BP aims to be a leading provider of mobility solutions and is evolving its convenient forecourt locations into mobility hubs to offer a frictionless customer experience across fuel and food and new services. Fiona Briggs reports
BP is sitting in a sweet spot, perfectly poised to meet the changing fuels landscape, deliver new mobility solutions and meet growing consumer expectations with new technologies and offers.
It will need to be since the marketplace in which it operates is being bombarded by new challenges and disruptive influences, not least the trend to electrification. As stated by Insight in a previous article: “The global car manufacturing and fuels convenience industry faces new strategic realities which combine powerful regulatory ‘push’ and consumer demand ‘pull’ effects towards an energy shift, creating a perfect storm of change.”
The popularity of electric vehicles is growing exponentially and is not expected to slow anytime soon.
Figures from Bloomberg’s Electric Vehicle Outlook Report predict sales of electric vehicles will shoot from a record 1.1 million worldwide in 2017 to 11 million in 2025 and 30 million in 2030.
In light of the trend, European Governments are queuing up to set out visions, backed by tough regulation, for the eradication of the sale of new petrol and diesel cars as early as 2025 in Norway and the Netherlands and by 2040 in the UK and France.
Norway is now viewed as a ‘global test lab’ for both electric cars and for the new consumer behaviours created by this energy transition. Indeed, once price parity has been achieved, it becomes apparent that Norwegian consumers may in fact prefer electric vehicles. This in itself could contribute a considerable pull effect to the situation.
BP, meanwhile, is gearing up for the transition with its new Advanced Mobility Unit (AMU), which has spent the last year analyzing the wave of disruption sweeping the mobility market, assessing opportunities, participating in pilot projects and striking a series of investment deals that support BP’s strategy in two areas – electrification and advanced mobility services.
“We are coming up with ideas and developing new business models as we build off what BP is really good at today with the needs of our customers and our consumers in the future,” says the Unit head, Roy Williamson.
Through its acquisition of Chargemaster, BP now owns some 6,500 EV charge points in the UK and a vital platform for future development, says Williamson. "It puts us right at the forefront of charging in Europe and allows us to build capability quickly,” he says.
But BP’s ambition doesn’t end with EVs, says Williamson. “BP’s ambition is to become a leading provider of the mobility solutions of the future,” he says. “That sounds quite grand but when you break that down, it means BP cares about how its consumers get where they need to go now and in the future and we want to ensure that our products and services meet their changing needs. We see very significant disruptive trends emerging and as the mobility world evolves, a key part of BP’s role will be to help people adopt and adapt to new technology.
"Electrification, automation, shared mobility, carpooling, car sharing and new car ownership models: when you put them all together, you get the potential for seismic change in the way people and things will travel around," Williamson says.
With EV adoption set to take off in the early 2020s and autonomous vehicles not far behind, these next two decades are going to be pivotal. It’s a point picked up by David Pitron, BP’s director of offer development and partnerships, Americas and new markets. “I think we will also see the impact of electrification and autonomous vehicles faster than any of us in the industry are really believing, you only have to look to countries like Norway to see the potential adoption rate of the technology,” he says.
“It poses a very interesting question for convenience retailers to answer – what is the future role of the convenience store? Is it to satisfy the regular daily needs of the consumer? – after all, people will still need to eat and drink and use the bathroom when they are on the road. Or, is there a paradigm shift: is there a future for a ‘convergence store’, a store where not only the food on the move, the impulse and the physical needs are met but where goods and services can be exchanged, delivered and transferred?
“The over documented rise of e-commerce has so far not fully explored the role of the convenience sector as a logistics span breaker (beyond the obvious locker or click n collect entry points),” he says.
Back at BP’s AMU, the business is already considering how forecourts may look in future and serve new consumer needs. “We have an opportunity to evolve the retail station into new mobility hubs fit for the future,” Williamson says.
These will provide consumers with a range of services - not only ultra-fast electric vehicle charging but servicing to a new breed of autonomous fleets.
Opportunities in last mile logistics - the point made by Pitron - and on-demand convenience for the local community are also under the microscope. “We see our retail sites playing a key role in future, potentially as staging posts as well as for delivery,” says Williamson. “So, our already strong and growing retail presence needs to evolve into this new space but we’re in a strong position to make that happen.”
In-store, new technology is set to transform the customer experience too.
