LAVAL, Quebec — There is a lot of talk lately about electric cars and their impact on not only the fuels business, but the convenience store industry as well.
It is an issue Alimentation Couche-Tard Inc. is keeping a close eye on.
"We are only seeing penetration in Norway where the concept is heavily subsidized ... in terms of taxes that make the vehicle more affordable than a comparable fossil fuel vehicle," explained Brian Hannasch, president and CEO of Couche-Tard.
Speaking during the company's fourth-quarter earnings call, Hannasch also pointed out that owners of electric vehicles (EVs) in Norway have access to HOV lanes, the bus lanes, free parking and electricity, "so there are a lot of perks that have incentivized the consumer around electric. And it's a material part of new car sales."
As a result, Couche-Tard is taking a proactive approach in using Norway as a laboratory to understand how the retailer can continue to drive traffic to its c-stores.
For example, the chief executive said Couche-Tard "is trying to really up our game in fresh and prepared foods. We'll have five sites up and operating with this new concept in the next couple weeks. I was in the first two pilots and [observed] very strong consumer response."
For EV drivers in Norway, the retailer is rolling out more electric chargers at its locations, and Couche-Tard is close to forming a relationship with a consortium of car manufacturers on a charging network throughout most of its core markets in Europe.
"For those customers, particularly those on the interstate and highways, we will be there to provide that service for them," Hannasch said. "And certainly, we are exploring other ways to engage that customer and keep them in our ecosystem. Whether that's being involved in parking lot chargers, residential charging, and things like that. It's purely exploratory at this time, but again we look at Norway as a laboratory into the future a bit and we are very much engaged to see how we can win there."
The company is continually monitoring and gathering data on electric cars from a variety of sources, including the academic and automotive industries.
"We continue to believe that we won't see a material impact from EV in the five- to 10-year timeframe," the CEO said. "We do believe there will be a flattening of fuel demand over the next five years. And that's consistent with what we hear from our fuel suppliers."
However, he noted the flattening will not be largely driven by EVs, but rather from the corporate average fuel economy (CAFE) standards.
"The vehicles that we are producing, and even despite record truck and SUV sales, these vehicles are more efficient than the past generation," the chief executive said. "We think that's the bigger impact, but we are also very glad they continue to take liquid fuels and will be very relevant to us for a long period of time."
While Couche-Tard is staying in tune with — and will continue to watch — the electric vehicle market, the retailer looks at EV from the fuels side like it does the cigarette business.
"We've been going out of the cigarette business for my 30 years and when I look at fuel, there is some similarities in that it is an extremely fragmented market," Hannasch explained. "There are a lot of low-volume sites in the industry, both in Canada and the U.S., and those sites are pressured over time from a lot of different fronts. That demand will be redistributed and the higher quartile, high-quality assets and those players with a strong backcourt are going to be the ones that win in that environment."
As of June 30, Laval-based Couche-Tard's network comprised 9,424 convenience stores throughout North America. Couche-Tard's European network comprised 2,754 stores. In addition, under licensing agreements, more than 1,700 stores are operated under the Circle K banner in 13 other countries and territories.