Take 5: Looking For Every Bit Of Profit From The Tank, by Simon Futcher

A ‘Take 5’ reflection on the ECR Retail Loss Group’s latest webinar on the use of video technology in Retail Fuel Stations.

The Petrol Filling Station (PFS) - an ever-evolving retail space since its first introduction on a small plot of land in St Louis, Missouri USA, around 1905. Today the thing that stands out is the multiple types and missions of a PFS that differ from country to county and retailer to retailer. From a pump attendant filling your car up, to self-fill pumps & kiosk attendant as well as a growing trend of fully automated ‘pay at the pump’. In the UK, Ireland and Australasia the majority method still tends to be payment after filling up your car, whereas in America and some European countries payment is required before filling your car up – the latter method sometimes dictated by local authorities as licensing conditions to support law enforcement’s needs first above the customer’s.

Product ranges also vary too - from a mini one-person site offering fuel & lubricants, tobacco and a few candies or gums, to a convenience store offering a complete transient, top-up shopping mission, as well as the sites that offer ability to purchase that much-needed big brand coffee for the onward journey.

Even the criminal aspect of PFS’s has changed significantly. Virtually gone are the travelling ‘professional’ gangs on risky tobacco burglaries. Now the crime of choice is to fill up a car’s fuel tank or a dummy fuel tank and either just drive off with false registration plates or dishonestly forgetting your payment, never to be seen again.

Whatever the retailed product or method of selling it, the clear similarity in all PFS’s is that the profit model has become more and more challenging for any Loss Prevention Specialist to get their head around. The key question is how do you improve sales on top of reduced, severely competitive margins whilst minimising growing losses?

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I was pleased to be able to guest on the ECR Retail Loss Group’s latest monthly Webinar series on the back of previous Professor Beck’s ‘Use of Video Technology research paper’ focusing this time on the subject of Video Technology in Petrol Filling Stations. Hosted by Colin Peacock of the ECR, it was good to hear a well thought out and presented piece from Joe Nock, of Z Energy in New Zealand who are making significant and tangible inroads to become what could be the future of PFS’s. That future not only has the most easy, quickest and pleasurable way to shop for fuel and other goods for a customer, but also the most crime free too – with proven losses halved. Personally, I recommend that if you were not on the webinar then pop over to the ECR website and watch/listen to Joe’s inspirational presentation again.

So, here are my regular ‘Take 5’ thoughts and summaries from the webinar.

Good Return on Investment Models on Video Technology Do Not Just Consider Loss, They Consider other Cross-Functional Business Benefits – Another ECR seminar and another reminder of the importance of looking for cross-functional business benefits to give a much-improved ROI model. Z Energy’s progressive journey in employing new and improved video technology for their PFS business has not just been about reducing theft. Actually, after working through the art of the possible, the second step of this investment journey was to use the video technology to introduce completely frictionless transactions for customers and cars identified from transaction data as their ‘Best Customers’ - a radical move to reverse think and stretch the use of the systems to increase brand loyalty and additional sales. A ‘Best Customer’ can now pull into a Z Energy fuel station, sit in their car while an alerted attendant (by number plate recognition) comes over to fill the car up with the right amount and type of fuel you want, to then have a pre-authorised debit/credit card take payment automatically without moving from the car or even talking to the attendant. ‘Best Customers’ who can pre-order a cup of coffee and a pastry and have it delivered to the car as they pull in – just from a camera recognizing the registration plate to create an alert to the PFS. The options and opportunities are now endless for Z Energy to push sales as well as reduce losses. Amazing work to see how their business is trying to maximise the return on investment rather than just use the system as a traditional support tool for Loss Prevention.

Good Analytical Data is Key to Any Strategy – Invested video technology and databases should bring good, analytical data to help with a clear strategy – many of us know how hard this data is to obtain if you are reliant on a manual input from a human, who is time and technology challenged on site. However, Z Energy have overcome this by having a reporting system that is completely automated. Incident reports that are auto populated of non-payment cases with number plate, date, time, place, pump and the all-important pictures and CCTV before being automatically sent to local Police to report the crime and/or a claim specialist to recover monies. Joe and his team have also been using the analytics from all the incident data to make good, strategic decisions to reduce losses. For example, they have been able to see that the main losses are from outside lanes/pumps that are nearest to the main roads, after 6pm. From there, they have put a strategy in place in some sites to have just pre-pay available on those outside pumps after 6pm and eliminate losses. An invested system to be able to give significant return – labour saving, accuracy of data, income from claims and reduced losses.

