In this episode of “The Future Of”, Jeff is joined by Scott Erickson, CTO at Harbor Foods Group, plus insights from Tammy Klein, Founder and CEO at Transport Energy Strategies and Jeff Lenard, VP at Strategic Industry Initiatives, National Association of Convenience Stores. They discuss the challenges facing gas stations today, the impact technology is having on them, and future profitability strategies. As they evolve over the centuries, there is a lot of marked competition between gas stations and convenience stores. Their owners have devised strategies to ensure their continued existence in the face of a hostile environment.
The discussion delves into the innovation happening within the car industry and how the future of convenience stores and gas stations is being reshaped by the increasing integration of pending self-driving cars/fleets and electric vehicles. As a result of modern technologies and increasing digital dependency, convenience stores must reevaluate their shopping experiences and the role they play in consumers’ lives.
To stay relevant in the future, gas stations will need to look back and embrace the concept of “service stations.” In order to stay profitable, gas stations will have to offer a variety of services in the future. One obvious solution is to put charging stations next to gas pumps, but more infrastructure and station placement planning is also required.
Scott Erickson: And there was no infrastructure for the automobile and somehow as the society we figured it out. I know that’s a horrible answer because there’s nothing to stand on technically there, but it’s just a faith in our humaneness to figure those problems out for the greater good of society. We tend to do that.
Jeff Dance: Welcome to The Future Of, a podcast by Fresh Consulting, where we discuss and learn about the future of different industries, markets, and technology verticals. Together, we’ll chat with leaders and experts in the field and discuss how we can shape the future human experience. I’m your host, Jeff Dance.
Jeff: Welcome, in this episode of The Future Of, we’re focusing on the future of gas stations. We’re joined by Scott Erickson, CTO at Harbor Foods Group, and Tammy W. Klein, founder and CEO of Transport Energy Strategies to explore this future. To kick-off, Scott, can you share more about your background and the relevance to the topic of today?
Scott: Oh, sure. Thank you, Jeff, for having me as part of this. Very appreciative of the offer to talk a little bit about our industry and the future of it. I am a fourth-generation family member of a family business that started in 1923. My great grandfather immigrated from Sweden, and worked his way across the United States from Ellis Island over to a little town called Aberdeen, Washington, and started distributing food, just milk, eggs, and cheese at the time, to all the local businesses in the community that needed that food supply. Fast forward, about almost 100 years, our 100-year anniversary is coming up next year, and we are now a company called Harbor Foods Group. We are now over 1.2 billion in revenue.
Through that growth from my great grandfather and a horse-drawn carriage to now, we have 850 plus team members. We service Washington, Oregon, Northern California, Idaho, Alaska. One of our primary customers is the convenience store market, which in our society today is a vast majority of the gas pumps that are out there in the marketplace. Throughout my career in the family business, which is spanning 36 plus years now, I’ve had the opportunity to work in about every aspect of the business, from sweeping floors, loading trucks, filling orders, delivering, some sales work, finance work, all the way up to the C-suite positions I’ve been in the last 20 years.
I’ve had a great opportunity to learn the market, learn about our customers, then played part of an integral foundational piece, I believe, of serving the entrepreneurs in our market that start these gas stations and what we call convenience stores today and learn their challenges and their struggles and their successes to see where some operators have been very successful, where other operators maybe struggle. It’s been a great picture of the industry.
I’m excited to bring some of that knowledge and experience to this conversation because I really feel like there’s an opportunity going forward for this convenience store, small grocer, corner grocer, whatever moniker we want to put on it, for that to continue to evolve and change over time into the future.
Jeff: Awesome. It’s amazing to hear that story and to know that you’ve been there in the company since birth really, right?
Scott: Pretty much.
Jeff: You’ve been working actively for the last 36 years in this incredible family business that has impressive roots, the depth at which you guys are working with gas stations, and to hear that you’ve actually been in all these different roles. I’m excited to hear from you. To start off, I think it would be good for our guests– everyone has this experience of visiting gas stations. They’re almost at like every corner and there’s so many of them. I think I read around 150,000 in the US of which most of those are gas stations. Around 80% I think I read were gas stations. Then obviously probably if we extrapolate maybe millions around the world. What is the future of gas stations?
Before we get there, I think it’d be good to start with a little bit of the 101. Talk us through a little bit more about the current convenience store and gas station today, how that business actually works. Give us just a little bit of insight so we can baseline before we talk about the future and think about how things are going to change.
Scott: I think today’s convenience store and gas station business has actually changed over the years quite a bit in and of itself and had to evolve. Currently, most of the convenience stores, a typical convenience store will make a little bit of margin on their gas sales and the gas is really a pull to the customer base I think to visit the location. There are corner grocers without gas that do quite well of embedding themselves in their communities and marketing themselves that way, but those ones with gas, they are relying on that traffic to help get the in-store sales.
Some of the challenges that the convenience store faces today that has gas pumps is, for example, with the pay at the pump, which has been around for decades, but that still was something that was relatively new and introduced when I was first starting in the business. That was one of the things that was a concern at the time for convenience stores because foot traffic wouldn’t be forced into the store to complete the transaction. Convenience stores rely a lot on impulse sales and that person coming into the store. When the pay at the pump came in, 40% of the people decided not to visit the store anymore.
That was a huge thing that the convenience stores had to adapt to. One of the things they did was try to market more programs in their store to draw that foot traffic in. They sell premium coffee programs. A lot of them are bringing in grab-and-go type food offerings. They’re doing things like reinventing their store to improve the lighting, improve the cleanliness. Realizing that their customer no longer has to make that journey into the store, they’re doing all they can to pull the customer back into the store. Now, convenience stores are still strong outlets for some products that do pull people in.
You have the tobacco products, you have the beer and wine type products, and the snacks and the sodas and energy drinks. I think those have helped the convenience store continue to bring foot traffic in the store. A lot of them are trying to go beyond those products and get more into, I want to go into the store type of mentality from their customer base. That’s been probably the biggest current challenge with the convenience store was “How do I convert the visit at the gas pump into a visit inside my store?”
It’s important to the convenience store because currently, about 50% of a convenience store’s profitability comes from what we call “inside sales.” 50% of their profitability comes at the gas pump and that can be very market-sensitive depending on how urban or rural their market is. Gas is a very commoditized item, very price-sensitive item, and that can be half of their profit but the other half comes from inside the store. There’s a need and a want and a desire for these entrepreneurs and operators to move that traffic from the gas pump into their facility.
Jeff: That’s really good to understand as we think about the future. Where are they today? Gas is actually sometimes not the primary profit maker, or half as you mentioned, but really getting into the store is an important part for that business model.
