Why fuel retail is thriving, not dying: the secret to risk free investment

There’s no denying that today, fuel retail is an incredibly disrupted market.

There’s no denying that today, fuel retail is an incredibly disrupted market. Not just through the rise of electric vehicles, but also digital innovation, fierce competition, and entirely different customer expectations. Fuel retail is thriving. Current networks and potential sites provide huge investment opportunities.

Indeed, with more mergers and acquisitions over the last decade, interest from investors has boomed. For example, the potential IPO of  EG Group. The brothers’ first venture was buying a petrol forecourt in Bury (UK) for £150,000 in 2001 before expanding and creating Euro Garages — a business with a turnover in excess of £12bn and 25,000 staff. The reason? It understands that fuel presents the destination but convenience offers the opportunity.

Mergers and acquisitions are fundamentally restructuring the fuel retail landscape and presenting growth opportunities for “destination’” retail. Yet today, the market still remains relatively untapped. In the near future we expect huge investment, greater retail innovation, and an explosion in brand partnerships to re-invent the fuel retail site.

And there’s only one secret to a risk-free investment: reliable market data. While investors rarely have their own data to analyze, experts like Kalibrate are on hand. With their help, finding a target site, completing necessary due diligence, understanding the potential of the site, and then optimizing the offering eliminates risk at every turn.

Working with a fuel retail data expert safeguards effective decision-making throughout the entire fuel site investment process.

1. Identification

While fuel retailers are facing a challenge to adapt their offering to the shifting trends in the market, investors are presented with huge opportunities. But before these opportunities can be realized, potential sites or networks need identifying.

With the right retail location planning tools, investors can establish exactly what is driving volume in each market and identify the strengths, weaknesses, and brand-level opportunities. Comprehensive, insightful reports ensure investors understand the competitors, their volumes, their number of retail outlets, their market share, and how the target network or site compares.

Granular data on a given location or potential investment area allows investors to identify a target with confidence.

2. Assessment

During the commercial due diligence of site or network acquisition, investors must next understand the robustness of their plans. Kalibrate’s performance potential analysis, for example, allows them to identify the best outlets for divestment, acquire new sites, or strategically investing in existing sites

With this insight, investors can refine their due diligence for any existing or proposed new location. Kalibrate can provide such firms with accurate projections based on their unique goals, and allow them to learn what impact a prospective acquisition will have on: a network, brand, volume, and profitability.

Acquisition analysis, for example, makes sense of complex possibilities so investors can make educated growth and development decisions.

3. Mapping a value plan

Assessing a potential investment is essential to forecasting ROI.

Investors often require additional insight before making key decisions like “buy, build, or expand”. Does a potential site have the opportunity for fast growth? If not, detailed analysis is needed to plan next steps and extract maximum value.

For example, how will a new brand, increasing the number of pumps, or a larger convenience store impact volume? To quantify this, data-driven planning tools can provide unbiased, reliable models that help answer challenging business decisions. For example, Kalibrate Planning provides:

  • Precise fuel and convenience store volume projections representing all new site possibilities
  • Information on how an acquired outlet would impact sales at existing outlets
  • The best available properties based on specific business requirements
  • Understanding on how a site compares to competitors’ strengths and weaknesses
  • Information for use in negotiations — in fact, some banks in the US will only offer their finance facilities with such a report

Armed with this information, investors can actively avoid risk and maximize profit.

4. Optimization

To continually get the best return on an investment decision, the work is never done.

Investors should encourage networks to continually assess and streamline their operations, their position, and their pricing. Kalibrate Planning and Kalibrate Pricing both offer accurate, data-driven analysis for ongoing auditing, assessment, and optimization. This information may answer questions like:

  • Do my forecourt and in-store operations align for maximum impact?
  • Do my operations support the experience customers want?
  • Do my operations support my retail network’s value proposition?

5. Transformation

If the fuel retail destination is evolving, what does the fuel station of the future look like?

They will be expected to offer a wider range of fuel sources, with electric vehicles driving change across the industry. Currently, the average time spent inside a fuel station is seven minutes. Tomorrow, retailers must consider the needs of a different consumer set; those with at least 30 minutes to spare whilst they wait for their car to charge. The focus will lean more heavily on experience-based destinations for consumers.

With this, there are opportunities for investors and retailers to optimize real estate layouts and devise strategies to provide an exceptional customer experience. This will impact the footfall of individual sites, the performance of whole networks, and introduce new competition from energy companies.

So, the fuel retail industry is far from dying — it’s on the brink of a dynamic transformation future.

With access to a set of trustworthy tools like those offered at Kalibrate, savvy investors can make these decisions with confidence. Access to granular-level insights as well as deep market knowledge and expertise allows them to confidently put forward the correct financial offering, and understand the most likely return on their investment, with the lowest risk possible.

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