Partnering with Law Enforcement Authorities is a Win-Win – Something very positive to come out of the webinar was hearing how Z Energy have successfully partnered with New Zealand Police to automatically pass offender data to them as crimes are committed. But we also heard how the partnership has lead to the police providing the system with a list of wanted vehicles and how an officer can just turn up unannounced, to chat with the vehicle’s owner - all with a simple text message to a police officer’s mobile phone from the video technology to say the vehicle has pulled up at the PFS. However, the criminals have caught on to this partnership and whilst it is believed to have helped reduce the number of thefts in Z Energy, the bad news will almost certainly be that the crime has not disappeared as it will have been pushed to another retailer. But what it does then question is how partnership working needs to improve between retailers in every country, as well as law enforcement, to deal with these significant issues. To quote William Gibson “The future is already here but it’s just not very evenly distributed” – how do retailers gain the learnings and benefits more of solutions, like Z Energy’s, and put them into practice so that everyone wins. Imagine every retailer in New Zealand having this solution in place… where would the criminals go then for their fuel? … and how many times would a police car just turn up unannounced for arrest of a wanted criminal?

Automation of Civil Claims to Recover Debt – Something I had never considered before is the use of an automated claims process for Civil matters which Z Energy have built into the process. Ie. The ANPR data of the theft and no means to pay are being automatically passed to a claim handling company by the system to then do license plate requests and recover the debt – with no retail human intervention. Joe said that since the incorporation of an automated handling of the theft/non-payment data, the recovery of unpaid monies has now risen from 20% to 50% of the total loss. That shows how a good, integrated and automated system works to recover debt simply. Also, it was powerful to hear of how having a simple CCTV image of the person adding fuel to the car helped this process, rather than just the registration plate number of the car. No way to argue when you can see it was you filling up.

Are Data Protection Rights Becoming the Easy Get Out? – I hope you could forgive me if the sceptic sometimes sees and hears Loss Prevention use Data Protection Rights as the reason not to look at a new solution – it’s the easiest option to use. But on the reverse of that how many times do we visit a site and see the scrap of paper with registration plates and time of incident hand written next to the till or we see the ‘rouges gallery’ CCTV stills on the wall in the general office that show the local cars and drivers wanted for theft – but walk past and ignore the issues. What Joe’s presentation reminded me, is that Z Energy have Data Laws to comply with in New Zealand but they have worked to show that they are safely, securely and compliantly collecting and storing data for the use of dealing with crime or criminal activity, or, as part of their ‘Best Customer’ process, they have the full permission of their customers to store/use the data. They have built the systems with Data Protection in mind. Surely, if fuel theft is as big an opportunity as it is – and I’ve heard some big numbers mentioned out there, then we need to embrace the Data Protection Laws and have systems and processes from initiation rather than once the system is built. After all, most countries allow for the use and storage of personal data in the prevention of crime or criminal actions. The law is there to help guide and protect us to make the right decisions, not be an obstruction to reducing losses and increasing profits.

After a webinar of that quality, what could be the next steps. Well, unless we are looking to live out Einstein’s quote on ‘insanity’, the main thing to do is to go away, review, reflect and hopefully do something differently. Going to the full scale that Z Energy have with their Video Technology investment would take some work and capital – and I know for some in the current climate that is just not feasible or possible. However, how about analysing losses again; understanding how the process works in our businesses and working on eliminating its potential deficiencies; or maybe even partnering with other retailers and police in city hubs to curb crime would be small steps to resolving a bigger problem. You may even want to bring in a consultant, like myself, to help you look at the problem and partner with you. In simple, this problem is not going to go away anywhere over the next 30 years…and will probably get worse before it gets better.

Which brings me on nicely …. What next for the PFS of the future? Within 30 years it is likely there will not be an oil fuelled car on our roads and we will all be being auto driven around by electric or some other fuel cell instead, I expect. But what happens to all the PFS’s we have now? That brings me around full circle in my blog…. I am sure that the PFS of the future will evolve again and new products and services will be found to fit in with those significant changes. Perhaps super quick full electric charge pumps or contactless air charging of cars… who knows? But, in example, we are already seeing fixed charging points appear in supermarket car parks now as a service/income stream to allow customers to charge their vehicles whilst they shop. But as always, it is important that Loss Prevention professionals continue to collaboratively talk over the coming years to be on top of what will come.