Retail Gas Station as a Profitable Business Model
Updated: Dec 8, 2023
What do you expect from a gas station when you come to fill your tank? Personally, I am waiting for the atmosphere of this place. It already looks like a ritual: a cup of delicious coffee, buying snacks on the road, and having a convenient rest after several hours of driving. Here I am attracted by high-quality gasoline and additional services. Otherwise, it would be enough to carry a can of fuel with you and refuel wherever you have to.
All this magic happens thanks to, and sometimes even despite, the software works. Today, we'll discover how legacy modernization can eliminate any obstacles on the way to a flawless service provision.
Is it worth the investment? What results should you expect? - Let's spend a few minutes trying to figure it out.
Gas Station Business Modernization: Whys
Growing demand
Agree, our customer needs are changing at the speed of light. We drive up to gas stations with an eye-catching exterior, a beneficial loyalty system, and quality services. Frank Beard, Retail Trends Analyst at GasBuddy states, “Americans are passionate about their favorite gas stations. It's common to have debates about which brands have the best coffee or cleanest restrooms."
A regular gas station no longer meets the demand. We want clean, creative spaces with multifunctional convenience stores and a wide range of services.
Our needs are the main reason for impending changes.
Without modern software, a business can't retain its audience. Therefore, digital modernization is the first thing that management should think about.
Income
Let's not forget about profitability. Gasoline stations make money on additional services rather than selling fuel. Following Statista, in 2020, the total revenue from the sale of tobacco products and beverages at the US gas stations was over $ 126.6 M.
Meanwhile, NACS reported that the gross margin from gasoline sales was 21.6 cents per gallon, approximately 8.5% of the total cost.
The inventory and tax reporting software should work like a Swiss watch here: without delays or glitches. If it does not happen, then it's time to modernize the digital base.
Safety
Recent circumstances made us take care of our health. But even if a gas retailer puts a million antiseptic dispensers on the territory, it does not make a fuel station safe. The optimal solution here is contactless service provision. For example, in-car payment for gasoline inside a smart car. It is what Shell and Jaguar did about 4 years ago!
So, if we choose between a regular gas station or an improved one, we will not risk our health. Many chains are already implementing innovations to improve safety. It's becoming a long-term trend.
Environment protection
Fuel trading is a risky type of business in terms of environmental protection. The wrong approach to storing gasoline can lead to a disaster. States continue to tighten regulations regarding environmental protection. Compliance is one of the reasons why businesses strive to provide green services and monitor gas storage.
Besides, high energy consumption is also about shocking utility costs. To reduce them, companies also implement sort of energy-efficient compressors.
Also, do not forget about alternative energy sources. Humanity is more and more concerned about the environment and is switching to electric cars, biofuels, and hydrogen. To meet the needs of a wide audience, fuel station chains management should take care of this segment.
Managing these systems requires gasoline retailers to modernize their legacy software. First of all - point of sale system. The last one is a central control point of the entire station. But legacy POS doesn’t provide real-time response and can’t deal with complex tasks.
You may also like: POS Software for Gas Station: Fresh Approach to Old Standards
Gas Station Improvement: IoT and 5G Technologies Are Coming to the Rescue
Evgeniy Aleksandrenko, Head of Digital Transformation at JEVERA, once said, “... at first glance, a gas station seems simple. But inside, it is a set of complex business processes that must be properly built and managed.”
Industry 4.0 technologies like IoT and 5G are reliable allies in this matter.
For flawless gas station operation, you need to create a unified ecosystem with connected components. IoT allows running the entire system from one point. With one click, the staff can turn off the station illumination, with the second - manage the assortment, with the third - generate reports.
The power of the Internet of Things is in integrations. The complementary work of the components enables cashiers to receive prompts for increasing upsales, apply for relevant loyalty programs, etc.
This holistic, personalized approach improves client experience and extends customer lifetime value.
If IoT is about ease of management and service delivery, then the new generation is about speed. Data transmission is carried out in real-time and provides prompt response. Services are provided faster, employees perform more, and profits grow.
The Future of Gas Station Business: Possible Development Scenarios
Additional services are completely transforming the industry and presenting us with new approaches to a gas station business. Now, we can evaluate four basic models of future filling stations.
Omnichannel station. It assumes the availability of countless options for refueling the car and a full range of services. It's suitable for a wide and varied audience.
Express gas station. Located in an urban area, it is a convenience store with several fueling/charging points.
Entertainment complex station. It’s a sort of a small town with a variety of shops and car refueling points.
Multifunctional gas station. It is designed to provide a full range of services for trucks: from refueling to car repairs.
Which of these areas to develop? - It is a matter of a gasoline station business plan, location of service points, and financial capabilities. Moreover, the list is not limited, so you can always discover the blue ocean.
Investing in Gas Station Modernization or How Legacy Software Deprives Businesses of Benefits
Many filling stations are still in the process of modernization. Their main base is existing software. Here are some reasons why companies are looking to transform this sector:
Losing customers. Legacy software often cannot cope with a large flow of orders and get failures. Consequently, service becomes slower. It affects the customer experience. Moreover, expanding the range of services always entails software changes, since expanding legacy products functionality is an inefficient way. If the management refuses to modernize, it loses potential customers who drive past the gas station in search of other options.
Losing employees. The work of a fuel station largely depends on the employee experience. The staff will greet your customers and create a welcoming service atmosphere. So, it should have everything at hand. The core tool for employees' work at a gasoline station is the point of sale. Therefore, you should consider transforming the POS as the hub of the internal gas station IoT infrastructure.
Losing profits. Small active audience and employee turnover require more investment from a company. Meanwhile, income is falling, and doing business becomes unprofitable. To avoid it, gas station convenience stores always follow the audience and industry trends.
To be honest, now legacy software modernization is a necessity for client retention. While some companies are fixing legacy software issues, others are actively using innovations, becoming the leaders of the domain.
Do you already have strategic plans for transforming your gas station digital base? If so, share them with our experts to discover how to implement changes efficiently.