High Five

Five insights shed light on how fuel retailers can further delight customers in 2019.

High Five

March 2019   minute read

By: Jeff Lenard

There may come a day when the process of filling up at the pump is significantly disrupted, but that day is not today—or any time soon. Yes, electric vehicle sales are growing, and innovators are bringing new ideas to market that could change how consumers buy fuel. But gas margins in 2018 were up. Fuel demand was stable at 9.3 million barrels per day, and gas prices have averaged under $3 per gallon for more than 50 straight months (October 2014-January 2019) and are about 30 cents lower than a year ago.

Convenience retailers certainly feel good about their future. A whopping 85% are optimistic about their business prospects over the first quarter of 2018, and for good reason: 84% say in-store sales increased, and 62% said fuel sales increased, according to the December NACS Retailer Sentiment Survey.

In the following pages we will share top insights from the January 2019 NACS Consumer Fuels Survey, providing key insights into how consumers shop for fuel and what they expect from convenience retailers at the pump and inside the store. But first, here is an important finding from the survey: 77% of consumers say that convenience stores share their values and do business ethically and responsibly, a sharp 9-point increase from just three years ago.

Consumers like what they see at convenience stores, which goes well beyond the products sold. They appreciate how our businesses operate and reinvent the idea of convenience, as well as share how our stores are a part of the community. Most of all, consumers are suggesting that retailers “get them.”

Here are five insights to keep in mind to help you continue to attract and satisfy customers today and into the future.

1. Lower Gas Prices Don’t Increase Driving

Analysts often talk about the boost that lower gas prices provide to consumer spending, and there’s truth to that. But for an average driver, a decrease of 30 cents per gallon saves them less than $15 a month. Perhaps more importantly, lower gas prices encourage spending because people simply feel better when gas prices are lower.

But the big question is: Do people drive more because of lower gas prices? Perhaps, but it’s more related to the state of the economy overall.

reFreshing Ideas

The NACS reFresh initiative was launched five years ago to enhance positive perceptions of our industry and help convenience retailers address important business topics by creating tools that offer new ideas, sharing facts and data and forming partnerships with best-in-class organizations that share the same focus. As a result of this work, 77% of consumers now say that convenience stores share their values, and 82% say that they are receptive to building a new convenience store in their community, both sharp increases from just a few years ago. More data and resources about the industry and the initiative can be found here.

Of course, some people say they changed their driving habits in 2018: 18% say they drove more, and 22% say they drove less than the previous year. But the main reason they changed their driving habits was because they needed to because of work or family obligations. Only 26% of drivers say that they drove more because of lower gas prices in 2018, compared to 57% who cited jobs and errands that required more time on the road.

Furthermore, Americans don’t expect to curtail driving in 2019: 95% say they will drive at least the same amount in 2019, with 21% projecting that they will increase their driving.

More than half (53%) of drivers say obligations will make them drive more in 2019, compared to only 10% who cited monetary reasons. Women are more likely than men to cite jobs (36% versus 23%), and those age 65 and older say vacations (46%) would cause them to drive more. Meanwhile, money is a concern for those who say they will drive less: 34% cited economic issues compared to 26% who cited a decrease in job- and family-related obligations.

An expected increase in driving is good news for convenience retailers, which leads into our next finding: Various work and family obligations can affect where consumers shop for fuel.

Why will you drive more in 2019?

(Green marks cited obligations; Blue marks cited money.)

2. What’s Your Rush (Hour)?

The morning and evening dayparts drive the bulk of consumer traffic for fuel purchases: 22% of drivers buy their gas as part of the morning commute, and 33% buy gas during the evening commute.

Men purchase gas, for the most part, equally across three dayparts: 25% buy in the morning, 35% at mid-day and 31% in the evening. Women, meanwhile, are almost twice as likely to buy gas in the evening (34%) than the morning (20%), but they are most likely to buy gas during the mid-day period (40%). Customers age 65 and older overwhelmingly purchase gas during the mid-day time frame as well (61%), likely because most are retired and don’t have to face a daily commute.

What time of the day do you most often purchase gas?

But there is an even bigger trend at work here: Only one-third of all U.S. drivers either telecommute (4%) or don’t work (29%). They don’t need to fight commuter traffic, so why should they?

How do you usually commute to/from work?

Those who don’t commute regularly present retailers with a “third place” opportunity where they can enjoy a cup of coffee and relax and recharge. By knowing when consumers are driving around (and why) during different dayparts, convenience retailers can explore ways to provide comfort. For example, younger non-commuting drivers are most likely to be out and about during the two rush hours, driving kids to and from various activities. These customers may be looking for a convenient place to grab a snack and beverage between errands.

Older non-commuting consumers are less likely to go out, but that could present an opportunity for retailers to develop a program where older drivers can hang out and enjoy coffee with friends. Older consumers may not get out of the house as much as other consumers, but they are more likely to attend zoning hearings. A clever outreach program, perhaps centered around coffee, to older community members could reap multiple benefits.

For those who don’t commute, when do you leave your house on a typical weekday?

One more point worth mentioning about vehicle use: Those who commute tend to use their car beyond that daily commute, and that means they could be looking for lunch or snacks and beverages during the workday as well. Two in five (39%) commuters say they use their car “a lot” during the workday, compared to the 8% who don’t.

And this means there are plenty of opportunities to fill up vehicles.

For those who don’t commute, what do you do during the day?

