Post fuel: The Australian service station of the not-too-distant-future

Australia’s next generation fuel stations

A research piece for a leading Australian energy brand got us thinking about the automotive industry and how shifting attitudes to cars will affect petrol stations. We sat down to figure out what needs to change for the petrol station of tomorrow to succeed.

Rise and fall of the gas guzzler

Coming in at 8th globally for the highest number of vehicles per 1000 inhabitants, there’s no denying Aussies’ love of cars. While vehicle ownership seems likely to remain stable, Australia’s relationship with cars is changing. Local production of automotive vehicles in Australia ceased in 2017, reflecting a trend in favour of compact cars. Overall household spend on fuel is in steady decline and less young people are obtaining full driver’s licenses[1]. Where large, powerful vehicles were prevalent until the early 00s, increased demand for light, fuel-efficient vehicles has seen visits to fuel stations—at least for the purpose of buying fuel—diminish.

In an article for New Scientist called “The end of the road for motormania”, Fred Pearce discusses peak car travel. He argues that the distance travelled per capita by private car will see a continued and gradual drop. Pearce writes “In Australia, car travel peaked in every city in 2004 and has been falling since”. The effortlessness presented by rideshare platforms (like Uber) and carshare services (like GoGet) are pushing Australians to question the merit of owning a car at all.

Engineering giant, AECOM, predicts each carshare vehicle has the potential to replace 10 private vehicles by 2036 on Sydney’s roads[2]. While Australia’s uptake of electric vehicles stalls behind global trends, industry authorities maintain momentum is growing. Conservative forecasts indicate that by 2050, 40-60% of new cars sold in Australia will be electric.

2017 census data reveals driving is still the preferred transport choice for over 65% of Australians [3]. Though evidence supports a collective love of getting behind the wheel, physical fuel station numbers are in decline. According to a study from Knight Frank, there were 25,000 service station locations across Australia in the 1970s. In 2019 there were approximately 6,500. In addition to evolving transport preferences, Knight Frank attributes this to reduced competition from the amalgamation of fuel brands with supermarkets.

Enter the new kings of convenience

Traffic is predicted to get worse and service stations are comfortably situated to exploit an unwillingness to commute far. “Their future value is not in fuel, although petrol stations will continue to offer that in some form for at least the next 20 to 30 years. The value is in their strategically significant locations.” says Ashley Lang, AECOM’s director, oil and gas ANZ.

In Australia, petrol stations have the opportunity to utilise their positions on neighbourhood corners and city-to-suburb corridors to service customers’ desire for convenience. Shifting focus from fuel to an offer of convenience will help fuel stations retain their frequently-visited status.

In 2017, oil major, Caltex, introduced a pilot concept called The Foodary to Sydney’s inner-west. They used a high-visitation location to test offers of fresh food, ready meals, parcel pick-up and laundry services for nearby residents. Following a successful trial, The Foodary opened 30 locations in 2018. The Foodary’s wide acceptance indicates movement from traditional supermarket partnerships to a new retail format.

Could good coffee be the new black gold?

Fuel stations globally are switching gears, aggressively seeking alternative revenue streams to supplement reduced fuel spend. According to 2018 data from the ABS, Aussie households are now spending more dining out than on automotive fuel each week. Picking up a coffee when refuelling is not a new or novel concept but picking up a quality, barista-made coffee in an inviting environment – this is where progressive operators are seeing success.

Fuel station customers could be split into two camps; browsers and buyers. Browsers are likely to think “I’ll get something if it looks good,” where buyers are certain of their needs. By harnessing the sensory journey; visual, olfactory and tactile – an enticing, worth-sticking-around-for offer will cater to both. Without compromising convenience, a reason to extend the current, hurried experience could change consumers’ purchasing intentions. Browsers may start coming to buy coffee and a fresh bite, without a need for anything else.

Give the people what they want…when they want

Using sales data from POS analytics, the enterprising retailer may promote intelligent and flexible offers. In simplest terms, this could be bundling and conspicuously positioning milk and bread for pit-stopping parents. A sophisticated solution may see the introduction of a reporting and merchandising technology, designed to support exemplary customer service through real-time inventory and spending data.

Technology could dynamically price and place items based on preferences for specific times of day. A competitive, tailored buying experience could swing the value conscious and time poor customer. Shoppers may even opt to forego traditional supermarkets in favour of the drop-in and dash convenience of a contemporary service station.

Redesigning for the new majority

What will signal the end of the forecourt as we know it? Most likely a drop in fuel demand due to vehicle sharing and the wide acceptance and ownership of electric vehicles or self-driving vehicles.

Roy Morgan Research CEO Michele Levine says, “2025 has been identified as a tipping point for the automotive industry as it faces digital disruption – any automotive players that fail to plan fully for a future involving increased car-sharing, driverless cars, and purely online sales will find it far too hard to catch up to ‘first-movers’ by the time 2025 rolls around.”

The current design of many Australian forecourts mirrors the need to pump fuel quickly and for attendants to monitor bowser use to mitigate theft (drive offs). When fuel is no longer the chief reason to visit a fuel station, how will commodious forecourts be repurposed? The average time to recharge an EV is anywhere between 30 minutes to 4 hours. With customers held captive for the length of a charge, future designs might rethink the space bowsers once occupied. They could feature pop-up markets, co-working spaces or even fitness centres. Forward-thinking operators will work to build their customers’ loyalty while they are still purchasing fuel. Encouraging the length of visits through revitalised, design-driven spaces will prepare today’s fuel station for tomorrow’s driver.

Where to from here?

Conduct has worked with leading Australian energy sector clients for over a decade. A service design approach helps us develop an understanding of the internal (or backstage) view alongside the customer’s view. Every organisation can learn from looking at their current state to structure strategy around customer’s future needs. Our service designers are experts in identifying and testing opportunities for service innovation.

Resources and further reading

1. chartingtransport.com
2. aecom.com
3. abs.gov.au
4. New passenger vehicle fuel consumption trends, 1979 to 2013 bitre.gov.au
5. The state of electric vehicles in Australia climateworksaustralia.org