Scott: Gas has made a comeback a little bit in the profit dynamic. Like today, it can be I believe anywhere from 8% to 14% tight margin that they might be able to make on gas. There was a time where gas was ultra-sensitive and they were lucky to make a nickel a gallon, which, with the infrastructure they put in and things like that, that cannot always be a profitable money-making venture or investment. Then it was really important to get the customer into the store because that’s where they would make their money.
Some convenience store owners in the past would use the gas as the attraction though they weren’t making much on it and really try to dial in what they’re doing in the store. Now, the fuel companies and I don’t know all the details, but the fuel companies really support a lot of the canopies, the marketing, the pump construction, and provide the financial resources for the operators to put those in. That helps in their ROI calculation as well.
Jeff: Got it. How about ownership? Do most of these convenience stores that are also gas stations, are they owned by these entrepreneurs? Are they owned by oil companies? Who are they typically owned by?
Scott: It can be a mix and we’ve seen it change over the years and change back. It’s been interesting. In the states that we service, Washington, Oregon, Northern California, parts of Idaho, it’s a lot of entrepreneurs. It might be a family business in and of itself that owns a convenience store gas station or they might own three or four. We do a lot of some regional players that might own 10. We have some nice chains that are regional chains that own 30 in a particular area. You get outside of those states and there are some states where it’s pretty much big chains that are the only opportunity.
I don’t have enough wherewithal on that or knowledge to know why, but that’s just what we see in the marketplace. They can be dominated by just change in a geographic region. In our area it’s a lot of independent business owners and they may have multiple numbers of stations, and then you will have stations that are owned or financed by the oil companies and that may be a complete chain and the oil company owns the whole thing or they might own the land, own the store, own the pumps, but they’ll lease the store to an operator who basically just lives on what he could get on the in-store sales. We’ve seen that model out in the marketplace.
Oil distributors will often own chains. They either acquire them in the marketplace through opportunities, recovering debt, and things like that and then they end up with 7, 8, 10, 12, whatever stores and so sometimes the oil distribution companies will own stores, and then obviously, that’s a good way for them to distribute their product, and then also take advantage of the retail space as well. It’s kind of a mix and all over the board, I would say if you look at the locations, probably half of the locations are independent business owners.
Tammy W. Klein: I want to comment on the current challenges facing gas stations today and I want to do it in the lens of understanding where fuels and vehicles, what I call transport energy, is really going around the world. I think one of the big issues that gas stations and fuel retailers are facing is “What kinds of fuels will there be in a world that is really beginning to push more strongly and strategically towards decarbonization? What does that look like?”
That might mean a revisiting of fuels that they offer today like gasoline and diesel. It might mean offering other alternative fuels. Electrification or electric vehicle charging is one option, but other alternative fuels are options as well. Then there may be bio-based versions of gasoline and diesel that they offer. It is a brave new world out there for fuel retailers to try and anticipate what the trends are and where policy is going in different countries. In Europe, there’s much more of a strong consensus and national and even supranational vision through the European Union, European Commission, about what transport energies should look like in the coming years.
It’s a lot of electric vehicles and light-duty vehicles, cars, sport utility vehicles, and the like, so there’s a lot of emphasis on electric vehicle charging, offering that, and then other fuels as well, bio-based alternatives such as hydrotreated vegetable oil, which is chemically indistinct from diesel. It’ll be fuels like that, but that’s going to be driven by very strong policies that are in place in Europe, but we don’t really have that here in the United States, which is where I’m based. We don’t have a strong national vision. We don’t have strong national policies. We have 50 states that are basically moving at different rates and speeds.
Some states are doing a lot on fuel issues such as California, which has implemented a low carbon fuel standard, which requires fuels that are offered to reduce greenhouse gas emissions and those are measured and you can earn credits and you can sell credits and there’s a whole regulatory regime around that. Then you have other states, that really it’s kind of business as usual. They’re not really moving very quickly in terms of developing regulations. We don’t have a strong national vision, and we have 50 states doing different things when it comes to fuels. I think that’s really challenging for fuel retailers around the country, and increasingly so around the world.
Jeff Lenard: Hi, I’m Jeff Lenard, vice president of Strategic Industry Initiatives for the National Association of Convenience Stores, otherwise known as NACS. Convenience stores sell about 80% of the gas purchased in the country. There are about 116,000 convenience stores overall and that’s roughly the same that it is around the world. Convenience stores are the dominant players in terms of selling fuels. Now, when you look at what’s going on with gas stations and what are the biggest challenges they face, you could probably break things down into three big challenges.
Number one is a fight for a limited customer base. The amount of fuel sold in the United States, gasoline, motor fuels peaked in the year 2018. Now, of course, in 2020 and 2021, we had significant demand destruction because of the pandemic and that hasn’t come all the way back. Also, I think most people look at 2018 as the peak year for demand as cars get more fuel-efficient, as we see the continued introduction of EVs into the marketplace and in various other issues. We probably are not going to see an increase in motor fuel sales on a yearly basis, but of course, we’ve been wrong in the past in looking at the numbers.
The one big challenge is if there’s limited supply, where do you get your sales, particularly as big boxes, hypermarkets, the Walmarts, the Costcos, and grocery stores continue to carve out space for fueling. That’s the one big challenge in terms of the fight for a limited customer base.
The second challenge that retailers face, that gas stations face is uncertainties related to supply. That is a continual challenge. That is not a new challenge. Some of that relates to environmental regulations that were passed at the turn of this century, which require boutique fuels required in different areas of the country.
What that does is it creates pinch points in the spring, leading up to the summer drive season. Usually, the system works its way through right about this time, right about mid-May, but in a given year, it can create some real challenges with the refining infrastructure, with the retail infrastructure, with the fuels distribution infrastructure, which can complicate things, particularly when there’s some sort of stress to the system. In the past years, that can be things like what we saw last year with the driver shortage and the continuing driver shortage, where it’s just been more of a challenge to get different fuels where they need to be.
We also saw the challenges this time last year with the colonial pipeline disruption, and just that slight disruption for a few days, which lasted, I believe about three days, was a significant challenge to the system. You saw customers just react by buying fuel in bulk, sometimes filling up garbage cans or second cars, third cars, and the system’s not equipped for that.
Anything that puts stress on the system can really create some imbalances and other stresses on the system, of course, are any natural disasters, whether it’s hurricanes, tornadoes, flooding, anything that affects production or refining because fuel retailing is the last step in that process. They’re dependent upon a lot of things going right before they are selling it to the customer.
The third thing that is a challenge for gas stations for fuel retailers is uncertainty related to the future of energy. What will they be selling at the pump or at the nozzle? There’s been a lot of discussion on EV. With retailers, I think a lot of customers when you look at consumer surveys, say they want their EV experience to be as close to their fueling experience. The public opinion surveys say we want charging at gas stations at traditional places where we see fueling. However, for the gas station, they need to make determinations.
