Why electric car charging is a problem retailers must solve in 2020
“Will there be parking?” was the problem which out-of-town shopping solved for customers in the 1990s and 2000s.
“Will there be charging?” is the problem which retailers need to solve in the 2020s – because the consumer of the future drives, if not necessarily owns, an electric car.
If you accept that proposition, you then face the question of how best to install charging in your car parks. I know a number of companies who are grappling with this issues at the moment – because what seems like a simple idea in principle throws up lots of commercial and legal questions when you delve into the nitty gritty.
The ones which come up time and time again in conversations with retailers are around charging speed and ownership. And the problem is that if you’re a national retailer with multiple sites, it’s very hard to find a one size fits all answer.
My view is that this has to be approached on a site-by-site basis. I’ll explain why.
Let’s look at charging speed first. The choice here is around whether you charge customers money for fast top-ups, or provide low-cost slower charging.
The first option is clearly attractive in that it provides a direct financial return. However, it also requires you to be able to draw down massive amounts of electricity from the grid.
To use this model you therefore need to look at the number of charging points you’ll provide in your car park and how much electricity this will require, then negotiate a pricing structure in your agreement with your supplier to make the charging points commercially viable.
This model lends itself to a site with relatively few parking spaces, where you want customers to stay for perhaps 30 minutes or an hour before making a purchase and leaving, freeing up space for the next person.
By contrast, if you’re operating a site with lots of parking and charging points, ‘low and slow’ may be the way to go. Free or cheap charging at a stately pace can encourage customers to spend longer in your shops – a few hours in which they grab a coffee and maybe a bite to eat, perhaps talk to a sales advisor and make a considered assessment before purchasing a product.
The kind of charging point you go for also has an effect on the ownership model you adopt. Here, the main options are full investment – where you buy your own charging kit and contract with a service provider to deliver the charging and associated data services – or a land lease agreement where you lease the space to a service provider who then installs their own equipment.
Full investment gives you full control over the kit you buy, some freedom to switch between charging service providers and more control over pricing. If you’re looking to supply fast top-ups, this may be the way to go – as you can recoup some of the cost of your investment through your pricing.
However, owning equipment means you are also responsible for it – your service provider doesn’t have to fix or replace it should it break. Furthermore, if the market changes and your kit isn’t compatible with new electric car designs or models of energy delivery, you could face a hefty replacement bill or be left with defunct charging points.
Land lease agreements may seem like a simpler and safer option – and in some ways they are. Correctly negotiated, they can give you the security of an SLA with the service provider which covers things like maintenance and pricing, as well as a potential income from the lease of the land.
However, freedom to switch providers is often more limited with this kind of solution due to the length of lease required – a break clause can help on this front but won’t always be the answer.
Additionally, valuable customer insight data gathered by the service provider won’t necessarily be available to you unless this is written into the contract from day one. This is bigger than it sounds – the vast majority of electric car charging services use mobile apps precisely because the data they can gather is so useful.
Retailers are used to analysing big data to assess dwell time and footfall and tailoring their offer around that information. EV charging has the potential to deliver a much richer dataset (such as where has the customer travelled from, where else have they charged), which can be of immense value.
Hopefully this gives you a fair idea of why I believe these decisions are better approached site-by-site. There are just so many variables – I haven’t even gone into many of the tangential issues such as subletting arrangements with your landlords or taking a joint approach with other nearby retailers.
A properly thought-out strategy to implement electric vehicle charging for each site is the right way forward. Get this right and the customer of the future will be parked outside your stores.
Chris Pritchett, commercial team specialising in environmental and business regulation, Foot Anstey
