Opinion: Predicting the Future of Transportation

Do you take the "insider" or "disruptor" view of fuel?

CAPE CORAL, Fla. -- A crystal ball is a common fortune-telling tool, whose earliest use can be attributed to the druids, who used it to divine the future and omens. This thought crossed my mind as I attended the Fuels Institute’s 2017 meeting in Denver this May. The exciting agenda was filled with experts who all had their vision of the future, and each one seemed very plausible.

And while the conventional wisdom among most attendees was that liquid fuels will dominate for at least the next 25 years, most of the speakers spoke about the inevitability of electric vehicles (EV) and automated vehicles (AV). This is very telling.

The experts’ views

Mitch Bainwol, president and CEO of the Alliance of Automobile Manufacturers, cited four market forces affecting current automobile policymaking: automation, ridesharing, electrification and connectivity. All are leading to electric automated vehicle (EAV) ridesharing. AVs are clearly safer and more efficient. Connected vehicles will move efficiently, which will remove much of today’s traffic snarls and accidents.

One would think that government would support this, but many states are inhibiting adoption. For example, Massachusetts apparently wants to discourage automation by highly taxing the vehicles. This is because the public is not completely on board.

According to a survey by Auto Alliance, only one-third of consumers feel that AVs are a good idea. Interestingly, consumers over 40 overwhelmingly think it’s a bad idea, where most of those under 40 see it as a good idea. So while AVs are widely viewed as a bad idea today, acceptance will grow as younger consumers replace the older consumers, likely at the same rate that the fleet becomes automated.

Ryan Robinson, associate director of research for Deloitte, predicted a shift to four states of mobility existing together: owned and shared AVs and owned and shared traditional vehicles. In Deloitte’s analysis, the shift to this state will begin in 2030 and dominate by 2045. But c-stores could play a role in this future, Robinson suggested, by offering charging stations.

But my key takeaway from his presentation was that there are two competing visions about the future: the “insider” and “disruptor” views.

In the insider view, the industry will evolve naturally and incrementally toward a future mobility system that retains its roots in what exists today. The stakeholders in today’s system have vested stakes to protect, so this view sees a slow, linear shift from today’s model to different models.

In the disruptor view, a tipping point will occur very soon, after which change will occur very rapidly. New stakeholders such as Uber, Tesla, Google and Apple are driving the transformation, and have no stake in the current model.

While Robinson saw an autonomous universe that relied increasingly on electric fuel, he believes the current convenience-store infrastructure could provide that need.

The Norman view

I don’t have a crystal ball. Like the seers of the past, I will only be heralded as a visionary for predicting a desirable future for you, or for being proven accurate later.

Autonomous technology is estimated to add as much as $150,000 to the cost of a vehicle. Therefore, I believe transition will occur as households give up their second car—the least-efficient from an ownership standpoint—and make up the difference with third-party ride-share EAVs. This will allow consumers to become more comfortable with technology, leading toward more widespread adoption.

Most convenience retailers are soothed by Robinson’s thought of electric charging at their sites, even though it is more likely EAVs will charge at home or in depots. But not all retailers adopt this easy, comfortable viewpoint. Instead, they are preparing for possible disruption.

For much of the 32 years I worked at Wawa, our conviction was that we would never sell gasoline because it conflicted with the established fresh-food offer. Then in 1996, we developed a way to enter the fueling business, rolling it out to nearly all sites in 10 years and becoming what Oil Price Information Service calls “the most-efficient fuel retailer” in the United States. The new conviction: There would be no new sites without a fuel offer.

But success at Wawa has always been driven by letting go of deeply held beliefs to embrace change and a new future. A couple of years ago, Wawa began entering college campuses with a model that focused on pedestrians and foodservice, and fuel was notably absent. Now, Wawa has announced its entry into the Washington, D.C., market, with a store that is twice the current average, and features indoor and outdoor seating. Again, no fuel, and the line between restaurant and convenience is further blurred.

The rest of us can learn a lesson. If the disruptors have their way, Wawa and other retailers will be ready once again to morph into the next convenience desired. We do not want to be a case study in how being lulled by complacency led to our demise.

Norman Turiano is principal of Turiano Strategic Consulting. Reach him at TSC.USA@comcast.net.

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