Gas stations use retail tech to drive sales amidst high gas prices
U.S. inflation ticked up slightly in August, as the monthly increase in the Consumer Price Index for All Urban Consumers (CPI-U) accelerated to 0.6% — the highest since June 2022, according to Statista. The uptick was largely driven by a steep increase in gas prices.
Shelter — i.e., rent and homeowners’ rent equivalent — is by far the largest expenditure category in the CPI-U, followed by food and energy. Gasoline, which is a subcategory of the energy index, accounts for 3.4% of the CPI-U and yet, due to a 10.6% jump, it accounted for more than half of the monthly increase in the all-items index.
Fluctuating higher gas prices and inflation is decreasing discretionary income, so consumers have less to spend at convenience stores.
“While customers likely have to continue visiting a gas station to fuel their vehicle, they don’t have to go in-store to make a purchase,” Scott Negley, Dover Fueling Solutions’ senior director of product management, told Retail Leader. “Gas stations have very small margins on the actual fuel; most of their profit comes from the purchase of offerings at the store. So, gas stations have to know their consumers well to still drive sales.”
Technology at the pump can help promote loyalty programs, promotions and deals, which tend to increase sales during economic hardship. Large displays, targeted advertising and intuitive technology can also help drive a customer in-store and increase their basket size.
“Gas prices will always be fluctuating, but what will remain constant is station owners’ needs to capitalize on retail profits,” said Sam Zietz, Grubbrr’s CEO, to Retail Leader. “The innovative solution is implementing retail technology and putting the seamless power of browsing and shopping into the hands of drivers.”
Consumer behaviors at gas stations
Gas prices will always be fluctuating, but what will remain a constant is station owners’ needs to capitalize on retail profits.
“The innovative solution is implementing retail technology and putting the seamless power of browsing and shopping into the hands of drivers,” Zietz said.
Today, the traditional pump used to fuel consumers’ cars is going through a massive digital transformation. Instead of pushing a button to select a grade of fuel, drivers are able to interact with an automated 27-inch touchscreen that allows them to select their fuel; view advertisements; and seamlessly order food, beverages and other merchandise available inside the retail store at the gas station. About half (51%) of consumers want the ability to pay for store items at the same time as fuel at the pump, according to a recent Dover Fueling Solutions report.
“Not only does this cut down on wait times, but it engages customers from start to finish — especially those taking long trips — and significantly boosts profits for the gas station owner by driving foot traffic in a new way,” Zietz said. “This is especially important right now, as gas prices are rising, which is driving down profits for gas station owners.”
As contactless payments become more standard across retail locations, customers expect that they can pay through a contactless method at a gas station too, Negley added. Gen-Z consumers also value contactless/touchless payments and self-service checkout higher than even payment security, which came first for the other generations, Dover Fueling Solutions’ report said.
The nature of refueling cars is often a short, quick visit whereas shopping in a more traditional brick-and-mortar store allows consumers to have more browsing time. Still, consumers increasingly want immediate gratification and digital ads alone will not provide that, which is where the use of automation and interactive tech become important for retailers.
“Gas station owners make most of their money in the store, and they make very little off of fuel sales alone,” Zietz said. “Because of this, station owners are looking for new ways to increase the basket size of every consumer. Implementation technology is an amazing way of doing this. With self-ordering technology getting implemented, ads come full circle by offering convenience for consumers and increase ROI for owners.”
Convenience stores are undergoing a transformation, evolving into distinct destinations much like other retail outlets. As a result, they are beginning to adjust their offerings to better align with consumers' needs and desires, including the introduction of more amenities and quick-service restaurant-style food options.
“Consumer expectations between convenience stores and other retail establishments have increasingly converged,” Negley said. “This convergence encompasses various aspects, such as loyalty programs, mobile apps and personalization.”