forecourttech podcast
Meet the movers and shakers of the forecourt technology world and find out more about the challenges and successes of working in the fuel & convenience retailer industry.
Hosted by Ralph Cochrane
Produced by event.video
forecourttech podcast
Episode 3 - Mark Wohltmann (Director, NACS Global)
Mark Wohltmann travels the world looking at convenience retail for NACS Global (National Association of Convenience Stores).
Ralph Cochrane talks to Mark about the trends we're seeing in the industry and what's exciting him for the future.
Podcast host: Ralph Cochrane
Produced by event.video
Welcome to this episode of the Forecourt Tech Podcast. I'm delighted to have Mark Wohltmann from NACS with me. Mark is known to many of you as probably the best traveled person we know, certainly on LinkedIn, with experience of convenience stores across the world. Mark, welcome.
Mark Wohltmann:Thanks for having me, Ralph. It's a pleasure to be here and for once in a while from my home office.
Ralph Cochrane:So first of all, tell us a bit about NACS. You've been there for a few years and we often see you at different industry events, both organizing and attending. What does NACS stand for and what do you cover?
Mark Wohltmann:So we're based in the United States and in the US we are the trade association representing convenience and fuel retailers, which means as a not for profit organization we basically make sure that our industry advances faster than anyone else. And as an industry body, we offer conferences, round tables, meetings, We organize a trade show, education programs market research for the industry, and of course, government relations in the U S. And because we know that convenience and fuel retail is not isolated in any country in the world, we know that we need to learn from what is out there in the world. And we are also happy to share, which is why we have an initiative we call next global. That is what I do with next outside the U S we don't do any policy work at all. That's the job of local associations. And we closely cooperate with a lot of them around the world. Organize a network of senior leaders in convenience and fuel retail, get them together, make sure they learn from each other and make sure that we collect information and share it back to help our industry grow.
Ralph Cochrane:So looking at your travels recently, just tell us a bit about where you've been and some of the things that you've seen.
Mark Wohltmann:Actually, I just returned from Turkey, which is an interesting market in a sense that it is on the verge of convenience and fuel retail development. You can find some highly sophisticated well designed, merchandised stores, but you also can find still a lot of petrol stations that basically just sell fuel. And they are in a tricky economic situation right now, but you can see that the time is right for them to break out, to grow, to really make sure this convenience retail opportunity is being grabbed. And that is something we see around the world. We had our convenience summit Asia in South Korea this year, highly sophisticated convenience retail, but nearly none of the petrol stations actually have a shop. So there is a. There's a connection that is missing and that is something that we see is definitely happening. So the classic retail development is the same in every part of the world. It is just in a different stage everywhere. I
Ralph Cochrane:mean, I was just recently traveling in New Zealand and there were a whole group of petrol stations that didn't have a store at all. So it was all done. Either on the on the machine itself, on the pump, or on your phone. I don't think that I've seen many installations like that in the UK. There's normally somewhere that you can go to pay at the kiosk. Is that what the future looks like? Or is it a growth area? Because I couldn't help thinking that they were missing all sorts of opportunities to sell me other services. I was literally there to fill up and then I went.
Mark Wohltmann:Yes, that definitely is an opportunity to connect this. Now think about from what you have seen, think about the view of the petrol station operator, that person who runs that site and has been selling fuel for a lifetime, that person most probably is not an entrepreneur. He's not a visionary. He's someone who makes a living by selling fuel. So as long as there is enough to earn, to survive from selling fuel, that person will not invest suddenly because he doesn't really have. The funds to invest in building a great looking convenience store or something like that on site. So usually it is the the companies, the corporations that kind of introduced this to a market until entrepreneurs actually come into the sector and take over and create something that is amazing and outstanding. And that is a shift that we will see everywhere because. We know that fuel sales are declining, period, on a global scale, will happen. Now with that, our entire industry has to rethink what they are doing when it comes to fuel.
Ralph Cochrane:It's interesting though, isn't it, that the, from what I understand, the dynamics of people charging So if they're using an EV charger are quite different. I will be there for a fair few more minutes than I will putting traditional fuel into my car. So what are you seeing the change? If fuel's declining, are you seeing other opportunities, particularly in the EV space?