Where do you put that fueling? Do you put it the most or that charging? Do you put that in the most convenient location or the least convenient location? Do you put a canopy on it? Do you create some system where people are able to order food or somehow do something in their cars besides sit there and wait for their charge to happen? There are a lot of issues related to that, because if you have to put conduits in you have to crack concrete that creates permitting issues.
What does the future of EVs look like, not in a 1-year period or 2-year period, but over a 10-year period? What do you need to do now? What do you need to wait on to see how it might play out?
Jeff: I really want to spend the bulk of our time focusing on the future of gas stations, but what about some of the recent events that have happened. We’ve had the pandemic for a couple of years impacting how much people are getting outside, driving outside. Recently, the war in Ukraine and how that disrupted the supply chain and availability of gas, seems like gas prices are just high, everywhere. I’ve seen a swing from like $0.99 in some states to now $5 consistently in many states. Tell us more about some of these, what you saw from the pandemic and also recently with the war happening?
Scott: I think with the pandemic, obviously people not being out and about affects any retail business. It affected the convenience stores, definitely. One thing that helped with the convenience store is people would still want things or need things, and they may not make as long of a trip, and they may run to their cornerstore to get those items during the pandemic.
During the pandemic, after the initial full-scale lockdown that we all participated in, as you started to be able to travel with certain certification paperwork, emergency, or necessities and society started to move about again, the convenience store industry had a nice growth spurt actually, because I think people were staying out of the bigger stores, they were buying the little things they needed to get by, and that helped that industry during that time.
Now we’ve seen since that level back out, but I would say that during the pandemic, the convenience store industry has actually seen maybe about a nice 5%, 6% growth, which has been good. As far as fuel prices, the biggest threat to fuel prices to the convenience store is obviously as price goes up, sometimes demand can also go down. Now, gasoline’s one of those commodities that a lot of people need, but they can scale back.
You’ll see demand go down and also you’ll see people spending more of their expendable income to fill up their car, and they’re maybe not going into the store for a snack or something that they desire or that extra energy drink, or something out of the food case or candy bar. They’ll be making other decisions with their dollars and that can affect the inside store sales. Haven’t seen a ton of that reflected in our growth numbers yet, but that’s generally a shift you’ll see in society when gas prices get really high like that.
Lenard: When you look at the effects of the pandemic and the invasion of Ukraine, they really are striking at two different elements of the fueling infrastructure. One is related to supply and one is related to demand. Let’s just look at the demand first, and that’s all related to the pandemic. When the pandemic struck in May 2020, the impact was immediate. People just hunkered down. They didn’t go to work, they didn’t run errands. They didn’t go out to restaurants or shows or sporting events or anything like that.
The impact on fuel demand was significant. It was 40% overall, but in many markets, it was much more significant than that: 50%, 60%, 70% reduction in demand over a multi-week period in mid-2020. Now, that demand has largely come back, but it hasn’t come back fully. It came back, there was still a double-digit deficit at the end of 2020 compared to 2019, and that deficit tightened a little bit in 2021, but it’s not all the way back. It’s not all the way back because there are still plenty of people who are working at home.
You can see in the US, particularly with government workers, that now that they’re required to come in a day or two a week, you’re seeing more traffic, but you’re really seeing different kinds of traffic. You’re seeing traffic patterns. Yes, there’s a typical morning commute, but we’re also seeing at convenience stores that, that morning commute, there aren’t as many, and they may not be coming inside for fuel in the morning. They may be getting at a different time and they may not be getting coffee or something else that they used to get in that morning rush hour.
Now, for those who are either out of the workforce because they retired or don’t feel like working or are working from home, we’re seeing a different traffic pattern emerge. We’re seeing people who are coming in still filling up in the morning, but maybe filling up at 11:00 or 11:30 when they finally find that it’s just a good time to get out of the house and meet people and have normal human conversations instead of talking to a box for several hours on end.
That’s what the pandemic has done related to demand. Now, with Ukraine, that is all supply-related. Russia is one of the top three producers of fuel. I think most people have heard on the news how much oil Russia produces, but it also refines products. The type of fuel that Russia produces also has an impact on how it’s refined because not all oil is equal. Some oil is heavier than other oil. You look at the tickers that look at different types of oil. There’s WTI, which is West Texas Intermediate, there’s Brent which comes out of the North Sea. There’s heavier fuel that comes out of Russia and formally with Venezuela, although that looks like it’s turning around.
Refineries are optimized to produce or take in different types of fuel. When fuel stops coming from Russia to other countries, it has a bigger impact on just the number. It has an impact on where refineries need to be optimized. One of the things we’re seeing right now is refineries aren’t optimized in the US and around the world and Russia also had refineries. That’s having a bigger impact than just the oil price that you see every day. It’s really having impact that’s affecting the refining ability around the world, and that’s probably having as big an impact on prices as oil itself. That’s something to watch over the next couple of months.
It’s not just the price of oil, it’s the ability to refine that oil.
Jeff: Let’s shift and talk more about the future because there’s so many interesting things to talk about there, but I think it’s good to understand the baseline. As we look to the future, if we just start with the high-level question, what do gas stations look like 20 to 30 years from now? I realize that might change in 10 and then 20 and then 30 and then 40, but there’s a lot of trends happening with electrification mobility. What are your thoughts on what gas stations look like in the future? Then let’s drill into some specifics.
Scott: I think that the gas station for the future, it’s possible in 30 years that it doesn’t sell gas. There’s obviously a lot of things that have to change in technology. I also think that in our industry, the gas station has had to adapt over the years already. A gas station started out as a service station. You got fuel there, you got your car repaired and corner grocers were a little bit different altogether, delicatessens, delis, things like that. As cars became more reliable, needed less service and that changed over time, you saw a lot of gas stations adopt food, candy snacks, packaged goods sales. They made that adjustment and that’s was the birth of the convenience store concept that we know today.
I think what that indicates is the real estate and their position in their communities is important. I think that can be leveraged for the future to continue to evolve themselves. The challenge will be how does that owner of that location maximize their profitability out of that location? How do I become more impactful with the community and gas becomes just a convenience I offer instead of a draw? Because gasoline could in 30 years––30 years is a long time––in 30 years, gasoline could very much be something that a hobbyist goes and buys for certain vehicles that are more recreational than naturally used for commuting. It could be just a convenience that’s added.
I definitely see the gas pumps, maybe being less dominant as part of the footprint of the real estate and more that space being utilized to draw people into the store. I always like to think of it like a community hub. How does that convenience store become a community hub? Can it offer UPS shipping services? Can it offer restaurant quality food that can be consumed on site or taken home to eat in different varieties?
