As the United States embarks on a (long) transition from internal combustion engines (or ICE) to vehicles powered by other sources of fuel, this will put pressure on existing convenience store operators to adapt.
Gasoline demand dropped approximately 5% on a daily basis between 2019 and 2022, and demand continued to drop another 1% in 2023, according to Barron’s. Some of the shift in demand is attributed to electric vehicles (EVs) – but not all of it.
Fuel is many times used as a hook to get you to stop and visit a location because of the price on the pole, affinity for a certain brand of fuel or other factors such as credit card relationship. In a post-ICE world where vehicles may be powered by electricity or other means that aren’t feasible to be offered at all your existing locations – what will be the draw to bring individuals who own these vehicles to your property? While EVs bring their own complications due to challenges of charging interoperability, this is changing with Tesla beginning to open its charging network and others are rapidly adding new charging locations as a result of the funding from the Inflation Reduction Act – those issues will begin to fade into the background as time goes on.
While electric vehicles make up only 3% of the total vehicles currently on the road, the owners of those vehicles are a population that is enticing to attract, as more than 60% of them earn more than $100,000 per year, according to the International Parking & Mobility Institute. Encouraging this growing portion of the driving population to stop at your location will be important. In addition, as chargers are added at many other “non-traditional” locations – people will be able to charge while shopping for groceries, buying books or electronics or while on their couch at home, potentially causing a shift in consumer behavior if they no longer need to visit their local convenience store location to fuel up and purchase other convenience items while there.
What should convenience stores do to react to these shifts? Many of the same items in the traditional playbook become more important. Well designed and targeted loyalty programs are a must to understand and engage the customer. In addition, having a strong competitive offer beyond fuel, such as food, and other roadside amenities – such as seating, clean bathrooms or a unique local flair – become more important when EV owners are stopping to charge so that you can draw them into the store. Lastly, let’s not forget that they need to charge these vehicles, so design support for charging in your space with intentionality and don’t just shove it into a corner of the forecourt.
Taking steps to begin to plan now is important. It will take time to be thoughtful with design changes to your forecourt, obtain the necessary permits, upgrade the electrical infrastructure to add chargers to serve these customers and also educate your customers on the decision you made.
About Schneider Downs Energy & Resources Services
The Schneider Downs Energy & Resources industry group provides specialized financial advice and services to our clients in the oil and gas, mining and aggregates, forest products and alternative fuel and energy industries throughout the Columbus and Pittsburgh regions. Our extensive knowledge of industry issues enables us to provide proactive audit, tax and management consulting services.
To learn more, visit our Energy and Resources Industry Group page.
