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Refuel Your Car or Refuel Your Stomach?

When the Oil price was low during the past two years, many Oil & Gas companies  wanted to re-think their Fuel Retailing businesses. They wanted to enhance the return from this traditionally low margin business so not to over dependent on the Upstream portfolio in the future.

This article reports on the various approaches many Oil & Gas companies, especially those in South East Asia, are transforming in fuel retailing and how digitalization can help them with the transformation.

From fuel retailers to energy service providers

There are many reasons for fuel retailers to expand their portfolios and are interrelated. One big factor is consumer preference for more than gas. In the US, there is a saying: “Millennials value the quality of food in their gas stations just as much as the price at the pump”. We used the think the top preferences for motorists are: price / promotion, location, loyalty program. However, due to today’s intense competition, one can’t just have good gas prices. There’s a shift in people buying gas based on the quality / selection of the food and dry stocks as opposed to getting a sandwich based on the price of gas.

The other reason is the margin. Convenience margin is typically 30% or more while fuel is usually around 3 to 4%. Synergy among the various businesses as well as competition are the other factors.

This led many Oil & Gas companies in SEA to tie-up top names in convenience retailing or grow their brands organically. For the former, Susco (of Thailand) has been awarded the franchise of Lawson 108, Bangchak (of Thailand) tie-up with SPAR with the slogan: “fresh and easy food market” and their website displays:

“focus on meeting the needs of shoppers looking to purchase food-for-now or food-for-later by either enjoying the Inthanin Garden eating zone or selecting from the great service counter offer to take away.”.

Their target is to establish 300 new SPAR stores within the next few years.

Elsewhere, Phoenix Petroleum (of The Philippines) has taken over the franchise operation of Family Mart in the country.

The two models are coming together, combining the strength of fuel brand recognition with new consumer preferences for a broader buying experience, and boosting profits in the volatile, competitive business of selling fuel. They compete as an eco-system.


Petrol with Coffee?

The business diversification goes further; many Oil & Gas companies offer good coffee along with their fuels, literally. For instance, PTT’s Amazon now has more than 2000 outlets and currently selling more coffee than Starbucks in Thailand. PTG, another Oil company in Thailand owns PunThai coffee chain and just taken over the Coffee World chain. Indonesia’s Pertamina offers Bright as their brand for coffee and mini mart.

The drive for growth, synergy as well as competition pushes the diversification further; car care, auto repair and lubricant sales are common business associated with fuel retailing now-a-days.



Some go even further; PTT of Thailand has introduced the PTT Life Station which it claims to be:

“One Stop Service concept to satisfy lifestyle of modern consumers”.

Each station is a complex of cafés, restaurants, banks, pharmacies and auto care shops from different companies. We now seeing fuel retailers competing as an eco-system.

With the various businesses providing a lot of potential synergy and many motorist touch points, Oil companies must also embrace technology to offer a different experience to the motorists and gain competitive edge. 

So, what areas can fuel retailers digitally transform to maximize their share of consumer’s wallets, improve margin with non-oil goods and services and gain customer loyalty?


  • Connected motorists

Motorists are well connected now, thanks to the mobile phone. Motorists are now able search for a gas stations with the lowest fuel price, receiving targeted promotions when they are nearing or at a gas station for cross selling, as well as pre-order their shopping or food and collect when they reach the gas station to refill, i.e. click and collect. Some fuel retailers use technology to become a service aggregator. This means they offer apps not only allow the motorist to activate the pumps and make payments with their phones while inside their cars, the apps also allow motorists find available parking lots, to open the gates and make payment when they exit. Fuel retailers can now offer seamless and delightful experience for their connected motorists.


  • Connected vehicles

Not only the motorists are well connected, their cars are also well connected these days. How about fuel retailers offer motorists car care services based on senor data collected from the cars? Or offer motorists a promotional package of change oil, brake cleaning, brake fluid replacement etc…as well as suggesting the most preferred appointment slots for their visits?


  • Service to the segment of one

With numerous data collected from the loyalty programs and various touch points, Oil companies can use big data analytics to identify specific groups via segmentation and shopping basket analysis for targeted marketing. Companies can even predict the promotion outcome before it is launched. Through real time analysis of POS data, the effectiveness of the campaign can be monitored, almost real time. With the concept of “Customer 360 View”, companies would be able to recognize their loyal motorists, know who they are & what they like, and able to make recommendations or instance promotions that they really wanted. Fuel retailers can also include social listening and sentiment analysis to gain more insight into customers.


  • Supply Chain excellence

So far, we discussed on external facing transformation opportunities, however, one must not forget the importance of the backend logistics. Forecasting and replenishment, logistics and fulfillment, central kitchen planning and recipe management are some examples of areas where companies need to excel in order to meet the high demand of motorists.


This article describes how the fuel retailing industry is transforming with demands from changing motorists’ preference, margin pressure and competition. It also outlines some of the technologies and ideas which can help the iconic gas station to undergo substantial digital makeovers so that they can survive and thrive in the digital age.

Will be keen to know how fuel retailing are changing in other parts of the world as well as other digital transformation ideas they are adopting. Your comments are welcome.

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