“The role of no/self checkout technology is coming fast as well and has the potential to transform the economics of the convenience store sector in stores with a scaled offer,” says Pitron. “For small stores there will always be a basic staffing requirement and the legal needs of the store for pump authorization or safety and security. For those stores with an extended convenience offer or in the case of BP, a partnership store such as Rewe togo in Germany or BP Marks & Spencer in the UK, there is the potential for greater change. The no checkout revolution could help keep costs in check and enable faster transactions for consumers. Consumers are so fast to adopt time saving technology that I have little doubt that this will become a ‘table stakes’ element of convenience across many countries in the years ahead,” he says.
The technology is simplifying rapidly as well, Pitron adds. The M&S self checkout using a mobile phone is scalable and simple, requires minimal investment and could be a far more pragmatic way to enable customer to ‘skip the lines’, Pitron says. “There are endless versions of no/self checkout being piloted across the world – the trick as ever is to avoid the Betamax and adopt the VHS!” he says.
Nicola Buck, VP marketing fuels North America, agrees technology can be a game-changer: “Technology is absolutely critical to improving the customer experience because it helps us personalize the experience and communications customers receive from BP,” she says.
Buck reports BP launched a test last year called BP Mobile Offers in the US which gave customers the opportunity to receive special offers via text from BP.
“The exciting part for us was the ability to test the channel out and understand if there was demand in the marketplace, which there was. It was also an opportunity to bring hallmarks of our existing program to that channel. For example, we were able to bring one of our promotional programs called Pump-n-Play, a scratch off game where consumers can earn discounts on fuel via the mobile phone. We saw a lot of engagement, which helped us verify that the program was something we can offer without being too intrusive,” Buck says. BP can also deliver more timely and relevant communications through contextual messaging, Buck adds. “We look at relevant moments like the weather, so we can send customers messages if it’s going to rain, giving them a cents off incentive to fill up. Not necessarily one-to-one, but it is a level of personalization that we are trying to get to,” she explains.
Meeting changing consumer expectations is another BP priority, as Pitron reports: “We recently did some very in depth research into the fundamental needs and desires of consumers in our environment. They told us that it really boils down to three core insights: they want to be surprised with quality choices, they want a moment of calm and they want to save time.
“We often forget that our industry is not yet a place where customer feel that they will get a quality experience,” Pitron says. “All too often gas stations are dirty, badly lit, and poorly merchandised. Most consumers want to be pleasantly surprised by a clean and well lit store, with fresh food and options from brands they trust.”
Customers also value a moment of calm if they can find it, he adds. “That doesn’t mean that we should be adding a spa to our convenience store, but it does mean that we can try to create store environments that are a little more sympathetic to the customer. “Bombarding them with endless promotions, wobblers, signage, screens and bulk displays is not a comfortable and welcoming environment for customers to enter and feel at ease,” Pitron says.
Saving time is the top consumer demand in the convenience sector, however. “It is always the number one factor for customers in our industry,” Pitron says. “Any chance we can give customers to combine trips and tick two things of the list at the same time is highly valued. That is why we have been down the path of partnering with leading grocers to enable customer to complete some “food for later” missions as well as the food for now with our foodservice and coffee offers and the classic impulse products. ‘Save me time’ ties together many of the game changers in the market – from mobile payment for fuel, to self or no checkout from the store – customers want us to keep them moving and we focus a lot of our time and development on this insight,” Pitron says.
Buck reveals how BP has been focused on providing increased convenience and speed at the pump.
“While the act of pumping gas hasn’t changed much over the last 80 years, we know firsthand from our customers that their expectations about what constitutes a great retail experience have changed a great deal,” she says. “Customers have different expectations around what a retail brand like ours should be providing them. They want a quality fuel product and to trust a quality brand; and they also expect a better site experience, getting in and out as quickly as possible, and being appreciated. These are things we are focusing on because we know it’s not just one, but all of them that matter.”
Buck reports BP’s new mobile payment app, BPme, addresses some of those needs, as it allows customers to pay while still in their car, track their fuel rewards easily and store their receipts digitally.
“We know that even a few seconds spent typing in a zip code or selecting a car wash, are moments of friction for our customer. They don’t want to take any unnecessary steps,” she says. “With the mobile payment app, these simple steps start to get removed, so the experience becomes more frictionless than it was before.”
Additionally, BP recognizes that not all customers want a gas discount and they may be loyal to other programs out there. So, this year it has partnered with brands like United Airlines and regional Kroger brands (Pick ‘n Save, Mariano’s and Harris Teeter) to offer the opportunity for customers to earn United Award Miles at the pump. “We are definitely evaluating other potential partners to give our customers additional choices in the future,” Buck adds.
In his role as director of offer development and partnerships, Americas and new markets, Pitron reports the business is making strong progress across both regions.
In BP’s West Coast ampm business, the company is well underway with a complete offer refresh, which lifts the look and feel of the store, adds in an updated coffee program and introduces the first fresh food.