Mark Wohltmann:First of all, EV is not the answer. It is not that all petrol cars will be replaced by electric vehicles just simply we don't have enough electricity for that. EV cars will play a role, especially in urban areas especially where people can charge at home, especially in more affluent areas where people can afford right now because EVs are still more expensive. There will be other solutions as well. There will be alternative fuels, there will be e fuels, there will be hydrogen, there will maybe be something very different. Now, nevertheless, looking at our industry on the petrol station side every EV that comes into the market and replaces a fuel car, Is a lost customer because that person does not come to fuel anymore But so is every person who buys a new car because if you actually ditch your old 15 year old high consuming Petrol car and you buy a really sleek new car that has amazing fuel efficiency You suddenly only use, need to frequent your local petrol station half the time. We're losing another customer at least half the time. And there are more developments like that. Young people, sharing economy, all of that. There is an overall decline. which means EVs will not completely replace fuel. But they will replace something. And to your point, the EV customer needs something else. Now, first of all, if you have an EV, it's like having a phone. Do you go to a phone charging station once a week to charge your phone? No, that at home overnight and every morning you start with a full battery. Then you go to your office. And you have another charger at your office and you charge it to full. And then you go home again. You never need to stop anywhere to charge your phone. This is similar with EVs. Fuel, you have to go to a petrol station because you can't get it anywhere else. Electricity, you can get it somewhere else. So the question will be for the future, for the interim, yes. So there will be some people that want to charge and that need to stay half an hour somewhere and do whatever. Because they have no other way to charge their car because they don't have a house, they live in an apartment or different situation. So in the interim, there will be a need for charges, but beware, this is not fully replacing the fueling customer and how much you can sell to a person who fuels and quickly buys a coffee and a snack and something else, or someone who sits down for 30 minutes and buys one coffee. The economics of that are very different.
Ralph Cochrane:Yeah, it's a really interesting area because just near where I live, there's a Tesla supercharger. In theory, the fastest charging certainly in the UK across the road, there's a supermarket actually quite a busy road. So that's problem number one, that it's not easy to get from the Tesla supercharger to the convenience store or the supermarket. But there's always people there sitting there charging. Waiting 10, 20 minutes, but I take your point. The idea of just sitting there with a coffee. I'm guilty of that in coffee shops, by your one latte and then sit there doing some emails or whatever. So it's quite a shift, isn't it? From that person who just needs. The old joke about convenience stores was always that it's men who want beer and nappies, I think, wasn't it, from 20 years ago? I'm going to ask you about that. What kind of trends are you seeing at the moment? What interesting things can you tell us about what people want from their convenience store?
Mark Wohltmann:I think what we really need to look at from a global perspective is we have an increasing urbanization. So more and more people live in high density areas in inner cities. And they expect from a convenience store or something very different than maybe a convenience store at a petrol station or somewhere on the outskirts of the city. The convenience store becomes the supermarket, right? So what we see is, I think Victor Paterno from 7 Eleven Philippines coined that phrase during the pandemic and said, what we see is convenience plus. So whatever convenience was before the pandemic, it has been growing into something else during the pandemic. And mainly that is product categories in stores that weren't there before. People started buying fresh bread in countries where convenience stores never sold fresh bread, especially not at a petrol station. People started buying washing detergent and things like that, that they normally bought at a supermarket. So the convenience store becomes something else, the convenience store becomes bigger, certainly. So that's urbanization. At the same time, we see a massively aging population. So if you look to Seoul or if you look to Japan, where we will have our convene summer Asia next year in March one of the oldest population in the world. These people, they will not drive to a supermarket or a hypermarket. They get everything from the convenience store, but at the same time, they also use the convenience store to socialize, to get together. So a store is not just a store anymore. You actually have to have some seating. You have to have an area for people to sit down and that's a very different. Different proposition as we had in the past. We are moving there already and there are good examples around but that's definitely a trend we see from the consumer from the, how they live. And then of course it's technology from the back office to the front, to the customer technology is big. Massively changing what we're doing.
Ralph Cochrane:I want to find out what is changing in convenience stores, because there's so many aspects of technology we can talk about from fraud how to better serve customers, AI, where do you start? What's changing the quickest for you at the moment?
Mark Wohltmann:Technology is evolving fast and technology really is changing every aspect of what we're doing. Be it in the back office, how we how we order, how we keep our stock, our inventory checked. To what we do in store, be it payments, be it electronic shelf labels be it cameras on the ceiling that can identify what kind of customers in store, the demographics, the mood and alert you to that to advertising, of course, how we use social channels how will you use any of that? And probably the biggest topic around all of that is connectivity.
Ralph Cochrane:Yeah. The. There's been some very interesting developments in convenience stores. I think we might be coming up for certainly six or seven years since Amazon first had the idea that you didn't need. a till you didn't need to you do pay for sure, but you didn't need the traditional store where you go to somebody to pay. It is in a few stores. There's certainly a few in the UK. There's one in London that I can think of is that kind of technology taking off or are we seeing increased levels of fraud and other areas that we need to worry about?
