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A beam that beacons: LED leads the way

High-quality, efficient lighting of pumps, car washes, parking lots, perimeters, signage and interiors is a vital component of business today and key to improving customer satisfaction and safety. Stations and convenience stores across the country are almost universally switching from old halogen to LED (Light Emitting Diode) lighting in new-build or through upgrades to older locations.

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“There is a big shift in the industry now toward LED lighting because of the cost, operational and customer and staff advantages,” says Jim Rodd, sales manager with Red Leonard Associates. “It’s almost certainly a standard in newly-constructed sites and by now most of the major companies like Canadian Tire and others have done, or are doing, upgrades across their locations.”

LED lighting in the forecourt has numerous advantages. Perhaps first and foremost is energy efficiency. Operators report they have seen savings as much as 66 per cent when municipal rebate programs are taken into account.

Longevity is another major advantage. “LED lighting in the forecourt uses less than 10 per cent of the energy than the old metal halid bulbs consumed and is a far better light,” says Tom Humphries, petro operations manager with Peninsula Cooperative in Victoria, BC. “You can expect to get longevity of 100,000 hours or 15 to 17 years before you need to change any bulbs. Other advantages are fewer operational disruptions when forecourt bulbs need to be changed and no service calls.”

Red River Cooperative, which operates more than 30 locations in Manitoba and some across the border in Ontario, has a local sign contractor come to its sites once every three months in the summer and once every two months in the winter to check bulbs and replace them when necessary. “With LED technology this maintenance and the additional cost is not required,” says Randy Andrusiak, gas bar operations manager with Red River. “From our experience the only item in an LED system that can fail is the driver, but very few have failed us over the last five years.” (An LED driver is an electrical device which regulates the power to an LED bulb or string or strings of LEDs. The driver responds to the changing needs of the bulb or circuit by providing a constant quantity of power as the LED electrical properties change with temperature).

Another advantage is that the light from LED is much better than from old halogen systems. “Better lighting in the forecourt makes the site more inviting for all customers, especially females who often look for a safe, well-lit environment,” says Humphries. “Staff also work much better and safer under good lighting conditions. We use LED bulbs that are 3200 K (kelvin) on the lighting spectrum which we feel give us the optimum lighting for a forecourt.”

The kelvin number will determine the kind of light an LED bulb will emit. A lower kelvin number means the light appears more yellow while a higher number means the light is whiter or bluer. LEDs at the 2700K to 3000K range will match the colour of an incandescent bulb. If you prefer a whiter light look for bulbs rated between 3500K and 4100K.

Another advantage of LED lighting is that it is instantaneous. When an LED light turns on there is no warm up period. As well, it gives more direct light than older technologies and reduces light pollution in the dark hours, a great advantage if the station is near a residential area. “The benefit is a gas bar that is bright in appearance and reassuring to customers that the site is safe,” says Andrusiak.

Red River Cooperative is in the process of upgrading its locations with LED technology at the same time as it is upgrading its exterior corporate identification. Humphries suggests operators upgrade to LED all at once. “Mixing old lighting with new LEDs is a bad idea and it’s typically better to do the whole thing in one stroke,” he advises. “The cost will obviously depend on the size and scope of the upgrade, but either way the investment payback of switching to LED is quick at one to two years.”

Once the forecourt is completed, Humphries recommends changing the in-store lighting as well. “LED tubes versus the standard eight-foot fluorescents again will consume only less than 10 per cent of the energy and provide much better retail lighting,” he says suggesting operators learn about local regulations and rebate programs.

Better lighting adds up to better operations and potentially better revenues and profits as well. Simply, switching to LED will provide premium lighting, conserve energy, reduce inconvenient and costly maintenance and reduce overall costs as well as create a more inviting and secure environment.


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Maximizing forecourt potential

Forecourt_Lg_032619Forecourt offers huge opportunity. Are you taking advantage?

Forecourt sales are all about creating positive first impressions. This is the view of Russell Large, a leading consultant in the convenience store sector. He views the forecourt as a c-store’s front yard and tells operators to take advantage of this prime piece of real estate beyond selling gas.

“Recently, many food establishments have switched to an almost exclusively ‘patio-based’ service model, and I think retailers are onto something,” he says, pointing to sites that offer smaller footprints with fewer staff and no formal layout. “With a little imagination, this is the forecourt of most gas/convenience sites. The trick for success is leveraging the time the customer is filling up, against something ‘fun’ for them to do while pumping gas.”

Here Large mentions Wayne’s interactive touchscreen pump topper. “The pump topper can be used to entertain while at the pumps with content, such as short funny YouTube clips, or used to direct customers into the store itself for specials or guide them to forecourt products, such as windshield cleaners.”

