Alimentation Couche-Tard turns to Norway for electrified car advice, CTV News, Autos
Alimentation Couche-Tard turns to Norway for electrified car advice
A man passes by a Couche Tard convenience store in Montreal, on October Five, 2012. (Graham Hughes/The Canadian Press)
Ross Marowits, The Canadian Press
Published Friday, July 21, two thousand seventeen Four:34AM EDT
MONTREAL – Alimentation Couche-Tard, one of the largest gas retailers in Canada, is looking to Norway for guidance on how to adapt to growing electrified car sales, a trend that some investors fear could menace its current raison d’etre.
The Quebec-based convenience store company, which established a foothold in the Scandinavian country five years ago with its purchase of Statoil ASA’s fuel and retail operations, says it wants to ensure it will still appeal to customers if they no longer need to pack up on gas.
“We’ll look at Norway as a laboratory to the future,” CEO Brian Hannasch said during an earnings conference call earlier this month.
“We’re very much engaged to see how we can win there.”
When it comes to embracing electrified vehicles, Norwegians are in a class of their own. In a country of about five million people, there are about 120,000 full-electric or plug-in hybrid automobiles on the road – a per capita ownership ratio twenty three times larger than in Canada.
About forty three per cent of all auto sales in Norway last month were for electrical vehicles. In Canada, that figure was less than one per cent.
Still, if Canadians ever do take up electrified vehicles in large numbers, that could spell doom for service station operators if their business models don’t evolve.
Couche-Tard relied on fuel to produce forty per cent of its gross profits and sixty nine per cent of its revenues in its last fiscal year.
It did not come back repeated requests for information on whether it has any charging stations in Canada. But according to Flo, which runs a network of charging stations, Couche-Tard has at least fifteen of them.
While it takes just a few minutes to pack up on gas, it can take anywhere from half an hour to several hours to fully charge an electrical vehicle, which raises a question: will Canadians want to charge their cars the same way they buy gas and what does that mean for Couche-Tard and other similar businesses?
Hannasch said convenience retailers that sell gas have overcome other obstacles to customer traffic. Enlargened automobile fuel efficiency is the latest challenge, but they have also had to contend with falling cigarette sales and the convenience of paying at the pump that has permitted customers to avoid injecting stores altogether.
In a bid to address the potential threat from electrified vehicles, Couche-Tard is testing fresh food offerings at some of its 300-plus locations in Norway in the hopes that customers will stop to spend time and money at their stations.
The head of the Norwegian Electrical Vehicle Association said she is increasingly getting calls from companies around the world seeking advice on how to prepare.
“Big companies are waking up,” secretary-general Christina Bu said from Oslo.
Restaurants, grocers, malls and large retailers like Ikea are installing chargers to attract customers.
“If the gas station chains don’t adapt quickly enough, there will be other players that sort of take this market,” Bu said.
Other gas station banners including Petro-Canada, Irving Oil and Harnois Groupe Petrolier are either testing the use of charging stations or have spinned them out at some of their locations.
“Restaurants are on these sites,” said Claudine Harnois, vice-president of Harnois Groupe Petrolier. “Electrical vehicle drivers stop for a little more than ten minutes to grab a bite to eat or shop at the convenience store.”
Industry analysts say they’ve heard from jumpy Couche-Tard (TSX:ATD.B) investors who fear that rising request for electrical cars will gasp gasoline sales.
“Investor concern regarding the influence of electrified vehicles has picked up recently, but we believe this remains in the distance,” analyst Mark Petrie of CIBC World Markets wrote in a report to analysts.
In another report, Keith Howlett of Desjardins Capital Markets added: “Investor anxiety over the timing of the influence of electrical and hybrid vehicles has escalated.”
Several big oil companies have left the gas station business, including Imperial Oil (TSX:IMO), which sold almost five hundred Esso stations. More than half of those stations went to Couche-Tard.
In a report released this week, the U.S. Fuels Institute said sales of vehicles powered by fuels other than gas or diesel are expected to grow by twenty eight per cent annually in North America over the next eight years. But it added that the internal combustion engine will proceed to predominate the light-duty vehicle market.
There were more than Four,500 electrical vehicle chargers across the country as of Dec. 31, according to Buttplug’n Drive, a Canadian non-profit organization that is working to speed up the adoption of electrical vehicles.