Mark Wohltmann:I think it's two very different things talking about fraud and I'll come back to that and talking about unmanned stores and that technology. You've seen the press release that Amazon actually is reducing that again, taking it back with a larger supermarket formats and stores like that. I do not think at all that unmanned stores are just taking over every convenience store that there is on the planet. That's not what is happening. There are very good use cases and there are a lot of unmanned stores right now already in the world. And they are all working. Some retailers still experiment to see Where does it work? How does it work? Some like Jopka in Poland made it work and they really have over 70 stores, I think. Convenience B in China has a couple of thousand unmanned stores. They use them as a hybrid, manned through the day, unmanned during the night. So there is definitely a business case. There's a use case. It is working now. The much more interesting part. I find is the technology behind it and what it is capable of. And I'm not just thinking about a completely unmanned store, but it is like unmanned fridges that are popping up here and there. So on a very small footprint more like a modern kind of vending and upgraded vending, really. But also thinking about do you still have a person walking through a store Taking stock of what is there and what isn't? We have a labor shortage and that is not going away. That will not go away. It is it will stay for a very long time. So we can't afford people to do work like that. But if you have a camera on the ceiling anyway, and that is facing a shelf, if you have the right software behind it, that camera image can already tell you, Hey, my product X, Y, Z is low in stock alert someone, or automatically order it. So technology is, we tend to think about the, just the big thing, right? It's old technology. You need 127 cameras on the ceiling and have an unmanned store. No, there are many use cases for that. And we need to think smaller and smarter to use this technology to help with our business. Now, connecting to your other question, fraud First of all, fraud is also a cultural thing. As I said, we just went to South Korea. There is no fraud. There is no, no one steals anything in a shop. They have unmanned stores without cameras. It's basically just an open store where there's no person, just products. And there's a self scanning cash desk. That's it. So you can just walk in. There's no one there. You can grab whatever you want. If you wanted to, you could just walk out. And not pay. There's no one to stop you. But Koreans don't do that. It's a cultural thing. In certain cultures, in certain areas, in certain regions, this might easily work, and you don't have to worry. Of course, there are different countries around the world where people do steal and maybe use every opportunity to steal. And you might not want to put an unmanned store there, no matter what technology is in there. So you it's not taking over for everything and everywhere. It really is. There are some good use cases for that. But it will not happen everywhere fraud. We see a massive increase in retail crime ever since the pandemic. That is something that's happening around the world. Unfortunately retail crime is increasing. Police response is decreasing and the violence of retail crime unfortunately is rising as well.
Ralph Cochrane:I'm interested as well in some of the technologies that you've seen. There's a lot of talk at the moment about AI. It's everywhere, isn't it from, generative AI even actually whilst I think about it, the image, if you're watching the YouTube version of this, the image behind me is an AI generated. futuristic forecourt. So AI seems to be able to do anything, but what are you seeing in the forecourt tech world where AI is being used to good effect?
Mark Wohltmann:First of all, what I see is a lot of uncertainty. A lot of people not understanding what exactly is ai, what exactly can I use it for? Because if you follow the media then you only get the information that either. AI is the end of the world. Or AI is the savior of humanity. But that doesn't help you with your operations at all. Now I think understanding that AI is a development of what has happened before. So we were doing things manually for many, for a long time until computers came up and then suddenly computers could help us. store information sort information helping us to find information quickly, right? These were the beginnings of information technology. And it made certain tasks that we were doing simpler and easier and faster. But it needed something that is really strict programmed, like the good old, if then else and if anything happened that didn't fit into this, you would get an error message. If you're old enough like me, you remember the error 404 that was driving you nuts on the internet. But Then it basically evolved and we had fuzzy logic. We had really had machine learning coming in so that the software actually can really not just follow the path that I have been setting, but really learn from it and evolve. And now with AI, I would see it like. We suddenly have the software capability to to look at millions, billions, and even more data points to analyze them and to find correlations between things that have no obvious connection at all, something that we humans can't see. are capable of doing, but a narrowly programmed software has not been able to. But now, thanks to AI, software is able to do that. And that will help us a lot with tasks that we are doing today as humans that are very time consuming but we can't automate it so far. And that will help us automate a lot of things. Your example with your background. Think about the classic approach of a new design for a store layout, for an advertising campaign. You write a lengthy briefing of what you want. You have some creative minds creating some over the past couple of weeks, then you have a meeting and they present it to you and explain to you what they were thinking about it. You choose one and they have to change that and you don't like the colors, so they have to redo everything. I started my career in advertising, right? So that is taking you weeks and months until you get a job. Today, thanks to artificial intelligence, you just brief it and you do that online and the software is doing that for you. So this is helping a lot with our communication and with everywhere where we need to analyze big data.
