The modern vehicle isn’t defined by the horsepower or torque of its engine, or its towing capacity or the size of its cabin. Rather, what makes it so powerful are the hundreds of millions of lines of code and computing hardware that connect drivers to their surroundings—and their surroundings to them.

“The vehicle as we know it is driven more on silicon and software—now more so than ever—than it is on oil and steel and rubber,” said Mark Boyadjis, global technology lead of the automotive advisory team for IHS Markit, London.

The vehicle as we know it is driven more on silicon and software—now more so than ever—than it is on oil and steel and rubber.

IHS Markit defines connected-car technology as the ability to provide online or telecommunication-based services in a vehicle, and to extract data and create knowledge from the vehicle, by leveraging a two-way, wireless mobile connection. That data link can be part of the vehicle’s dedicated communication module, or brought in via the driver’s smartphone.

An estimated 46% of new cars sold in the United States in 2020 will be connected; by 2025, this share will rise to two-thirds of new vehicles, according to IHS Markit. The growth in connected cars is happening in tandem with other tech developments set to transform the automotive fleet over the coming decades:

• Connectivity is helping improve electrified transport and setting the stage for fully automated vehicles.
• The rollout of fifth-generation (5G) cellular networks across the United States promises to offer faster data transfer speeds for connected devices.
• Consumers’ increased adoption of mobile ordering and payment during the COVID-19 pandemic has primed them for connected commerce.

“What we really have here is a confluence of multiple technologies that are coming together at the same time that are causing a disruption in mobility and in the way a customer shops and searches for products and services,” said Karl Doenges, EV infrastructure liaison and mobility technology consultant, NACS.

And for convenience stores, the implications are huge.

“We are an industry that is built around the vehicle, and the driver and the passenger,” said Doenges. “When the vehicle and the way the driver fuels that vehicle changes, it obviously has an impact on the convenience retailer.”

A Digital Footprint

Fuel has provided that first and immediate entry for convenience retailers into the realm of connected cars. In 2017, General Motors (GM) launched its in-vehicle connected commerce platform GM Marketplace, which allows consumers to find gas at Shell or ExxonMobil sites, order food from Starbucks and Dunkin’, or make dinner reservations from their vehicle’s dashboard. GM next partnered with Shell and P97, a mobile payments provider, to develop an in-dash fuel payment feature in GM Marketplace. Other automakers such as Hyundai and Fiat Chrysler have also played in the space.

“We’re just starting to scratch the service, particularly in the fuels industry, with connected cars and how they’re going to impact retailers,” said Brian Norris, executive director, retail data and product management for Oil Price Information Service (OPIS), Rockville, Maryland. OPIS’ real-time fuel pricing and station information data are available in the navigation systems of more than 30 million vehicles, as well as Google Maps, Google’s Waze GPS navigation software app and Apple Maps.

In September, OPIS debuted Fuelstradamus, which leverages machine learning and a data science algorithm to predict the direction of fuel prices over the next day or two. It is available to automakers as an application programming interface (API) for connected car platforms, as well as fleets and travel sites.

“If we expect fuel prices to go up, the car will see there’s a prediction that prices will go up and prompt the consumer to fill up now rather than wait until tomorrow,” Norris said. Users can reportedly save two to five cents per gallon with every fill-up.

While price will continue to have a powerful hold on fuel purchasing decisions, OPIS expects consumers to plan their fuel purchases more often thanks to the greater wealth of data now available to them in their vehicle. Here, being the part of a route to a final destination is key. To even be considered as an option in this scenario, retailers need to make sure their locations are included in navigation systems and applications such as Fuelstradamus.

“If OPIS doesn’t get data for their station, and we’re the supplier of data to these car companies, their store may not show up as an option for consumers,” Norris said. Retailers can participate for free by supplying OPIS with their daily location pricing.

Indeed, establishing a digital footprint is table stakes for convenience retailers in the connected car transition. “The more immediate need for the industry is to make sure that they’re fully integrated in modern communication systems, that their loyalty program has a presence on the internet, that their customers are familiar with that,” said John Eichberger, executive director of the Fuels Institute. “You’re going to have the opportunity to push offers, push rewards through the car platform. But you need to have the capability to do that. So the importance of digital marketing, digital relationships with your customers is going to take on a whole new level.”

