The forecourt has been slow to digitally transform, but the work is essential. Here’s how smaller retailers can go about it.
Eva Jones, Head of Product Development and Innovation at Suresite.
When it comes to digital transformation, forecourt retail might be a little behind other retail sectors, which have by and large embraced new consumer trends. Independent and smaller forecourt retailers face their own set of unique challenges in this transformation journey, meaning that some have been slower to adopt than the larger forecourt brands – who are already leading the way in several areas.
But change happens, whether you’re on board or not. In order to keep pace with the competition and to meet customers’ expectations (which have rocketed in the wake of the pandemic) digital transformation of smaller and mid-size forecourt retail businesses is essential.
The key challenge is in weighing up the cost of digital transformation versus the business value and gain. In 2021, independent forecourt retailers invested, on average, £16,000 into each of their stores. Whilst a substantial investment, the amount is a drop on the preceding year, when retailers spent an average of £24,000 per store. The impact of a global pandemic, ongoing staffing problems and rising costs have taken their toll on all UK businesses; and a careful and even conservative approach to investment and innovation is an understandable response to such uncertain times.
So how can small and medium sized forecourt businesses approach digital transformation in 2022? Where should they start, and how can investing in innovation be made more accessible to independent brands?
Know your customer
Retailers have access to vast amounts of data, but don’t always put it to good use. To kick off their digital transformation, forecourts should focus on extracting value from the data they already have, in order to understand who their customers are and what they need. Data from POS, customer card payments and wetstock management solutions are all little pots of gold; and can be made to work even harder for forecourt businesses.
If just starting out on the digital transformation journey, then retailers should begin with the most accessible data available; from point of sale and payments. POS data is collected every time a transaction happens, and doesn’t specifically require the most sophisticated system either. In-store transactions create data points about customers, such as their buying habits. Just by analysing these datasets, a retailer can start to see patterns and trends in shopper behaviour or the peak trading hours for their store. They can also compare fuel and shop purchases, identify basket spend and size, and even determine which products are most often bought together and create promotions based around this information, in order to drive further sales.
Forecourts can also use data for stock management, ensuring that the right amount of product is bought at the right time in a bid to reduce waste. Data can also support retailers in identifying where a promotion is needed to effect faster sales of a particular product that is taking up space in a stock room. Knowing a forecourt’s busiest and quietest times can also help manage resources and drive operational efficiency, whilst still delivering on customer experience.
Going digital-first with loyalty
When paying for fuel and other goods at one of the big brand forecourts, customers are often asked for their loyalty card, increasingly in a digital format, at checkout. We see this a little less in the independent forecourt space, which can be a limiting factor in driving loyalty to the brand. Investment in a digital loyalty programme can be costly to smaller businesses too.
But loyalty programmes have much to offer SMEs, and one option may be to partner with a well-known, credible loyalty partner that requires less investment, but can still yield a financial benefit. One example in this space is the collaboration between BP and Nectar. Rewarding loyalty has become a baseline expectation from customers, and can be the difference between growth and decline of a business. A customer is far more likely to spend their money somewhere they feel they “get something for nothing”, versus a retailer where they hand over their money with no additional reward.
Technology such as QR codes – an incredibly accessible and affordable way to introduce new digital processes – can also be an effective way to encourage customers to sign up for loyalty programmes.
When paired with data, customer loyalty schemes become an even more powerful business tool. For smaller and independent forecourt retailers, investing in a partner to understand the insight that data brings can be paramount. The obvious advantage of loyalty data is that it gives a retailer the ability to target customers directly with promotions that will be of particular interest to particular audiences – based on the previous buying behaviour. The big brands are already doing well in this area. The digital-first rewards programme Shell Go+ reached 1 million registered customers a year after its launch.
Data is only useful however, if it is ‘good’ data, showing one version of the truth. Retailers can find themselves inundated with data from various sources. This then needs to be integrated to show a 360 degree, single view of customers and their buying patterns. Data needs to be credible, reliable, accurate and automated for easy interpretation of analysis and insights.
Introducing rapid delivery services and omnichannel models
Digital transformation of the forecourt is essential, simply for the reason that customers want and demand choice.
Tight fuel margins also mean that smaller forecourt businesses must turn to additional sources of revenue. In the wake of the pandemic, we have seen a significant rise in forecourts offering home delivery and click and collect services, particularly as the trend for non-fuel retail (NFR) and e-commerce continues to grow. Many sites have also become important retail hubs for local communities.
One in three shoppers in the UK have used a rapid delivery service; with UK examples including Appy Shop and Snappy Shopper. An omnichannel shopping experience has become a requirement for survival, enabling customers to choose how they shop and receive their goods, whether in person, online, or via a third party service. With omnichannel shopping, consumers can get their groceries without having to drive to a store or queue to pay.
Convenience is king
Sales channels should not be thought of separately either. For example, a loyalty programme’s offers should be available both in-store and online or on mobile, and customers should be rewarded wherever they shop. Data should be shared across the omnichannel model too. Knowing a customers’ shopping habits via grocery delivery services can also inform in-store retail offers and promotions.
Online grocery shopping is at a tipping point; and whilst it might feel like the domain of the larger players, there is plenty of room for independent forecourts to enter this space too. Partnering with a delivery service such as those listed above is a great way for smaller forecourt retail businesses to drive additional value for independent forecourt retailers.
Insight and understanding
Digital transformation might seem like an overwhelming task for those smaller retailers who are limited by the investment available and the expertise at hand. But change needn’t be immediate, nor exceptionally costly. Data insight is of critical importance; and the very best place for forecourt retailers to start their transformation journey. The most cost-effective option is to capitalise on the free data which retailers already have access to, such as POS, card payments and wetstock data. By taking the time to understand and anticipate customer needs, retailers can revolutionise their entire forecourt offer for the new era of fuel retail.