Ralph Cochrane:Yeah. So it's a fascinating future, isn't it? I wanted to come back to the convenience of retail. So I saw something you wrote recently where you said. It's all about the convenience of retail. I want to ask you what you mean by that, and also what's the challenge do you think at the moment for the industry?
Mark Wohltmann:So we talk about convenience retail. This is because we we speak in English and in the English language, we use the word convenience retail. Now, if you go anywhere else in the world, the average person has no idea what convenience retail is because they have no, they don't use the word convenience. And probably there isn't a word in every language that really describes what we connect to convenience retail. But why do we call it convenience retail? Because it is and has been convenient. A convenience retail store more than 100 years ago when the first convenience store really started as that, it was about I sell one thing, why don't I sell another thing? and make it convenient for the customer that they can pick up two things on their way, not just one. And then it was about convenient in terms of the large supermarkets moved out of town, so there was a gap. Convenience retail came in as small formats, being convenient because I don't have to drive out of town. So it is convenient because It is open, convenient because it is on my way or it is close by convenient because it isn't a massive store where I can quickly get in and out, maybe convenient because I have parking. So everything that makes my life easier, that is convenience retail. But what makes my life really easy? When I go shopping for groceries, I don't go to the supermarket. I go on my phone, I open an app, and I order Ocado, and I get it delivered. So that is convenient for me, right? I don't even have to get in a car and drive somewhere. That is convenience. So if we keep calling it convenience retail, and I'm very much in favor to do that we need to think about what is really convenient for the consumer. And is there maybe someone else who might come in and be more convenient than we are?
Ralph Cochrane:Yeah, it's interesting because I know that you live in the UK like me. And I think we're seeing certainly forecourts associate themselves with higher end brands in the market. So talking about your grocery shopping, you're using Ocado, which is an provider and your groceries arrive at your door, but also, for example, Marks and Spencers and Waitrose, which would both be considered to be at the top of the market for food.
Mark Wohltmann:You see those a lot in convenience stores on the forecourt particularly around here where I live and in London, in the big cities. So what I've noticed is that convenience stores are associating themselves with brands that perhaps they think they're more affluent customers associate with also coffee.
Ralph Cochrane:I know you're a big coffee drinker like me. So you tend to see Costa machines everywhere, which is a big chain here. He's got his coffee in your hands. So there's been a bit of a move to try and persuade you that this is the place you can also go to collect those nice things, the kind of 10 percent of goods that we want, the nice cookies or ice cream or coffee. Do you see that continuing? And is that a sort of Western trend? Or is it something that you're seeing elsewhere in the world? I'm interested, because you travel so much, what things are actually working? for convenience store owners?
Mark Wohltmann:It's a very good question. And I would say it is not an East West question or North South. It is much more a location question. So is it an urban store? Is it a rural store? Is it a store that is on a motorway or is it a store that is on a bus? Big road in and out of town. Because the use case, the consumer use case for that will be very different. You will, you have convenience stores that. are just a top up shop location. It is just you forgot something. You don't want to go back to the supermarket. You buy it there. It might be an indulgence location, right? You want to treat yourself with something. And in that case, you probably don't want to buy the cheapest thing that there is on the market. Now. The connection to brands, of course is is also, you have to look at small, very small stores, small convenience stores. They don't have much space say, so they also need products that are broadly accepted because they have a wide customer target group. And they need good margins of course, right? Because they are not the volume seller. If you are a discount or a big hypermarket, you can sell something for a tiny margin because you are selling thousands of products and still make your money. As a convenience store, you can't do that. Having said that, what I was just talking about is a small convenience store. The average small convenience store, if you though have a very specific target group, let's say, and as you said, we're in the UK here. If you look at a Tesco express or a Sainsbury Local, They are considered convenience stores as well. Walk into a Tesco express in London. That much more looks like a very small supermarket, not like a large convenience store. Why? Because that is the shopper mission. They are the supermarket for the very urban, high density consumer. They need to focus on different brands, they need to focus on different product sizes. Because, yes, products are different. people in that store might buy a washing detergent in a really big container. Whilst in a different store, they might just want to top up like the small one. So that is probably the same everywhere. in the world, looking at Tokyo, Johannesburg or London, if you have an inner city store versus if you have a store that is in a rural area, maybe being the hub for the community. If you have a store that is on a commuter road in and out of town, where people might stop for fuel, but they also stop for the coffee, they stop for something that they bring to the office or bring back home versus the one that you have somewhere really in an urban area.
