Q&A with Galp: “We are in a moment of enormous transformation”

PetrolPlaza spoke to João Diogo, Head of Retail for Galp, about the company’s brand new autonomous convenience store in Lisbon, frictionless shopping and the transformation of the fuel retail business.

João Diogo has been the CEO of Galp Spain 2017, leading the company's turn around, blending a comprehensive organization restructuring with top class talent and business transformation. He is also the Head of Retail at Galp and is responsible for the Smart Store project. Galp's distribution network totals 1,475 service stations, of which 1,276 are in Portugal and Spain. The interview also included João Dinis Soares, Lead Retail 4.0 Transformation Manager at the company.

Galp recently opened its first 'Smart Store' concept. Autonomous stores are a trend we’ve seen expanding in urban areas and places like student campuses. Not many service stations have integrated the concept. How did the idea for this project come about?

J. Diogo. It's unfair to say that petrol stations didn't already do some form of autonomous shopping. For example, customers have been able to buy fuel without entering the shop. Our Galp & Go concept is a modern station with vending machines that gives the customer access to fuel and other products. At car washes we are implementing more and more technologies – we have more than 50 where you don’t need to go into the shop to buy a token. Mobility means that you have fast mechanisms. We want customers to see stations as destinations. Their needs also change – you will spend more time at a site to charge an electric vehicle. There are other services that allow us to make their life more convenient – click & collect, Amazon lockers, laundry, dog wash, gym.... It's all part of the ecosystem that stations will represent.

Within this ecosystem, we've thought about how to improve our shops, including products, services and digitalisation, and looked at various experiences. In Lisbon, we have implemented a grab & go with a simple selection of products on a vending machine to avoid queues. Other concepts are scan & go and a pure self-checkout, like the Smart Store. You have to be registered in the app and, once the system recognises you, you can take the products and go.

What are your plans for this shop?

J.D. It's a pilot that we are going to test in several places. We chose that location because it seemed good for the launch. We had the Rock in Rio festival next door with a lot of people. The store is modular so we will now move it to beach areas, university campuses, etc. We can also put it in stations that are under construction. Through different apps with partners, we could expand the number of customers with immediate access to the shop.

We are seeing an explosion of frictionless shopping technology. You have already mentioned several types. Will there continue to be different technologies for different experiences?

J.D. We need an infrastructure that allows us to plug in any kind of technology. The fast adopters are going to be the ones that help us with testing. It’s essential that a store can adopt technology in a way that is agile, precise and integral. The physical and digital customer experience must match. For example, when you buy products on the Galp website, you should have them ready by the time you get to the shop. The structural project we are carrying out is the replacement of infrastructures at the point of payment (POS). We are working on becoming more and more autonomous, integrating many of the functions that are outsourced.

We know that in many markets, such as the US and the UK, retailers are suffering from a lack of labour supply. Can autonomous concepts help tackle this challenge?

J.D. We are testing technologies that allow us to optimise certain functions in the site. It is true that payment and frictionless give us that possibility. But there are other points where customer service is very important. Today we provide different services than in the past, and there are other demands. Getting a good coffee, having a good sandwich, preparing an omelette… These are things that a cashier was not prepared to do. We also want to simplify other functions that no longer make sense. We have set up a "virtual manager" to carry out basic functions and free up the manager for other activities. On the one hand, we can remove functions that have no added value and, on the other, value the services that site workers provide. Two sides of the same transformation project.

With the expansion of different retail models in stations, how do you decide which model to implement at each location?

J. D. We have mapped out the station segmentation in our network: lifestyle hub, commuting, unattended.... The more sophisticated models like a lifestyle hub, which you see in Northern Europe, include a lot of food offerings and a variety of services. Other simpler models may include drive-thru and click & collect in urban areas. The space taken up by many pumps today will be replaced by ultra-fast chargers. That will also change the model. You must win the space. If you want to be part of urban mobility you will look at services like battery swapping and electric scooters. It's all part of the ecosystem.

We are living in a time of tremendous change for the sector, frictionless shopping being part of that. From a digital perspective, what are the other big changes you expect?

J. Soares. I see two pillars that will set the trends in retail in the next 10 years, connectivity and personalisation. The customer and the car will be able to connect the physical elements it carries to plan the journey. We are also on a path where we want to know what someone is going to consume when they travel from Lisbon to Madrid. That ability to foresee the customer's interests will be key in this retail and energy segment. From an infrastructure point of view, we are trying to prepare for that. Every day there are new start-ups and we have to be agile – able to change one technology for another, one energy for another, etc.

J. D. We are in a moment of enormous transformation. Technology does not emerge by itself, it emerges in response to changes in the energy matrix (hydrogen, gas, electricity) and in the customer journey. How can we make the customer's life easier? If we don't do that the danger is that we will disappear. Service stations are no longer a point of sale for fuel. That is what we are working on. Stations we build must make sense to the customer. If not, they will be empty.

Interview by Oscar Smith Diamante

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