Do you walk into a convenience store in 30 years, and it’s not anymore a convenience store, as much as it is a place to grab some food, do some business, pick up something you might need, or to hang out with your friends and community members in the neighborhood over a beer or over some espresso? It could really change how it’s serving their community.
I still think in the travel patterns, there’s still I think going to be a level of commuting, but I think in the main travel patterns, those opportunities are probably going to have to morph more into that travel rest like an advanced rest stop almost. Not a rest stop, but a travel plaza that you pull into regardless of how your momentum of your vehicle’s being provided, but a place where you want to stop and take a break because you’ve been on the road for four hours.
Jeff: More of like a community hub, more maybe the restaurants and cafés. You mentioned the UPS store. Maybe there’s even if you’re there for a longer period of time, health and fitness, Amazon locker center, but basically all these ideas are like, “Hey, this is prime real estate. How can you make this more of a community hub if the patterns are changing?” You called back to history and said, “Hey, these used to be service stations. They serviced and repaired vehicles. Then as that got lessened, they had to shift.” We’ve seen that pattern already of these convenience stores and can be community hubs already evolving.
As we think through the future, again, there will be an evolution needed. It’s interesting to think about how fast that will change. Boston Consulting Group said that the new mobility and autonomous movement, the electric vehicles, they said they might make fuel retail gas stations unprofitable by 2035 as it currently operates. Tell us more about how fast do you think the electric vehicle electrification autonomous vehicle movement is going to happen. What are your thoughts on that?
Scott: Personally, my thoughts on that are, I think it’s going to be a combination of things between capacity and charging time. I really think those might be the drivers or the tipping point. In a theoretical world, if I can buy the equivalent electric vehicle, so if I’m looking at a Honda Accord or Toyota Camry, and I could buy the same size vehicle at the same price within plus or minus 5%, call it, and my electric vehicle has a 500 plus range and charges in 15 minutes or less, I think that’s going to be tremendous pressure on the gasoline engine because I believe the ease of ownership and the long-term maintenance of an electric vehicle, barring just the environmental push on it, but I think those every day, how I live with this vehicle is simpler and easier with electric vehicle.
I think that even is part of fueling the vehicle as well. In Washington, any new convenience store gas station has to provide at least one electric vehicle station charging station in their build. It’s a requirement. Now, there’s grants that are supplied to help with that, but the challenges are there’s power constraints. To get the necessary wattage to have six charging stations. A lot of those pieces of property don’t have the infrastructure to the property to provide that charging. They might be able to do one or two or three, and that might be all they can do. I think that it’s very possible with EVs, you may not charge at the same spot that you gas up your car.
Jeff: It’s not an exact replacement to say, “Okay, I’m going to get gas maybe two to three times a month,” but you’re getting gas essentially at home with electric vehicles, typically. You’re typically charging at home.
Scott: Your workplace.
Jeff: Unless you’re traveling, if range is going up in the future, you may not need to stop essentially as often is what you’re saying.
Scott: Yes, and especially if you’re talking on the commute side, the daily driving.
Jeff: Oh, daily driving.
Scott: When you’re around town and you have a 500-mile range, that might last somebody almost a month, and they’re just trickle charging it at night every so often. There might be incentives. It’s cheaper to charge here because then it is your neighborhood and things of that nature might come up. I think the convenience of plugging in at night might win over that. Even those people that continue to go to a workplace, a lot of workplaces are putting in charging stations as well. If you can pop into wherever you work and plug your car in and they get in and it’s fully charged and it’s really not a cost to you, that’s pretty convenient and pretty cost-effective as well.
I think we’ve seen the convenience stores start to adapt to this concept a bit because cars are what, 26% more fuel-efficient than they were years ago?
Jeff: Right, 26% more fuel-efficient and then the electric vehicles obviously are giving so much more range on that. That’s already decreasing the need now. Then the hybrid side. That’s fascinating to think through. If we go back to this notion of how fast you think this is going to happen, you’re saying that you think it’s going to happen fast. I have read, I think it was car companies like Volvo and GM have said, “Hey, 2030, 2035.” We obviously have the Teslas of the world and Rivian and Lucid and others that have a ton of pent up demand for purchasing, but how quickly is this turnover going to happen?
I think EVs are still like 2% of the majority of the cars. Now the White House has said, “Hey, by year 2030 half of new vehicles–” they’re trying to push half of new vehicles in US should be EVs. We see car companies going along with that, but aren’t we still going to have the majority of vehicles for maybe the next 20 years be gas, or do you think that these better cars we’re going to be trading up, and then we’re going to be sending these cars to somewhere else?
Scott: Personally, I don’t know. EV or some alternative fuels. I think there’s some other fuels that are interesting, that people are playing with as well, but just sticking in context because the EV is much more a reality today. There’s production constraints with new cars. The Teslas of the world can only pump out so many cars, but you see a lot of the big manufacturers really putting a lot of research and development behind electric cars as well, they’re coming out with their own models. I think the capacity concern is going to solve itself for example, because right now that would be a hurdle. If everyone today wanted an electric vehicle, it couldn’t happen.
But I think there’s like anything that we see in technology––and technology is not just computer technology, but technology in the sense of improvements in society––it goes much quicker than anyone ever anticipates.
Jeff: There’s a tipping point.
Scott: Yes. You can go back the checklist of things. From radios to televisions, to the home computer, to Netflix, to cable modes, to whatever you want to pick, cell phones, smartphones, it goes so much faster than us than we predict, experts to people just with an opinion. I think we need to heed that and we need to respect that history when we think about this. I could see when the parameters of value exceed the gasoline engine or are at least equal and the ownerships remain simple, more simple in the gasoline engine, I could see a significant shift in my mind over a course of three to four years.
Why I have that opinion is I think the big companies are already adjusting, the big automakers, so they will be able to shift with that and be able to satisfy the supply, to help with satisfying the supply. I also see it wasn’t that long ago that cars became much more reliable and interest rates got very attractive. I don’t remember the timeline exactly, but it would be cool for someone with more statistical ability to take a look at. We turned over new cars in the marketplace across different income levels in a two to three-year period.
Jeff: Oh, wow.
Scott: Everyone was buying new cars. New cars became the thing to buy and they had all different price ranges, all different models. I use everyone lightly, of course, because there’s still––but a bulk of the population was turning over new cars because it was made financially feasible to buy a car, the cars were much better than what was previous, and people didn’t hang onto their cars as long.
Jeff: We might be upgrading like we upgrade our smartphones.
Scott: I think so.
