.
A place where they pick up their dry cleaning, pay a bill or buy a
lottery ticket. Where meal solutions extend beyond the pie.
A place where filling the tank is not always the reason to visit

8. Updated October 22 2012 8
coalesce things
that are
inconvenient so
as to make them
convenient
The whole purpose of a convenience site
is to make the less convenient alternate
unnecessary
Dry Cleaning ,Postal Pick Up, Click and
Collect, bait, great food……………….

9. the future for petrol is where the cars are
All indications are clear - there is a
future for fuel stations in the
suburbs.
These stations will increasingly
become differentiated by their
complete offer - not limited to the
price of their fuel but rather their
ability to provide consistent and
constant solutions to time poor
travellers.
The “21st century corner store”.

10. Updated October 22 2012 10
not everyone
drives a car
Commercial vehicles are the heavy users of the category. Travelling more kilometres and
consuming more fuel. The drivers are already equally heavy users of store facilities
They are also increasing in number. In 2010 they represented 23% of all vehicles on the road yet
used 41% of all fuel
The segment covers a wide range of vehicles from light commercials under 3.5T GVM to articulated
trucks
Targeting the needs of this segment on the forecourt and in the shop represents a growing
opportunity

11. Updated October 22 2012 11
what is the cost of old
fashioned service?
What is old fashioned
service?
Filling the tank, cleaning the
window, checking the tyres?
Would people care for it?
Would people pay for it?
How high is the bar for
service in convenience in any
case?
What could it look like?

12. Updated October 22 2012 12
let me buy
tomorrow's tank
today
Wouldn’t it be great if I didn’t
have to guess when the cheap
petrol day was?
What if I could lock in
tomorrow’s tank at today's
price?
Research consistently shows that
balances on gift cards or debit
credit cards is more quickly and
more widely distributed than
cash

13. premiumise the
category
Is fuel a commodity for everyone?
Different fuels represent an opportunity to premiumise
the category just as nearly every other FMCG category
has done at some point.
Think toothpaste, think shampoo, think dog food!
Vehicles are close to many people’s hearts and just
about every persons wallet.

14. Updated October 22 2012 14
develop a sales
based mindset
A good owner operator will out perform a good employee operator - if you want to engage your
customers you need to engage your own people first
What would happen if we provided the opportunity to earn a little more and attracted people with
more to offer than the ability to stand on their feet all day.
Pay on performance could have all sorts of positive implications
What types of individuals could be attracted? Does it mean money alone?

15. Updated October 22 2012 15
help me find
the best price
“If you are going to move your prices up and down all
the time the least you can do is help me get the best
price when I need to fill up”.
Increased competitive pricing transparency will happen.
There will be nowhere to hide.

16. Updated October 22 2012 16
develop a meaningful
food offer or find
someone that already
has one
No, this is not a call for more plastic
wrapped sandwiches carrying labels
proclaiming ‘home made’ or ‘fresh cut’
This is about real food - made to order
(MTO).
The prize for developing an offer of
substance is big.
If you can’t achieve find a established offer
and bring them in under roof

17. Do you
even
need
fuel?
A compelling offer.
A place where customers stop by for a multitude of items that
make their time poor lives easier.
The place for great food and coffee 24 x 7 ………and you can buy
fuel.
A business that gets customers thinking that way has arrived.

18. Updated October 22 2012 18
Growing in numbers
and staying mobile
Older Australians are
growing in number and
staying mobile for longer.
By 2026 the number of
Australians over 65 years
of age will have increased
by 100% on the 2006 total
from 2.6M to 5.2M
What will they value?
Drive through windows
and increased levels of
service?
The availability of
assistance on the forecourt
or easier access to parking
or the air hose?

19. Updated October 22 2012 19
The other
50%
The P&C is male dominated.
A large segment of the market never pays a visit.
Why?
In many markets retailers are redesigning the offer and pitching it towards women.
Larger cleaner brighter washrooms - colour schemes and the product offers.

20. How can you call
it convenient if
you cant drive
thru?
QSRs derive anywhere from 50% to
70% of their turnover from their
drive offer.
It is a critical component ;
delivering speed, access and
control to their customers.
Why wouldn’t a convenience offer
provide drive thru service?
You can get a burger at McDonalds
but you can’t get milk, nappies,
chips, chocolate …………… Couple
this to a quality fresh food offer
and who is more convenient now?

21. Blur the lines
You need to look the part.
Do stores need to sadden the soul?
One of these stores is a petrol station. The other
is a fast casual chain charging $10 for a
sandwich.

22. How do we make this
work?
Pay at Pump for fuel is a must.
(This is not necessarily pre
payment)
It will deliver significant
productivity gains and provide
the opportunity for an
improved customer experience
in store.
The question is how to convince
Australian’s that its not simply a
lack of trust.

23. Updated October 22 2012 23
close
the
price
gap
What if the price gap between convenience and grocery closed in one fell
swoop overnight?
The price gap between convenience and grocery will close as chains become
more organised – improve their supply lines and fight back against grocers
moving into smaller formats.