3. Pumping Up Sales

Having a better understanding of why consumers fill up can help retailers develop a strategy for attracting them inside the store. Most drivers decide to fill up when they are low on gas, but they don’t wait until they are running on fumes. They are seeking convenience as much as they are fuel, so they will wait—at least for a little while.

When do you typically decide to buy gas?

When Americans fuel up, they fill up. Seven in 10 (70%) say they completely fill the gas tank. Older drivers are even more likely to “fill ‘er up”: 90% of drivers age 65 and older say they fill their tanks.

Do you typically...

While price has lessened in importance for those seeking a place to fill up, it still dominates decisions. Most Americans still shop for gas based on price (59%), but we see interesting variations by demographic. Men are far more likely than women to select a store based on brand (14% versus 7%), while women are more likely to select a store based on location (26% versus 19%). Those age 65 and older are most likely to shop based on price (63%).

What’s the most important factor in selecting where to buy gas?

For those who say that price is the most important factor to stop, nearly two-thirds say that the gas price sign (63%) drives their purchasing decision. The price sign is even more important for drivers under the age of 35: 68% shop based on the price sign. Drivers in the Northeast are most likely to stop at a store because it is tied to a loyalty card (22%).

How do you shop for price (for those you consider price most important)?

Another factor to consider: People shop differently for fuel when they are on the road, as opposed to in their community. Drivers on the highway are much more interested in easy access to the lot and food options.

So that leads to the big question: How often do gas customers go inside the store? The answer is that an increasing percentage do, rising from 35% in 2015 to 44% in our latest survey.

Men are more likely than women (52% versus 36%) to go inside the store and those under age 35 are much more likely than those 65 and older (47% versus 22%) to visit the store associated with a gas station.

Retail winners will be those that look beyond the best price and instead, closely look at what customers want.

4. Inside the Store

As in previous years, the top reason that a gas customer went inside the store was to pay for gas at the register. While 78% of all customers pay by credit or debit card, a sizable percentage of customers pay by cash inside the store. Half of all female customers pay for gas at the register.

To buy drinks (42%) and snacks (37%) are the next two reasons that gas customers come inside the store after filling up at the pump. Retailers also could consider the importance of two services that attract customers: More than one in five customers say they used the bathroom (21%), and one in eight used the ATM (13%) the last time they went inside the store.

The importance of amenities like bathrooms and ATMs becomes much more apparent when looking at the order of purchases: Most drivers go inside the store before they buy gas (59%). Certainly, this includes the 45% of gas customers who pay inside, but many customers go inside the store before buying fuel, most likely to withdraw money for a cash purchase or use the bathroom. This is especially true in the West where 71% of gas customers go inside the store first.

Convenience stores sell immediate consumption. Sixty-five percent of all items purchased are consumed immediately upon leaving the store—or let’s be honest, while leaving the store. That’s most often the case with a beverage or snack but it’s also true with meals, whether sandwiches or salads. Three in five consumers (60%) consume their meals in the car—whether that means while parked or driving.

The last time you went into the store, what did you do?

There are a few fascinating demographic variations. Younger consumers are far more likely to eat in the car than older consumers (71% versus 19%). Men are far more likely than women to hang out and enjoy the food in an in-store seating area (16% versus 4%), while older customers have zero interest in sitting down inside the store to eat their meal. Could this be a missed opportunity, or is this behavior too ingrained to impact meaningfully?

If there is one message made clear, it’s that time is increasingly important. The percentage of customers who eat in the car has risen from 53% to 60% since last year, while those who eat their sandwich once they get to their location has dropped from 34% to 27%. Is the food simply too tempting and tasty, or is convenience at a premium?

Where do you typically consume the meal you purchased at the store?

5. The Future: Time, Money and What’s Cool

We asked consumers about several emerging technologies and trends that could redefine convenience and speed up their overall convenience store experience. While it’s clear that consumers are interested in these ideas—seven of the nine items are of interest to at least 50% of the population—only one of these technologies grew in interest over the past year.

What’s the most important factor in selecting where to buy gas?

Customers agree that convenience is defined as speed of service. A recent NACS report, “Time to Shop,” suggests that the U.S. convenience store industry delivers the most coveted commodity: time. And for each of the new technologies, consumers are eyeing the time-saving applications. But when asked what is interesting about these technologies, some acknowledged more of a focus on saving money, or just being cool.

Why are you interested in these ideas?

Consumers certainly see a few of these technologies as having the ability to take costs out of the system that could be passed along to customers.

But what about food trucks as a new idea? They aren’t often seen as less expensive, and they aren’t necessarily quick. In fact, food trucks can sometimes make it challenging to find out where they are. However, many people like the experience that food trucks offer, and that they can choose where to eat based on a specific type of cuisine. Food trucks can also offer retailers an opportunity to trial new foodservice items and build excitement, which can be any retailer’s competitive advantage.

Above all, gas consumers are no different than any other retail customer. The retail winners will be those that look beyond simply the best price and instead, closely look at what customers want—and then customize their offer to delight customers. As long as that remains a winning model, significant disruption to the fueling industry will stay at least an arm’s length away for the next few years.

Who’s Who in the Survey

The NACS Consumer Fuels Survey is conducted by noted marketing and polling firm PSB. A total of 1,101 fuels consumers nationwide were surveyed over the period of January 17-23, 2019, and consumers reported a median gas price nationally of $2.23. The margin of error for the study is +/- 2.95 at the 95% confidence level.

NACS and PSB examined a wealth of subcategories data, only some of which is included in this article. Other insights can be found at the NACS Fuels Resource Center.

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