Matthew Williamson looks at the evolving face of one of our most familiar services – the petrol station

Type Perspectives

Date 17/11/2017

The vehicle manufacturing sector is in a state of flux as an increase in demand for hybrid or electrically powered vehicles accelerates. With government intervention stating purely-petrol or diesel cars will be banned by 2040, and Volvo stating it will stop making purely-petrol-powered cars by 2019 this change is inevitable. The effect on the petrol forecourt market could be profound. Although (spoiler alert) it is not all bad...

Recently my wife suggested she would like her next car to be electrically powered and my 13 year-old son realised that his first car could easily be the same.

If these conversations are replicated across every breakfast table in the country, we should anticipate a step change for the filling station sector, as drivers who historically have little interest in the inner workings of their car, decide they want alternative power. Impressionable teenagers, who lust after a Ferrari V12s, realise that their future will include some form of alternative power.

The UK fuel retailing market has been evolving over the last 30 years with the sector moving from being purely fuel retailers, to true convenience retailers offering fuel, a full range of convenience goods, coffee, hot food and car valeting. We are on the verge of seeing this evolution now move towards a revolution as the whole way we power and use our cars changes out of all recognition.

Whether we like it or not – electric power, fuel cells, driverless cars and mobile technology are all here to stay and could transform the forecourt sector offering opportunities and conundrums alike.

As specialist advisors to the forecourt market, we have long seen the potential need for change within the sector, as our 8,500 petrol filling stations in the UK are largely based on a layout from the 1960’s. A significant number operate with infrastructure well over 20 years old. Upgrading sites is a long-term investment with operators normally looking to incorporate a larger shop and more profit-making facilities e.g. hot food. It is the increased profitability from non-fuel income rather than any increase in fuel volumes that pays for infrastructure upgrades.

The trouble is, in 2017, we don’t actually know for certain what the forecourts of 2037 will look like as customer’s needs and habits are changing out of all recognition.

In future, fuel stations may not need the same volume of fuel storage capacity they have currently. For electric cars, fast charging and improved battery life will see ranges of 500 miles on a single overnight charge. Therefore, other than the most high mileage driver, most drivers could feasibly not need to visit a ‘fuel’ station ever. The effect on the national grid may be another matter altogether!

Even with the UK Government’s plan to ban purely-petrol and diesel cars by 2040, in reality, the pace of improvements in electric and hybrid cars probably means that we (as consumers) will embrace this change over the next 20 years anyway – potentially quicker if my family is anything to go by.

Some commentators are even suggesting electric powered cars will overtake petrol/diesel cars (in numbers) by 2025.

So before we know it, our cars will all be using some form of electric power, plug in and battery technology will have leapt forward giving diesel challenging ranges, charging connections will be standardised and driverless technology will be used for a mix of driving experience, economy and road safety. In short, alternative power will be the norm.

So where does this leave our filling stations?

In reality, most forecourt operators are happy as they are and are not planning to completely rebuild their sites any time soon. And maybe this is the correct approach – there is so much on the horizon with so many competing technologies (Beta v VHS anyone?) jumping too soon (being an ‘early adopter’) could be a brave move. However, leaving it too long is also not an option – both from an environmental failure and ‘missing the boat’ point of view. We all need to watch carefully – oil companies, electricity providers, government, operators, lenders (they will need to fund much of this change!), designers and those advising the sector. There will be an optimum time to make the move and completely change the layout and infrastructure of the average ‘petrol’ filling station.

Nothing can change overnight but change is inevitable and the forecourt sector needs to embrace it as consumers and drivers do the same.

So it’s an interesting time. None of us knows the answer but the same old adage applies – know your business, know your sector, get proper advice and above all do not take your eye off the ball.