Interactive pump-side systems will soon use facial recognition software to address customers directly when they approach the fuel dispenser. “These systems would greet the customer and display specials that the system’s data has pre-determined a preference based on past purchases. Customers could be directed to an island pop display, propane cage or other area of the forecourt. Already we see prompts for car wash as pretty standard on most dispenser systems. Certainly, this capability is going to be enhanced as technology moves forward.”

 Large suggests that much like the bathroom in a restaurant, the forecourt or ‘front lawn’ of a gas/convenience store location speaks volumes about the service, or lack there-of, that awaits them inside. “A clean, well organized, fully stocked and innovative forecourt will eventually sort all the players out, as curb-appeal isn’t just for homes. You’ll need to have solutions in place for Millennials that want a frictionless interaction, and those that want good old-fashioned service. They are your future customers. Embrace the tech.”

Getting the service and product message out to customers is key to success at forecourt. Tim Walker runs Revin Media Inc., a marketing and brand strategy agency based in Mississauga, Ont. He suggests gas station customers need to be directed with clean simple design communications. “People are often overwhelmed at retail sites with not just marketing messages, but with cellphone communications and other inputs. Good communication cuts through the clutter and there are lots of places to do this at the forecourt,” he says, pointing to bollard sleeves and dispenser nozzles, as well as highly visible flags that can pull in customers off the street. “We have been seeing success with LED reader boards that display specials and other commercial messages in custom sizing tailored to each unique application,” he says.

At Vancouver Island’s Peninsula Co-op they have been working to streamline the forecourt in an effort to present sites with cleaner visuals and enhance curbside appeal.

“Investment in a clean, uncluttered exterior, good lighting, and appealing landscaping will draw people in,” says Tom Humphreys, petroleum operations manager, Peninsula Co-op. “More is not better. “The large fixed exterior merchandise cases full of oil and washer fluid that often sit between pumps or against the building are no longer what we want. We like a limited selection of oil and washer fluid on two-wheel rolling carts. These are easily moved into the store at close, easily refilled from back stock and much less inventory investment sitting outside.

At Breakaway gas stations, they too are paying very close attention to forecourt opportunities to add customer value and fuel retailer revenue. According to Veronique Murphy, VP retail & marketing at Greenergy Fuels Canada Inc., the company behind Breakaway, everything starts with research to drive effective marketing activities. “Once operators really know their customers—whether they are traveling to cottage country or motoring in a city-setting—they can make better seasonal forecourt product choices to address changing customer needs and, most importantly, effectively encourage them to go inside their Breakaway c-store and make more impulse purchases.

 “At Breakaway, we also use forecourt advertising as a powerful way to grow retailer revenue. Building on Breakaway’s unique hockey theme that pulls consumers into its bright and modern forecourts, we position advertising on pump toppers, nozzle talkers, feather flags, posters and dispensers. This multi-channel forecourt messaging is highly integrated with our in-store promotions and technology, such as our eye-catching hockey-rink styled mini jumbotrons, which get customer attention and increase sales.

“On full-service forecourts, Breakaway is also using technology, such as portable debit and credit card payment terminals, to enable operators to offer customers convenient and seamless car-window service,” she says, concluding that communicating the right messaging at forecourt generates tremendous opportunities.


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Forecourt Performance Report 2019

Change is the only constant for Canada’s evolving fueling sector

 Canadas fueling sector is an industry that has experienced considerable change in recent decades. The upstream side of the business has undergone consolidation and brand shifts leading to a shrinking number of stations, while technological evolution brings greater efficiency. For the fuel sector change is the standard norm.

 This year, Octane is again partnering with the Kent Group Ltd., a data-driven consultancy that is a leading authority on fuel sector marketing economics, performance measurement and benchmarking, as well as price/margin reporting/analysis, regulation, and industry economic research and analysis, to bring you a comprehensive snapshot of the industry. Since 2004, the Kent Group has generated a complete site census that lays bare the downstream side of Canadian petroleum.

 This year, Kent reports that brand diversity continues to grow, while refiner controls over pricing are in decline. Canada now offers 67 distinct companies marketing 88 brands of gasoline. Refiners’ position as a controlling force has declined since 2004: Today, only 23% of Canadas fuel is price controlled by one of the seven refiner marketers. This is a 9% decline over 14 years and shows how refiners have divested their forecourt holdings in favour of more emphasis on their downstream operations.

 

Lay of the land

Screen Shot 2019-07-22 at 1.34.13 PMIn 2017 Canada was home to 11,948 retail gasoline outlets. This years survey establishes the 2018 national site count at 11,929, a 0.2% decrease. Kent reports that this ends a three-year run of site increases, which followed 25 years of steady site decline (Figure 1).

