Facing declining fuel sales due to the Covid-19 pandemic during 2020 in the U.S., convenience store owners proved remarkably adept in ringing up in-store sales. In 2021, even as we hopefully contain the virus, fuel retailers should recognize that declining gas sales are likely the norm.

survey by NACS, the trade association of convenience and fuel retailing, found that 74% of convenience store retailers experienced declining fuel sales in the third quarter. On the positive side, 58% reported higher in-store sales for the first nine months of 2020 than the same period a year earlier.

Covid-19 accelerated the trend toward work-from-home, which is likely here to stay for a significant portion of the workforce and will cut down on commuter miles. But there are more factors at play that were already primed to put new pressures on fuel retailers:

  • The ride sharing market pioneered by Uber and Lyft is growing at a compound annual growth rate of 20%, with a quarter of the US population using such services at least once a month.

All of these trends are certain to impact profit margins. And this comes at a time when the fuel retail segment can least afford it, because many have been putting off the inevitable transition to EMV payment systems.

 

A survey by NACS, the trade association of convenience and fuel retailing, found that 74% of convenience store retailers experienced declining fuel sales in the third quarter. On the positive side, 58% reported higher in-store sales for the first nine months of 2020 than the same period a year earlier.

 

Fuel retailers are uniquely challenged

Other retail segments are already years into the liability shift, but as Visa has noted the fuel segment has unique challenges and “would need more time to upgrade to chip because of the complicated infrastructure and specialized technology required for fuel pumps.” In addition to often needing to replace outright older pumps, the industry faced a shortage of compliant solutions to make the shift.

For instance, in some cases, older automatic fuel dispensers may need to be replaced before adding chip readers, requiring specialized vendors and breaking into concrete. Furthermore, five years after announcing the liability shift, there was a limited supply of regulatory-compliant EMV hardware and software to enable most upgrades by the first deadline in 2017.

Initially scheduled for October that year and subsequently delayed first to 2020 and now to April 2021, the four major US card associations require fuel pumps to be upgraded to EVM chip acceptance systems in order to shield the merchant from risk of fraudulent card transactions.

Those operators who fail to do so will have to assume liability for any fraudulent transactions made using mag stripe devices. It’s estimated that almost half of major fuel retailers are unprepared for the EMV requirement, and a third are likely to miss the deadline.

 

Transformation or decline

It’s clear that we’re at an inflection point in the retail fuel market segment. “The days of a gas station’s role as a convenient fuel stop are numbered,” is the ominous outlook offered by analysts with Publicis Sapient. “Changing consumer expectations, market economics and shifting competitive dynamics mean that oil companies and pure fuel retailers are under pressure to reinvent the gas station as part of their overall digital business transformation.”

Those who are unable to make the adjustment risk a steady decline in profitability and consumer traffic, or even business failure. Finding new ways to engage consumers is vital to this industry segment as it faces up to this future of adversity. That’s certainly how US convenience store retailers acted in the face of the pandemic. According to the NACS survey, many adopted new sales practices, including:

  • 21% adding curbside pickup
  • 21% adding contactless payment
  • 14% focusing more on drive thru
  • 14% adding delivery

Adapting aging infrastructure

Fuel merchants cannot afford to allow payments complexity to interfere in their transformation goals. Many are managing too many payment technologies, aging systems and devices, regulations, and methods. That makes it increasingly difficult to keep up with the changing demands of consumers. Success in the face of adversity requires retail fuel operations to achieve new levels of agility and innovation in order to provide new experiences to consumers.

Major fuel retailers have been working with partners on solutions to adapt aging payments infrastructure to modern technology requirements and changing market dynamics. Essential to that transformation is a simplified payments and seamless checkout experience, indoors or outdoors, supporting purchases for retail, food service, kiosks, vending, fuel at-the-pump, carwash or electric-vehicle charger. Take a moment to envision the future:

  • Next-generation fuel and convenience payments run on a cloud-hosted platform that is fully device and endpoint agnostic – working with both modern, smart payment terminals and existing estates of classic payment devices from any manufacturer. This provides fuel merchants with an easier glide path to modernization and EMV compliance.
  • Access to rich data sets from sales and operations allows fuel retailers to plot out new revenue opportunities. (According to Publicis Sapient, “many U.S. fuel stations still don’t use data to inform customer experiences, or aren’t using all of the data they have access to in order to build the right relationships and/or partnerships.”)
  • A simplified payments chain with careful integration and orchestration of the checkout flow allows for payments and data to flow across channels and devices. Tools for data visualization at the retailer site and across the network enable a holistic view of valuable business insights.
  • Integrated endpoint management allows for any device to be set up, managed, and supported in the field and across borders.
  • The platform incorporates an innovative content creation component to allow 3rd-party business solution to be crafted into highly targeted merchant propositions to enhance the in-store customer experience with value-added services.

The good news is that the fuel and convenience payments platform of the future is here. Solutions from AEVI Motion that fulfill all the above are available now. Ready to explore your fuel and convenience payments transformation?

Contact the experts at AEVI Motion here.