Jeff: More frequently. Just because we have them doesn’t mean we’ll want to use them given that the experience could be better, there could be that tipping point. There’s obviously the environmental aspect, which is part of the equation, the price point’s part of the equation, the experience inside the vehicle, because the new cars aren’t just electric, they’re also like rolling computers, where it can be a much better experience inside. Then it is the latest experience and it’s very technology-driven. There’s a lot more room for technology given that so much room has been taken out with the electric motors being typically around the wheels. Then there’s the infrastructure, and that’s often been a hurdle, is infrastructure for anything. How do you have the infrastructure?
Part of the infrastructure right now for cars is gas stations to get around but in the future, our infrastructure built into our homes, then it’s these charge points to say, “Okay, I’m not going to have anxiety when I go travel because often we buy things or do things.” Insurance is a great example where it’s like, we all have tons of insurance for those worst-case scenarios. Are you seeing the infrastructure’s going to keep up also with any trends on the infrastructure to support EVs––any thoughts on that?
Scott: I think that’s going to also be a function of what does the EV 10 years from now or eight years from now needs as far as the infrastructure to keep up. Current battery technology requires a certain amount of wattage to charge in a certain amount of time. I’m not schooled or know enough about those details, but just on the surface, what does the battery technology that’s around the corner do? Does that charge with less energy? Does that charge quicker so that more cars can charge in less amount of time?
Does that have that extended range? Is it lighter with an extended range so that it even freed up more space, for example, inside the vehicle like you’re talking about, and do the face of vehicles themselves change? Right now, it’s a very personal experience and it’s something I enjoy. I love going on road trips and hitting the road. I have a Jeep and I like taking the doors off and all that stuff and being out in the wind.
That’s part of the experience, but do we get more comfortable with the more of a community type thing, and because of the quietness of EVs and some of the self-driving that’s being used in the electronic vehicles, do they become more communal in and of themselves? Are you ride-sharing more? Do you not own a car? Do you lease into a car? I don’t know. The future is so wide open with this, but I think what happens generally is something gets very appealing very quickly and the market will adjust.
Jeff: The market shifts pretty quickly. We’ve seen that with lots of technology recently, like voice AI. There’s three billion devices that now use voice AI. We didn’t have this technology, but now half the world does. It’s embedded in our smartphones, but most of us have some smart device now at home, a cheap one, right?
Jeff: That’s one example. Even the automobile itself, if you look at horses to automobiles, how quickly that happened. It was actually pretty quickly, and it was over a period of a decade major cities could be completely revolutionized.
Scott: There was no infrastructure for the automobile and somehow as a society, we figured it out. I know that’s a horrible answer because there’s nothing to stand on technically there, but it’s just the faith in our humanness to figure those problems out for the greater good of society, and we tend to do that. We tend to do that.
Jeff: I think your point about the range of the batteries changes the game. The idea that you’re charging home changes the game.
Tammy : It’s anticipating what those changes are going to be. Its uncertainties in the market, anticipating those. Are consumers going to flock more towards electric vehicles, for example? Should they offer charging? The first experiments in doing that were really not great. There weren’t a lot of vehicles. When fuel retailers first started offering charging around 10 years ago, there were all kinds of problems with the equipment. There was a lot of underutilization. There were just lots and lots of problems.
Some fuel retailers really got burned and there was a great reluctance. Even today, there’s lingering reluctance about when and whether to get in the ring and offer charging. Does it make sense? Is there a return on investment, things like that? Then you see other fuel retailers that are really trying to take that risk and offer charging in the hopes the consumers will increasingly buy electric vehicles and need public charging.
That’s happening everywhere in Canada and the US and in parts of Europe. It’s really, there’s this uncertainty. In the US, there’s policy uncertainty, less so in Europe, and there’s uncertainty about new technologies like electric vehicle charging, will consumers buy them? I think we know now at this point we know that electric vehicles are coming. It’s really not a matter of if, especially given the more than $500 billion that the auto industry is investing. It’s really going to be a matter of when and how.
Lenard: I think Aspirationally people feel because of all these reports the news reports because of the commercials, because of all the newest related to EVs that they’re more prevalent than they are. I think a perfect example is in the survey, one of the questions we asked and we looked at the median number, which is the middle number. We didn’t want to look at the mean number which can be inflated or reduced by people who say zero or a hundred or something like that, where you get two extremes. The median’s the middle number out of every survey submission. The first question we asked is what percent of new vehicles on the road that were purchased last year were EVs? 20% was the median answer. According to US drivers, they thought that one in five cars sold last year was an EV. In reality, it was about 3%, a couple percent more were hybrids, but still not in double digits in terms of EVs, and consumers at a minimum were off by a factor of two.
Then we asked the second question, what percentage of vehicles on the road right now are EVs? The median number for that was 15%. They thought that 15% of all vehicles on the road are EVs. The correct answer to that is less than 1%. Just a little backed up in terms of information. There are about a little less than 400,000 EVs sold last year out of the 14 million or so vehicles sold last year. There are about 270 million vehicles that are registered in the United States.
Let’s just presume that by some magic, production was ramped up in every vehicle sold last year and the next nine years, assuming 14 million cars sold, although it’s a little lower because of the pandemic, but let’s just assume that. If over the next 10 years, 14 million, all 14 million vehicles sold are EVs, nothing else. I’ve been to some areas of the country where I see nothing but pickup trucks so okay, we’ll put that aside. If every car sold is an EV, that means in 10 years, EVs will have about a 50% market share, which means that 50% of vehicles will not be EVs. When you look at the numbers that don’t feel realistic at all, that every car sold in America is going to be an EV.
Jeff: Like you said, Washington state, if they’re gas stations are integrating some of these charge points, I think I read that the White House was investing like 5 billion to try to support 500,000 public charges across the country, but you also have Teslas, Rivians, and even these car companies investing in some of their own infrastructure. It seems like that’s been the near-term infrastructure pin because we haven’t had the range, but it could all be for, hey, just long term– It could just be for those longer trips that we don’t take very often if the battery range really goes really high and it’s solved itself.
Scott: Do you think though, Jeff, that there’s a community aspect that is just part of what we want to be is people? Where I’m going with that is I don’t think that the current gas station or convenience store is going to go away. I think they’re going to evolve and offer the services that meet their customer base. I still think one of the services is going to be that charging.
I just don’t think it’s going to be as needed as the gas pump, it’s going to be more of a want-to. Look how many of us can make great coffee in our home. We can, but do we? Some do, some don’t. Some of us like to go to the coffee stand. Some of us even like to go inside and say hello to people and see people, especially pre-pandemic, and rolling out of this thing too, where we’ve been bottled up a bit.
Some of us like to go through the drive-through espresso stand to get our coffee, and having some background in the coffee industry, me personally, I can make a better coffee at home than I can get at a stand but I like saying hello. There’s a guy I see every morning across the window that I say hi to that we went to high school together. And so you get that type of connection point. I think this evolving of the convenience store and what our operators are doing in the market to position themselves, to be ready for this is, is phenomenal as they’ve shifted and start to shift, but creating those communal hubs and offering that electronic charging, that EV charging is a option, it’s just another way to pull people into this community center.
