Fuel stations of the future

In a future of autonomous vehicles, hybrid and electric cars, car sharing, high-density living and low-emissions policies, will we wave goodbye to the Australian servo?

In the 1970s, around 25,000 service stations pumped petrol at nearly every major intersection – one station for every 520 people, half of whom were too young to drive.

The old-school ‘servo’ has evolved considerably since then. Market consolidation has seen many smaller family or independent operators cash out, and the number of service stations has fallen to around 6,500 today.

As modern vehicles become more fuel efficient, and as the ownership of hybrid and electric vehicles grows, the types of fuels used by vehicles is changing too. Many millennials are forgoing car ownership in favour of public transport, car sharing and services like Uber.

AECOM’s Transport on Demand report, published earlier this year, predicts that every car share vehicle in Sydney could take up to 10 private vehicles off the road by 2036.

So, why are service stations such hot property?

Ashley Lang, AECOM’s director, oil and gas, Australia & New Zealand, says the value of service station sites comes down to the old cliché: location, location, location.

Pointing to BP’s $1.8 billion purchase of 527 sites from Woolworths late last year, Lang says service stations tend to be positioned on relatively large, well connected sites in urban location close to people, homes and businesses.

“The future value is not in fuel, although petrol stations will continue to offer that in some form for at least the next 20 to 30 years. The value is in their strategically significant locations,” she says.

The market leaders are already expanding their convenience offerings in a rapidly-evolving market, Lang says, and are looking to become “one-stop-shops” of food, retail and convenience.

Lang points to Europe and parts of Asia, which she says are “pushing the envelope on what a petrol station can be”.

Shell has two sites in Bangkok, for instance, which offer drivers the red carpet treatment with personalised bowser attendants and onsite luxury cafés. In the UK, almost every Shell station has a Costa coffee outlet and around 30 have a Waitrose supermarket attached. Shell sold 60 million cups of Costa coffee last year alone.

When it comes to local innovation, Lang says Caltex is “ahead of the pack”.

Caltex has operated for 117 years in Australia, and Karen Bozic, acting executive general manager of retail for Caltex, says the company will continue to “shift with consumers’ mobility and convenience needs”.

Research undertaken by Caltex suggests convenience is “under-served” in the Australian market, Bozic says.

Caltex has begun testing a “convenience marketplace” called The Foodary in a number of strategic locations in New South Wales, Western Australia, South Australia and Victoria. Bozic says the concept “delivers fuel and everyday needs from barista-made coffee to freshly-made food and local goods. In some sites, this will include parcel pick up and laundry services”.

The Foodary is supported with an app, which enables customers to “pre-order coffee or food and pay for fuel without leaving the vehicle”.

The first test site opened on Parramatta Road at Concord, and a further six have opened since February. Bozic says “there is no doubt taking a marketplace approach resonates with consumers and we look forward to exploring that fully”.

This approach is just the tip of the iceberg.

Lang predicts that the balance of fuel will favour electric and other low-emissions options within a decade, changing the hazard profile of service station sites, and therefore enabling other uses to be contemplated.

Other technological advancements will also save on space. A typical service station with a robotic stacker could house 50 automated e-cars, for example, freeing up space for other uses.

Lang says it’s not inconceivable that service stations could become “connected co-working spaces or maker spaces”, community hubs for large-format 3D printing or homes to other manufacturing facilities.

“Now is the time to look beyond the current horizon and consider a far more radical future for these sites.

“The locations are too strategic to ignore.”