 Our estimates show that the Canadian retail gas station population peaked at about 20,360 in 1989, declining at a steady pace until about 1999, and then at a moderately slower pace through to 2014,says Kent Group managing director Jason Parent, adding that since 2015 the number of retail gasoline outlets moved marginally higher until the slight decline in 2018. 

Screen Shot 2019-07-22 at 1.34.29 PMConsumers enjoy 3.2 outlets per 10,000 persons (Figure 2), with Ontario having the most stations per customer. Overall, operators offered 88 brands of gasoline, a number than has declined by 10 from 2004. The two largest refiners, Shell and Suncor, also have a smaller share of the forecourt, with just 11% of stations taking price direction from these companies. And, while only 23% of forecourt sites are price controlled by big name players, 40% still use the big names, such as Esso, Shell and Petro-Canada, on the canopy.

In 2018, a notable change to the retail fuel landscape is the rebranding of BG FuelsLoblaw fuel networks to Mobil. This move impacted more than 200 sites across Canada. Mobil is now the ninth most common brand in the country, representing about 2% of all sites.

Screen Shot 2019-07-22 at 1.34.38 PMOne of the biggest shifts is among the group of non-traditional gas marketers. These operators include grocery chains (Sobeys and Federated Co-operatives), big-box retailers (Costco) and others, such as Canadian Tire, 7-Eleven and Couche-Tard, where the main business is something other than fuel (Figure 3). This group has grown from a 15% share of the market in 2004 to 23.5% in 2018.

Regionally, there are a variety of companies marketing leading brands of gasoline. For example, Esso products are marketed by 11 companies. Both Shell and Suncor also market under similar arrangements (but to a lesser degree). Kent suggests this format works to manage relationships with former brand associates and gives the refiner-marketer more leeway as they focus on higher value outlets (Figure 4).

 Sharper tools

Screen Shot 2019-07-22 at 1.34.57 PMThe rise in consumer demand for fuel, coupled with the decline in the number of outlets, work to create considerable unit efficiency. Back in the early 1990s, when Canada had more than 20,000 gas stations, average throughput was about 1.5 million litres per site. By 2017, the average hit close to 3.8 million litres at just 11,948 retail gasoline outlets. Last year, the number of litres declined by a modest 1.8% (the number of outlets declined by 0.2%) to reveal a trend that indicates sales per outlet may well have spiked (Figure 5)

Non-traditional marketers of fuel, such as grocers, vehicle repair and big box retailers reported gains of 15% from 2004 to 2018. Since 2004, non-traditional marketers have increased their presence more substantially in central and eastern regions of the country, more than doubling in Ontario and Quebec, and growing at an even much higher rate in many Maritime provinces,says Parent.

He points out that big-box outlets, such as Costco, as well as couponing and cross-promotions between the gas bar and chain store, can create significant impact on retail fuel markets even though thee outlets have a relatively limited market share. Retail outlets under this category tend to be high volume retailers (HVR). This means that throughputs are much larger than market averages. HVRs generally have a pricing advantage over traditional retailers due to their low operating costs per litre and the ability to cross-merchandize with their non-petroleum offerings, meaning markets with a high concentration of HVRs are generally characterized by lower average pump prices.” (Figure 6)

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Gas versus Diesel

Diesel penetration is up at Canadas fuel sites and diesel is available at 76.5% of reporting sites. This represents a significant climb from 2014, when just 47.3% of sites sold diesel. Even so, the diesel market remains small in comparison with gasoline sales. In 2018, diesel accounted for 7.3% of total retail petroleum sales. 

Backcourt remains essential

In Canada, 85% of fueling sites feature a backcourt offering, such as convenience store, car wash or quick service restaurant (QSR). 

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In 2004, Kent reported that about 40% of c-stores were 500 to 1500 sq. ft. Today, the most common configuration exceeds 1500 sq. ft. This illustrates how retail is tapping in to higher margin sales at locations, as well as increasing development from convenience leaders, such as 7-Eleven and Couche-Tard (Circle K). 

The Kent Report found 2,034 car washes associated with the 10,153 fuel stations that reported ancillary offerings. This representation is up 0.2% from 2017 (19.8%), but down slightly from the high of 2014 (20.6%). The three largest brands, Petro-Canada, Shell and Esso increased their car wash market penetration slightly. Kent reports these players took their share to 13.2% in 2018, from 12.9% in2017.

 In 2018 there were 1,188 quick service restaurants associated with Canadas fueling sites. Here, the 10,153 locations that responded to the survey showed an 11.7% market penetration rate. This is up from 7.8% in 2004, but remains virtually unchanged over the last decade, revealing what could be a significant development opportunity.


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