Ralph Cochrane:Yeah it's fascinating to once you start to talk about it, once I listen to you, I can picture the differences when you're at a motorway service station, or when you're at a local convenience store. I have a question that we always ask everybody, which is called past. present and future. So I'm interested, first of all, with the past. Is there something that you expected to take off but really didn't? It could be a technology or a service, or perhaps the opposite. There was something that you thought, no, that's never going to catch on. And actually it's become something really big.
Mark Wohltmann:That's a very good question. Looking at it I thought years and years ago someone was talking to me about the future of payments. And that was when most what we did was cash but there was also the credit card and the debit card. And someone explained to me how in future we will pay with biometrics and all of that. And I found that so like Minority Report future I couldn't envision that. I couldn't see that. And it's not that long ago, right? If I look back and today It's so easy to pay with any device. And today you even can pay with your biometrics. You can pay with iris scanning with facial recognition with any of that. So I, I think this is a technology that has advanced the payment system way faster than I could have imagined.
Ralph Cochrane:Yeah, that's a great answer. Yeah. And Minority Report. Great film. Talking about the present, what is exciting you at the moment in the world of forecourt technology?
Mark Wohltmann:What's exciting me is that retail, especially our industry has always changed. and will always change. What we see though is that the rate of change is really increasing. You still have to create like a five year plan, right? If you build your strategy. But that doesn't mean you build a plan and you build it for five years and you review it in five years time. You have to constantly rethink what we're, what you're doing. And you have to adjust basically on the fly because everything is changing so fast. And what really excites me about that is in our part of the industry. So convenience and fuel retail how our retailers embrace that. It's not like they are sitting in their office and. doing this. I've done business like that past hundred years. I'll do it like that the next hundred years. But really being open, really getting out there, getting together, talking to others looking for best practice and really trying to keep up with it, but also at the same time, enjoying that, right? It's not oh, it's a burden that I have to do that. No people are really seem to, yes, I want to win the game.
Ralph Cochrane:Yeah, I love that. Let's talk about the future. So many technologies that we've covered here on this podcast episode. But what's exciting you for the future?
Mark Wohltmann:I think what I'm really excited about is our industry as such because we're in a very good position. When you think about retail, things come, things go, things are being invented, we're selling it for a while, and then it becomes obsolete. What will never become obsolete is food and beverage is eat and drink. So I think we're in a very good position as our industry offering exactly that. The other thing is that we as humans, we are social animals. We want to meet other humans. We want to interact not like people. You and I are doing right now over the computer. We want to meet real people. And I think our industry moving towards hospitality more and more over the past years and decades, we are on the right track here. And I'm really excited to see where this is leading us because I think we are at the forefront of retail becoming hospitality providers. And that is exciting for us. And when it comes to technology. Technology is there not to replace us. Technology is there to support us. And I think the future I don't even know what I should call it, petrol station, but the locations that we have right now they will be very different in the future, but we will still serve our customers. So i'm really excited about
Ralph Cochrane:great. Thank you. Thank you very much I just have one final question which was left by our previous guest on the podcast. So that was Francois Mezzina, who's the president of IFSF and he asks There are so many standards available globally. So many different bodies as well that as in industry organizations that you need to belong to, do you think it's about time that we brought all of these together under one umbrella organization or set of standards?
Mark Wohltmann:Thank you, Francois. That's a typical Francois question. And I would say the answer to that is actually twofold. First of all, the reason why we do standards, why as an industry, we want standards is to make things compatible and to reduce the number of options out there to ideally one, because then everything connects to everything. And that is the easiest way. So in a way you could say Yes to this answer. Because it's always easier if you only end up with one standard, but at the same time the retail landscape in our industry is so diverse. Around the world from large organizations to small organizations from corporate driven organizations to maybe more entrepreneurial single store operators from companies that change very quickly and to companies that change very slowly that sometimes there is no possibility to just have one standard. No matter how hard you try. So there are good reasons why you have multiple standards bodies with different agendas and different ideas about how to do things. Now, my personal view, I'm not a standards expert, but my personal view is what everyone within the standards world should do is Try to align as much as possible but whenever it is not possible, pursue whatever you need to do for your respective member base.
Ralph Cochrane:Yeah, very true. Mark, that's all we have time for on this episode of Forecourt Tech Podcast. It's always fascinating to talk to you. I'm excited to see where you go next. And if people haven't found you on LinkedIn. I'm sure they will now, and also you can follow NACS online. But Mark Wohltmann, thank you very much for joining this episode.
