After the pandemic, the economy did not recover the way many expected. Instead, most industries have been sliding slowly downward. Businesses everywhere are feeling the pressure of a downturn — so where is the opportunity that remains? Or how do you preserve your strength and wait patiently for the next recovery?
From what we have seen, China’s gas-station industry — private stations in particular — is going through its toughest test yet. On one hand, regulators are cracking down on non-compliant operators, to clear out the damage done to the whole private-station sector by a few dishonest owners — but that has also badly weakened private operators’ appetite to invest. On the other, electric vehicles are growing fast and have already hit fuel sales in some regions; as EVs keep growing, station traffic will fall further.
In mid-2023, PetroChina tendered some ¥500 million of charging equipment, a move that startled the industry. The state-owned oil major was leading the way, accelerating the shift from fuel retail to energy services. Looking at the history of gas stations in Europe and America, a station that only sells fuel cannot last. The future is a multi-format service hub — fuel, convenience store, car wash, supermarket. With EVs growing fast and attitudes to fossil fuels shifting worldwide, we believe China’s fuel retail must make the same transformation: convenience store, fuel station, charging station and car wash, all in one. Giving this format a precise name is hard, but every operator faces the same question: how do you attract customers — and keep them?
In a market economy, the simplest answer is a price war. But a price war is a move that wounds your enemy and yourself in equal measure. After a while, nobody makes money, and everyone has worked for nothing. In my view, the most effective and most lasting strategy is this: raise the efficiency and the quality of your service. Truly achieve “what others don’t have, we have; what others have, we do better.”
The convenience store
The convenience store is the awkward part of a gas station’s business. Most stations sit in convenient locations — which is exactly where small supermarkets and family shops like to be. That is the opposite of the situation abroad, where most supermarkets are far away and a trip there is inconvenient, while the station store can supply everyday food and goods at fair prices. A station store is also small, so it cannot stock much of what people need day to day. And people tend to assume that things at a gas station cost more — just as they assume things at a train station or an airport cost more. So for now, I do not think a convenience store is a good way to bring in traffic.
The charging station
A charging station will certainly be a necessary part of the future energy station. As petrol-car sales fall and EV growth becomes irreversible, having charging is essential if a station is not to be left behind. Shell, Esso and other majors are already building standalone charging sites or adding chargers to their existing stations. But for now, EV safety is still a worry. And whether today’s charging stations can match new battery technology — or the solid-state batteries and ultra-fast charging that may come — is still unclear.
The car wash
The car wash is an old topic, and we often say: wherever drivers come to spend, there should be a wash. Whether they come to fuel up, to charge, or to shop. As a way to bring in traffic, a wash suits a gas station, a charging station or a large supermarket very well. For a gas station today, offering a free wash with fuel is the perfect way to draw in the drivers you already have. The worse the economy gets, the less people want to spend — when they do spend, they weigh every penny, so if washing costs money, they will put it off. But if one fill-up earns a free wash, they will happily drive a few extra kilometres to come to you.
Cutting the cost of washing and raising its efficiency still comes down to investing in automatic wash equipment. How exactly a station operator should choose the right wash equipment — we will talk about that next time.