Jeff: The future of gas stations as more of a social and community hub could offer lots of different services. The charging stations will be part of that. Gas will still be part of that at some period of time, but that could be the future. Do you think of this more like these places becoming more Starbucks? You mentioned you’re going to get coffee. Is it that ecosystem where it’s like, it is a little bit more of an experience? I’m not saying that gas stations now aren’t but if you think about a Starbucks versus walking in a gas station, there’s a difference there. Do you see the draw, if you’re trying to make it a community hub, you’re really elevating that experience being an important part for their future success?
Scott: I think so, and I think it also depends on the population you’re serving. Like we talked about earlier, if you are more on an interstate travel route, you’re going to adjust to serve a different group of people in a different spot. People that are traveling. If you’re in a neighborhood community or in a more rural setting, you’re going to shift a little bit towards that. I think there’s going to be services that the fact of these positions in the market, the real estate and where it is, I think there’s going to be services that are going to be able to be provided that we don’t even see yet. 10 years from now and think 10 years ago.
Jeff: Yes. We were going to Blockbuster still to maybe get some movies and getting DVDs in the mail or maybe that was 15 years ago.
Scott: We may not see what’s available out there, but I really believe in the ability of these business owners to adjust. They’ve shown it throughout history already, and to leverage that real estate in that position and to leverage what they’ve already built in their community. We have so many owners, like a convenience group as Don Rhode owns some stores in the Vancouver area and he does a wonderful job of integrating the stores in the community and being a place that people like to go to. There’s friendly faces and they say hello, and they know something about each other.
It’s just leveraging that further as the market shifts and say, “Hey, we may not need as much gasoline as we did 20 years ago, but we need this.” We may not know what this is yet. There’s a junior high kid working on what this is right now that’ll be something we want 10, 15 years from now. That’s just the evolution of technology in our societies, and they’ll provide that because at the end of the day, our success over the years has been driven by serving our customer base and being a valued partner, and being invested in their success. If they’re successful, we’re successful.
Our operators and store owners and small business people, they are vested in their community’s success. If they appeal to their community and they provide the services that community wants, then they’re successful. I don’t think that that changes because of challenges, I don’t think it goes away because of challenges. I think the challenges bring new opportunities for people to reinvent themselves and provide that new service to that community that it demands because there’s already tremendous pressure on all retail.
People are staying home, or look at the restaurant industry in what you would call the lunch districts where you had sky rises of office buildings full of people. These restaurants’ business, profitability, livelihood, depended on that foot traffic after work and during lunch. Look how that dried up and it shifted obviously to where people live and those restaurants, but there’s that type of change happens all the time. There’s tremendous pressure in more fuel-efficient vehicles.
People not commuting to work like they used to takes people out of the traffic pattern. People generally with the high price of gas putting pressure on people’s pocketbooks and budgets, not buying as much. Those aren’t necessarily new challenges. Gas prices have spiked before and been a challenge. People wanting to drive as often because of it has spiked before in our history and been a challenge.
The community that operates these services is the gas stations and the convenience store market, they’ve adapted very well to those changes and I have a lot of faith that they’ll continue to do that. It’s super fun to speculate about what that might look like in totality, but I think a big unknown is we don’t know what we don’t know right now.
Jeff: Right. I love the concept though of it being, again, going back to roots as a service center and this other principle of being a place for a community and then also adapting to its local community, ideally, up-leveling the experience as well in the process. I think those are key principles.
Scott: It’s going to be a pull versus the push. Like right now, there’s a need. I need to stop and fill up my car and it’s probably coupled with some wants as well. I want a cup of coffee or whatnot.
Jeff: We all need to go to the bathroom. No matter what, like if we’re traveling, that is a draw too. That’s not going to happen inside the vehicle.
Scott: No, No. I don’t know, Elon Musk might be working on that. Who knows but no.
Lenard: People are very aspirational when they’re thinking about what EVs have for the future, but it’s going to be a long time before we get there and gas stations will be around now. They may not sell as much gas. They may do more charging. There may be other types of fuels involved, but the gas station will be there to provide convenient fueling or energy consumption for whatever they need. The typical fueling is three to four minutes.
I would imagine as technology advances that you’re not going to be looking at charge times that are significantly higher than that. If EV charging is to take off outside of the home, and that might be that people are looking at not complete charges. I think the presumption when EVs came in is people would want to charge from 0% or 1% to 100%.
Now that takes a long time. I think as time has gone on, people have looked at EVs much the way they’ve looked at cell phones and you see the way people with cell phones look at charging is “I’m on the road. I’m at 40%. I’d love to be at 60%. When I stop in this place and quickly get something to eat, I’m going to charge for a couple of minutes.” Possibly some model that we might see with EVs that people look for partial charging, they don’t want to get to that dreaded below 20% where the percentage turns red and all of a sudden it’s like, “Oh wow, I got to do something in a hurry.” Gas stations will be around, EV easily around too. There’s no forecast that I’ve seen that indicates anything different over the next two or three decades.
Tammy: I think in terms of looking at the future of the gas station, it’s going to encompass all of these things. I think it’s going to be about designing an aesthetically pleasing, nice place, attractive for people to come and sit and either fill up or wait for their car to charge because even in the fast charging, you’re waiting 20 or 30 minutes. I think fuel retailers are already responding to that. You see food offerings. People really love some of the offerings that some of the fuel retailers are doing. It’s not just these questionable snacks and sandwiches, you’re not really sure. It’s like really first-class food offerings, really nice seating areas, WI-FI, services like ATMs, and others. Those things are already beginning to proliferate. Retailers around the world are beginning to offer that.
Then they’ll just be like this other dimension to keep people and bring people in the store while they’re waiting, for example, for their vehicle to be charged. I think that’s where we’re going. Instead of you drive in, you fill up, you leave and it’s done. I think we will see a few retailers create more destinations in particular markets where there are services and amenities and attractive places for people to come.
I think those––it won’t be in every market. It won’t be every station, but I think we could see that rolling out in select markets and really expanding on these things again, fuel retailers are already doing. It’s really just about expanding that and really planning for that especially when it comes to technologies like electrification and electric vehicle charging.
I think that’s really one of the big, big things that I’m seeing that we’ll see fundamental change and it will present challenges, but it’ll also present a lot of opportunities as well. It’ll just be staying sharp, watching the policy landscape, watching the consumers and what they do, watching these new types of vehicles roll out, and seeing how consumers respond to them.
I think again, presents opportunities and challenges, but it’s an exciting space to be in. I think fuel retailing will be with us for a long time and like every industry, it will continue to evolve.