Speak Up

This digital footprint becomes even more critical as consumers’ main communication interface to their vehicle increasingly becomes their voice.

A recent application is Amazon’s collaboration with ExxonMobil. Drivers can use Amazon’s Alexa voice assistant from their vehicle’s navigation system or the Alexa app to pay for fuel from inside the car. How it works: The customer pulls up to an Exxon or Mobil-branded site and asks Alexa to pay for gas. After providing Alexa with the location and pump number, the user gives Alexa permission to turn on the pump. From here, the consumer gets out of the car, picks the fuel grade and begins fueling. The real advantage to this approach is it works with both built-in and brought-in connected car technology.

“The convenience and the payment security are the end-customer value, and the better access to customers is the value for Exxon,” Boyadjis with IHS Markit said. “Amazon also gets a dime in these transactions.” The analyst sees voice-assisted interactions as the path forward for connected cars.

According to a 2019 survey by Microsoft, 72% of consumers have conducted a voice search with a personal digital assistant such as Alexa, Siri or Google Assistant. More than three in 10 had made voice commands to a vehicle. And more than half expected their digital assistants to help make retail purchases within the next five years.

“Because speech recognition is a software technology, we’ve seen that move way, way faster forward than you would have anticipated,” Boyadjis said. “Now you have artificial intelligence, cloud-based voice systems being presented to users in cars, and the improvement on satisfaction and capabilities have come with it.”

However, this shift toward voice search introduces new complications for convenience retailers who want to be visible to connected car drivers.

“If someone searches with voice, they get much more specific,” said Doenges. For example, instead of asking their vehicle or smartphone’s voice assistant for the closest c-store, consumers would be more likely to ask for premium grade gasoline, EV charging or a breakfast taco near them, right now.

OEMs’ navigation systems do not always categorize convenience stores in a way that reflects the breadth of their offer.

“Right now they’re not designed around businesses that have a carwash, a QSR, convenience items, have fuel—that’s really four to five businesses in one location,” Doenges said. “And if you go into any search engine and say, ‘Where’s the closest carwash?’, you’re going to get a full-blown carwash. You’re not going to get a c-store with a carwash—because it’s listed as a c-store, not a c-store and carwash.”

Finally, whom a driver asks for help will determine which options are offered, Doenges said. So if iPhone users ask Siri for the nearest place to buy a breakfast taco, the voice assistant will search Apple’s Map ecosystem. If they ask Google Assistant, they will get options in the Google ecosystem. Retailers will want to be present in all of these information ecosystems or risk losing out on business.

The more immediate need for the industry is to make sure that they’re fully integrated in modern communication systems, that their loyalty program has a presence on the internet.

“The car will cater to that driver’s preference,” said Eichberger. “The convenience retailer has to be flexible and willing to make accommodations for individual preferences because customized service will be much more important.”

Pivot Your Model

Establishing this smart digital footprint will be even more critical as the electrification of the vehicle fleet continues and public EV charging becomes an increasingly popular service. “EV charging sites don’t have signs; they are not on intersections. Algorithms, artificial intelligence that predict when you need to charge, options where to go—they are all tied into navigation,” said Doenges. “If you’re not in that navigation system, it’s really, really difficult.”

Flash forward a few decades to fully autonomous vehicles, which can only operate with a navigation system. This takes the importance of inclusion one step further.

For the short and medium term, convenience retailers should leverage learnings from connected car technology to become more relevant and better serve their customers. Here, IHS Markit is conducting research into c-store customers’ driving and parking behavior, and what they are doing at their destinations. It hopes these findings can support the convenience industry as it adapts to a changing, connected vehicle fleet.

“Individual fuel retailers and oil companies, how they transition their business model is very important depending on what type of customers are showing up and how those customers are spending time at the store,” said Boyadjis. “Are they coming in and plugging in to chargers? If so, you need to think about that c-store. Would it be the kind of store people would want to be in for more than five minutes?

“As the c-store model continues to evolve, it will be important for these operators to understand how they can leverage connected vehicle data and how they can leverage the knowledge of what drivers are doing at their stores to pivot their business models,” Boyadjis continued. “I’m not going to sound the alarms and say this is happening in 2021. It’s starting to, but it is something that transitions over the course of time. Even if we are still talking about [internal combustion engine] vehicles, they’re so connected that you can begin to pivot your model even before we talk about the future of electrification.”