“Like everyone else in the convenience business, we have seen the need for ever improving coffee offers, fresh choices and contemporary store interiors,” Pitron says. “Our customers are enjoying the change and are rewarding us with same store sales growth ahead of our forecasts. We have also been developing further store formats,exploring where we can take the ampm brand, how we can satisfy our existing consumers more and more to gain their loyalty as well as making a welcoming environment.”
In the East of the rockies, where the company trades with the BP and now Amoco brands, the business continues to consider a company-owned network. “We continue to look for the most appropriate business models that best fit with our business strategy and remain committed to delivering value with our existing business partners,” Pitron says.
Mexico is another hugely exciting growth engine for the business and it already has over 380 sites selling BP fuels in both company-owned and dealer-owned channels.
“We have big plans to rapidly expand this number of sites and have been energized by the positive consumer reaction to our market entry,” Pitron says. “We have entered the market with a strong position as a trustworthy brand, where consumers will get a great attended serve experience – and a guarantee that if they pay for a litre of fuel then they will get a litre of fuel. This may sound like a very basic claim to make, but this has not always been the case in Mexico.”
Pitron adds that BP is working on a number of additional elements to its fuels offer and there will be much more to follow. “We are also exploring how best to enter the convenience market, it is very different from the North American market and from other BP markets around the world so as ever, we are starting by trying to understand the consumer needs, missions and behaviours first,” he says. “Building a business from the ground up is an exciting challenge and we have recruited some great people - there is a real buzz about the business and an ambition to differentiate and succeed.”
Like leading executives in the convenience and forecourt industry, Pitron recognizes there are both local and global trends in the marketplace. “I think we see different global markets evolving in different ways and along different lines and there is not a one size fits all answer. Having said that, I think there are some themes that go across multiple international markets,” he says.
“In mature environments I think we have seen the topping out of the growth of the hypermarket/supermarket fuel share growth. It was a big feature of the last decade but it appears to have now run its course and to have found a level. Business such as EuroGarages are a prime example of how an international company is using a business model in multiple geographies. EG started in one region of the UK, has now expanded across the UK, into Europe and has now hopped the pond to the US and is acquiring sites at an impressive rate. With a successful and portable consumer offer and business model, it has achieved the kind of scale traditionally associated only with major oil companies,” he maintains.
Shared knowledge and learning remains vital to success in convenience retail and at BP it’s a vital ingredient for future strategy. “Inspiration comes from everywhere and everyone,” says Pitron. “I am fortunate to work as part of a global team and that allows me to both travel to a wide range of geographies and to meet colleagues and customers from many parts of the world. Personally I love meeting the disruptors, the people and businesses who will not accept the stated wisdom or that status quo, after all my favourite quote is that “the world was shaped by unreasonable people”. Welcoming failure and constant iteration is also inspiring to me, organizations and individuals who have the ability to try and fail, then try again until they get it right, are the winners and it is a secret sauce that is as rare as it is critical to success in a rapidly evolving market.”
Pitron states there are many people he admires within the BP business but outside of BP he cites Ari Haseotis at Cumberland Farms for the way he has continually developed and iterated the business, its offers and its services. “I have no doubt that it is his leadership style and open approach that have provided the platform for his teams to succeed,” he says.
Joe Bona formally of CBX and now Bona Design Lab is another inspirational influence. “Whilst you could pigeon hole Joe as a designer or offer consultant, I think Joe is one of the most insightful and strategic people in our industry,” Pitron says. “He once told me that as an offer developer I should always be careful to align the ambition of the offer with the capability of the business to sustainably deliver the offer. It remains to this day some of the best advice that I have been given. I only wish that I had always followed it!”
BP is gearing up to a future where, ironically, the only truly predictable factor is change. Yet with its AMU and in depth consumer research the business appears well placed to respond to both market and competitive pressures.
For Priton, the future of convenience retail will be centered on three key indicators:
• Faster: frictionless journeys for its customers, enabled by mobile payment for fuel and store transactions
• Electrification and autonomous vehicle: these will be widespread and consumer needs and missions will be clearer on how best the convenience industry adapts to thrive in this changing mobility landscape
• Convergence: the role of the forecourt convenience store will be evolving to becoming a ‘convergence store’, a place where needs are met for consumer, for online delivery, online collection, a hub for autonomous vehicles
“The basic core consumer needs will remain, save me time, surprise me with quality choices and provide me with a moment of calm,” says Pitron. “At BP, we will continue to strive to be at the front of this changing consumer and competitive landscape, there’s never been a better time to be a convenience retailer,” he concludes.
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