Jeff: One interesting thing I think that Amazon has done is we saw them getting more into retail. They also bought Whole Foods, a major grocery and we see these Amazon Go places cropping up, which is just walk out technology. You go into a store, you walk out with it, and they have their cameras and their AI, they automatically deduct them from you. You don’t really check out. You just walk in, you get what you need. We saw Amazon Go go into the grocery business. If you think about convenience stores being a subset of grocery, and also the notion of these Amazon Go being little convenience stores, could you anticipate Amazon making a major play for gas stations and convenience stores and buying them up as major infrastructure to support their ecosystem?
Scott: I wouldn’t put anything past a company of the size and financial capability at Amazon. That is a possibility. One of the challenges that the market is going to face in the future is going to be “What do I do with this real estate?” We talked about the community center, we talked about reinventing themselves, that’s probably going to work for some of the markets, and I’m thinking 30 years down the road, I’m not looking like five years down the road. Thinking 30 years down the road. Then it becomes “Well, what do I do with this piece of real estate? What’s the best way to serve the community with this piece of real estate?” it might be a totally different business.
You saw that in our history when service stations converted more to convenience stores. You would see service stations closed down and something else popped up in the spot, whether it’s a fast-food chain or a Starbucks. That gas opportunity there was gone and it shifted somewhere else. I could see some of the real estate being repurposed. I could see a major player coming in, and maybe wanting to buy up that infrastructure and produce that infrastructure there. That’s one way to do it. Another way to do it might be to partner with these locations and avoid some of the initial investments that’s needed to actually buy it, and work something out in that manner as well. But Amazon is so big, and they buy things and do things with their financial capital that are a little bit unpredictable. So is it outside the realm of possibility? Heck, no.
Jeff: Definitely. I think they caught us by surprise there. This notion of the mix of brick and mortar and digital is interesting and your point of what do we anticipate for gas stations, maybe there’s even a digital aspect that becomes important for the future, given that that blend and that hybridization is everywhere. One of the things I’ve been thinking about is it seems like some countries like Norway, for example, are going a little faster than others on electric and hybrid. I think it could be interesting to see what happens to the gas stations there because I heard maybe as much as 90% of new cars are electric or hybrid.
I’m not aware of any trends that are happening there for gas stations. I think that could be an early sign of some of the evolution we might see.
Scott: Well, you look at Europe is a interesting model, Japan is a interesting model, and there’s other places around the world. Then you look at our market, a gas station, or a convenience store, what part of that store today could be distributed to the consumer how you see it in Europe in Japan like a vending machine. Some of the technology that’s in place and other industries today, where that goods to person technology––can I walk into a convenience store and the footprint of that store is now about that community service center?
And I go to a couple of panels in the walls in the store and it’s an ineffective fancy vending machine and I say, “I need some toothpaste and I want some wet wipes for my car,” and it just vends them out to me. The rest of the store is all about that experience with the community, food, and maybe whatever services we don’t see today. You do see some of that. Europe is very progressive in their advancements, because they lack space, they have a very high cost of labor. In the distribution industry, a lot of the things that leverage equipment automation will come out of Europe because of those things because of the space constraints and the cost of labor.
You do see different ways to get the product to the people that take up less footprint and are more convenient. Let’s face it, we walk into the convenience store or the community market and we need toothpaste, we don’t need to see every toothpaste on the shelf. We probably have a couple of brands we like and we’re in there because we need toothpaste. It’s not really an impulse buy. But if we can find a better way to distribute those to the consumer that’s in the store, then can we leverage that space to pick up more that either impulse buy or different food concepts that can serve the community even better? Europe has some of those things in place that we could probably leverage the research they’ve already done.
Jeff: Thank you. Again, a key takeaway point from this is prime real estate. Needs will evolve and these community centers will evolve with it. We’ve been seeing that trending over time, whether that’s the Red Box that you see because that’s a new business model. It’s vending something or the Red Box is going away because we aren’t using DVDs as much. That’s interesting to contemplate. What about the trends in food? You guys supply gas stations with the bulk of what shows up in their store. I’ve noticed you personally, you have tons of energy, you seem really healthy. Is there any trend towards more healthy food in gas stations as well?
Scott: Yes, it’s been a topic of conversation probably for a decade. I think we’re reaching a point in our society that people are being more health-conscious. We probably have never been more health-conscious as a society ever in the United States as far as working out and whatnot. I think what we’re learning is that our inputs are important. What we eat is important, that working out and staying fit and staying healthy is vital, being active is vital both mentally and for your physical health, I believe. This is all my personal thoughts too, Jeff. I don’t have––
Jeff: It’s relevant. Thank you.
Scott: -–any technical experience here or anything but what we eat is very important to how we feel, I believe, and to our overall health as well. Getting up there in age, I’m 51 and I have peers that are very physically fit. I was not, and it’s probably still not where I need to be, but they were having some of the same health concerns I was having. It wasn’t because they weren’t more dedicated to their health because they were.
What they were eating and putting in their body, regardless of how they burned it and what they did with those calories to be physically fit was doing damage to them internally. I think there is going to be more of a push to make what’s been a decades-long or more mission, really give it the traction and grip to really start to offer more of those items in that marketplace.
Jeff: Everything’s tempting, obviously. When you’re traveling, you go to the bathroom and it’s like, you’re probably hungry or hangry maybe too. Everything’s tempting there, but the level of education or awareness of health, people are changing too. How you meet that growing need and as that awareness grows, you could see the product line changing. I’m seeing a lot more––some integration like sandwich shops, Subways, stuff like that showing up in rest stops.
Scott: We see that trending as well. Harbor Foods Groups, we have Harbor Wholesaler Services, a gas station convenience store, quick-serve restaurant market. We also have a company called Harbor Food Service that is what you would call a broad-line food service company. It services restaurants from quick-serve all the way to your fanciest of fancy restaurants and a variety of menus. That’s been a real fun, invigorating business as well when we talk about food.
Why that’s important to us as a family business, is all that we talked about the evolution of the convenience store, is to learn more about the food market so that we can better position our convenience store customers to be those community centers and offer high-quality food and also to take what we learn in the convenience store distribution game, which is very much about efficiency, is very much about being on time and consistency and apply that to the food service market are some of the technologies for efficiency we use in the convenience store game, apply that to the foodservice market so we can better the experience of the restaurants.
We really think we’re positioned uniquely to provide win-win to the market segments for both these customer bases. We’re super excited about that. Where that helps us in the convenience store, what we’ve seen, is as our operators have developed more what we would call “food service offerings” in their stores, whether it’s a deli case, or whether it’s some grab-and-go foods, or whether they’re making things on-site, what used to be our third or fourth most profitable segment in that market segment has gone to number one.
