Fuel and convenience predictions 2023: supply chain, inflation, and EV charger strategy
As we head into the final month of the year, we look at the top 3 trends that our experts predict will continue to dominate the industry going into 2023 and how you can prepare your site to get ahead of your competition.
How are supply chain issues affecting fuel retailers?
2020 brought in many challenges including the impact to the global supply chain and the knock-on effect on fuel prices, construction costs and consumer behavior. We expect to see these trends continue into early 2023, before falling back to more normal levels in the second half of the year.
CBRE, has predicted that there will be a 14.1% year on year increase in US construction costs by the end of 2022, feeding into 2023 due to a shortage of labor and supply chain issues. These supply chain issues began when the world fell into lockdown back in 2020 but with inflation on the rise, the ongoing after-effects of the pandemic and the war in Ukraine, we are yet to see the pressure the global supply chain is experiencing, ease.
This has become a huge issue for those who are looking to construct or renovate their fuel site, with many waiting months for gas tanks or materials.
However, it has been noted by supply chain quarterly that, although issues will continue into early 2023, mid-way through next year we should begin to see costs declining as the pressures that are aggravating the supply chain issues subside.
As the strain on global supply chains ease mid-way through next year, many fuel retailers who are looking to make changes to their existing sites or are looking to begin construction on a new site will benefit. Supplies should become more readily available, with costs lowering due to stock levels increasing to pre-pandemic levels.
How can retailers combat the pinch of inflation?
Inflation and the cost of energy crisis have become big talking points as the year draws to a close. CNBC predict inflation will rise to 5.9% in the US in the year ahead.
However, The World Bank has predicted that energy prices will decline by 11% going into 2023, after surging in 2022 by 60% following Russia’s war on Ukraine. This will come as a welcome relief to all gas station and convenience store owners.
Consumers often look to fuel retailers with convenience elements for their essential shopping. NACS’ research shows that many customers are no longer shopping to fill their basket, but simply buying enough to get by, this change in consumer habits suggests more customers may be visiting your convenience store rather than shopping at larger supermarkets.
Stocking your store by keeping your offering relevant to your customer is essential during these volatile times. By continuing to serve your local communities and creating value for your customers, you will benefit from localized shopping habits and customer loyalty. Kalibrate predicts that knowing your local audience’s preferences will be essential in 2023 and beyond.
Is your fuel site ready for the rise in EV ownership?
President Biden has stated that, by 2030, the US should aim for half of new vehicle sales to be EVs. This is closely aligned with signals from large car manufacturers, who want to go all electric within a similar time frame.
Some US states have already begun this process. In September the California air resources board approved the Advanced Clean Cars II rule which will require that all new car, light trucks and SUV sales be zero emission by 2035.
According to a recent report by McKinsey & Company, EV charging-energy demand for electric vehicles could reach 53 billion kilowatt-hours by 2030, a 20-fold increase needed to support the upcoming tide of electric vehicles.
EV sales are predicted to rise by 53% by 2030 (BCG, November 2022). With such a large segment of your potential customer base making the switch, it could be worth considering an EV strategy for your business if you haven’t already. Adapting for EVs could help you win loyalty from those who have already made the change, read our recent case study about a fuel site who recently created an EV charger strategy.
We can see from our own research, the Electric Evolution, that 49% of EV drivers shop for essentials while charging their electric vehicle, as charging times can be upwards of 20 minutes. Including an EV charger strategy alongside your c-store or QSR could be a huge benefit to your site, making it an attractive destination for EV consumers by allowing them to grab a bite to eat or go shopping whilst their car charges.
As we see adoption for EVs rise in the coming years, evolving your fuel site’s strategy to keep up with the EV timeline could be imperative to your site’s success and the ability to remain competitive. Understanding your site’s demographic may help you to understand where your consumers fall on the EV adoption curve and when the right time to invest in EV chargers at your site is.
How can you prepare your site for 2023?
Understanding the impact of these trends can allow you to remain competitive in an extremely volatile environment. Consider your offering and learn how to adapt whether that’s:
- Analyzing your store to understand the areas that need improvement and where you could be losing profits
- Understanding your demographic further to create an offering suitable to their needs
- Introducing an EV charger strategy to your business plan so you can appeal to a growing segment of EV drivers
Taking a deep dive into each of these areas to maximize your site’s profitability could be essential to success in early 2023. To learn more about how other site owners are preparing their fuel site for these changes, check out these case studies here.
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