Are Australian fuel consumers becoming less sensitive to price?
Earlier this week, ACAPMA released the findings of the 2017 Monitor of Fuel Consumer Attitudes. Conducted every two years, this national research provides insights into whether consumer trends in fuel purchase behaviour are changing over time. The 2017 results suggest that while fuel price remains a dominant consideration in site selection, Australian motorists appear to be less sensitive to fuel prices than they were in 2015 and that they are increasingly selecting sites based on the total petrol-convenience offer.
The 2017 Monitor of Fuel Consumer Attitudes builds on the findings of the previous (and inaugural) Monitor of Fuel Consumer Attitudes that was conducted in 2015.
The principal objective of these two-year surveys is to provide ACAPMA (and its members) with a good understanding of community attitudes towards the fuel retail industry – thereby providing an opportunity for the Association to ensure that its future advocacy is both credible and relevant.
Reflecting the majority of community research at the time, the 2015 research results found that price was the most important factor in the buying decision and that the use of supermarket “discount” vouchers was prevalent.
However, recent international research suggests that price is becoming less important in the purchase decisions of fuel consumers. Conversely, the nature of the convenience offer is becoming increasingly more important to consumers.
With this in mind, the focus of the 2017 National Monitor of Fuel Consumer Attitudes was on greater examination of the price sensitivity of consumers.
The 2017 survey comprised a national survey of 1042 fuel consumers, with the sample designed to be wholly representative of the Australian population in terms of age, gender and location.
Different to the 2015 survey, the 2017 survey utilised a small number of video interviews with consumers to provide a qualitative overlay for proper interrogation of the results of the online quantitative survey (by contrast, the 2015 survey utilised a series of focus group discussions).
For ease of understanding, the headline findings of the online survey were grouped according to specific customer segments – that is, respondents who displayed similar demographic and behavioural characteristics.
A description of the resulting segments is provided in Figure A.
Figure A: Observed consumer segments in 2017
The 2017 research found that price remains the most important factor in the decision to purchase fuel for a majority of consumers with forty eight percent (48%) of survey respondents ranked price the number one factor in deciding where to fill up (see Table A).
Table A: Most important factor in a consumer’s decision to purchase fuel from a particular service station (2017 results vs 2015 results)
As shown in Table A, the 2017 result of 48% was significantly lower than the 60% result recorded in the same research two years earlier.
“At first, we were surprised to learn that just below half of all respondents had nominated fuel price as the most important factor in their choice of a service station, said ACAPMA CEO Mark McKenzie.
The results, however, appear to be consistent with research recently released by CommSec which shows that Australian Household expenditure on fuel is at the lowest level it has been for 30 years in real terms – and the ACCC’s June 2017 quarterly report on the Australian Petrol Market (June 2017), which found that fuel prices in 2016/17 in real terms were the lowest in 15 years.
“We believe that part of the explanation for reduced fuel price sensitivity lies in the fact that, like consumers throughout Europe and North America, an increasing proportion of Australian fuel consumers are visiting service stations to buy convenience and grocery items – often without buying any fuel”, said Mark.
While fuel remains the dominant reason for visiting a service station, the 2017 research reveals that the convenience offering is becoming more significant in the increasingly busy lives of most consumers.
“Analysis of the survey results revealed that there was a significant group of respondents (i.e. 30%) who visited a service station to make convenience purchases without actually buying fuel”, said Mark
“Of these, 34% visited at least once per week, while 14% visited every few days, continued Mark
Younger consumers appear to be making use of their local service station for convenience shopping (See Figure B)
Figure B: Proportion of Convenience only shoppers by age (Shown in red columns)
While older Australians may be unlikely to go to the petrol station to shop for anything other than fuel, more than 40% of consumers aged under 40 years indicated that they use a service station for convenience shopping without also buying fuel.
“It is worth noting that these results do not indicate that fuel price will not continue to be an important consideration in the decision of a motorist to frequent a particular service station”, said Mark
“But, there is a growing body of evidence – including this research – that the purchase behaviours of around 50% of fuel consumers are no longer based solely on fuel price”, continued Mark
“The challenge for our industry is to accommodate this increasing trend away from ‘fuel only’ customers to customers who are seeking a ‘fuel and convenience’ offering that helps them successfully navigate their increasingly busy lives”, concluded Mark
A copy of the 2017 Monitor of Consumer Attitudes can be downloaded at: Click here