The demand is there and if it’s executed appropriately, people appreciate it. That allows for more healthy offerings as well.
Jeff: That creates the trend.
Jeff: You guys are positioned with that offering, serving regular restaurants and stores as well, grocery stores, to help with that trend, to help with that shift. That seems like that’s part of up-leveling the experience as well.
Scott: It is.
Jeff: You may only be serving a certain type of demographic in those stores, but if you can bring in more high-quality foods, then you can reach probably a broader market, especially as we think about community
Scott: Yes. Pulling in on the way home from work or wherever you are and be able to pick up quality grab-and-go food that you heat up at home, that’s as good as you would make at home or having a spot if you just want to relax and chat and knock it around a little bit where you can get the food right there and eat it there. It’s a pseudo restaurant experience. A little more convenient and a little quicker, but it’s very similar quality and I think that’s something that those locations can offer. It’s something that we’re driving towards as well.
Jeff: You may not go there to get gas or to charge your car, even though there could be some convenient options there. You may just go there to connect.
Scott: Yes. There’s examples of operators in the market that have done a really good job of offering more to their customers than just “I need gas” or whatever. Some people do very good. There’s a place in Spokane called Rocket Market. They have just a very nice wine selection. They keep it fresh and keep it rotating. They’ll do a wine tasting once in a while, out in their parking lot. Stores have done things like that. They put in growler stations and they’ll hook up with a local brewery and they’ll be a place where someone could get their growler or beer filled from the local brewery.
All those things are starting to percolate in the market and really every operator that’s committed to that change. It’s going to be a little different depending on who they’re serving in the community they’re in. It’s going to be a little different for each. It won’t be quite so cookie-cutter. I think that’s the power or the secret sauce that our customer base has, is they’re not a chain that has 5,000 convenience stores across 20 states and they all look the same. If they’re serving a community, they’re going to know what the community needs, what that community desires, and they’re already entrepreneurial in nature. They’ll adjust.
Our job is to make sure that we provide them with enough ideas and enough support to where they can find those resources or those items or those services that they need to provide to their customer base so they can continue their success. We have 850 plus team members that we want to be successful so we need our customers to be successful. We work very hard at it.
Jeff: It makes sense that you guys would all be thinking about the future. Maybe the gas stations they’re community stores, not even convenient stores, they’re community stores. Something like that.
Lenard: The fueling industry is always evolving and it’s going to continue to evolve, but the thing is, change takes time. If you look at the history of fueling everything that’s introduced, that is a significant enhancement of fueling has taken decades to take hold, not days, months, or years, but decades. For instance, you look at self-serve, which started, you could argue that it was in the 1940s in some places, but the technology really was introduced in 1964 that allowed people to fill up their cars and save a couple of cents a gallon. It took the rest of that decade to even get a smattering of stations to take advantage of it.
In fact, it was the first two oil crises of the ’70s that allowed various states to relax their restrictions on self-serve where you finally saw people who would say, “Yes. I’ll pump my own gas. I’ll change my behavior to save a couple of cents a gallon.” The move from full serve to self-serve was at least 20 years in the making, if not 30 years in the making. Another thing you look at things like pay at the pump, which was started in the mid to early ’80s and took well over a decade to really be embraced. People still continue to go inside the store well into the 2000s.
When you look at these types of advancements, it takes years and years and years to change behavior. The success of the future will depend upon how do you tell that story to customers? When you look at how a couple of marketing axioms is, if you have something that’s just basically a stair step enhancement, what you want to do is you want to paint it as revolutionary. You want to make it seem as amazing as possible, and not just a basic change in something that people are familiar with.
When you’re trying to tell somebody about something that’s revolutionary, you want to make it sound like something they already do. When you look at the next generation of fueling or charging, or whatever it is, the key to get there is to tell people, it’s really not that different than what they do now. That will encourage adoption, that’ll move things along quicker by telling people, “Hey, it’s not that difficult. It’s something that you’re very accustomed to.”
It’s just about marketing, as much as it is about technology and a lot of other things.
Tammy: What’s changing is that fuel retailers may have to more broadly consider the types of fuels that they offer, bio-based gasoline, bio-based diesels, renewable natural gases, if there are natural gas vehicles out there, electric vehicle charging, maybe also in the future, hydrogen. It’s really beginning to plan for that and anticipate, and try to anticipate from that.
It’s really going to require knowing your consumer in the various markets that are being served and really knowing them deeply and really watching what’s happening on the policy front, and what the trends are, and really beginning to prepare accordingly.
Jeff: What advice would you have for gas station owners? Given how much change is ahead, what advice would you have for them?
Scott: I think for the gas station owners, is to have faith in their ability as the entrepreneurs in their community. They’ve shown over the years to adapt to all sorts of challenges and changes, to better themselves, and better how they serve their communities. I have a ton of optimism that though challenges may be coming 10, 15, 20, 30 years down the road, that they have the unique ability to adjust to those and provide something that’s even better for the community than what’s there today.
We see it, we see it in little steps here and there and we’ve seen it over time, in different challenges that that market is adapted to. I think these people are the true entrepreneurs in their community and they can be the true revolutionaries in their communities of how they serve them, and they just continue to do that. I have a lot of faith in their ability.
Jeff: That’s really insightful as we think about their opportunity to improve the experience and also survive and grow out of it in a stronger way. Often great things come out of our hardest moments or change.
Scott: I really believe that it takes those challenges, those struggles to have the creativity to innovate into the future. I think throughout history, a lot of the innovations that come from severe challenges and struggles people have gone through, or industries have gone through to reinvent themselves.
Jeff: Thank you for all that wisdom. This notion of your journey, and also the adaptation, this goes back to our original topic, The Future of Gas Stations, how they adapted over time, and will need to continue to adapt drastically. To bring that back to our relationships and thinking about how, if we’re committed to a good experience with each other, how we need to also adapt and learn together and communicate and have clear expectations. Those are my key takeaways from your wisdom.
Thank you, Scott, for being with us and for sharing the depth of your experience, your foresight, your insight into the future. Really impressed with your thinking and also the legacy that you’re living and continuing to live in this business that started with your great grandfather. Impressive. Loved having you here.
Scott: Thank you so much.
Jeff: I’m sure our listeners really enjoyed it also. Thank you.
Scott: Thank you, Jeff. Thanks for having me. It’s been a real pleasure.
Jeff: The Future of Podcast is brought to you by Fresh Consulting. To find out more about how we pair design and technology together to shape the future, visit us at freshconsulting.com. Make sure to search for The Future Of in Apple Podcast, Spotify, Google Podcasts or anywhere else podcasts are found. Make sure to click Subscribe so you don’t miss any of our future episodes. And on behalf of our team here at Fresh, thank you for listening.