Z Energy - Preparing for disruption
A recent study by Suncorp New Zealand shows that Kiwi businesses have a complacent attitude to disruption, with 78% saying they are confident their business can withstand future disruption, and over half (57%) saying they won’t need to change products and services to meet market disruption any time soon.
Z Energy is not one of those businesses.
As New Zealand’s third largest retailer, and one of the country’s largest and most diverse companies, Z Energy has operations in every region and does 60 million transactions a year.
CEO Mike Bennetts also considers it a sunset business.
“I think disruption of our core business is a given, and we are not complacent about it - but we are not going out of business overnight. We are lucky enough to be able to learn from our sector in other markets as we go along,” says Bennetts.
Bennetts says that the world looks uncertain for Z Energy in the next decade or two, and that has driven some key decisions to embrace the opportunities that disruption to the sector presents.
“Z Energy has some pretty lofty goals around sustainability. We are dedicated to reducing the carbon intensity of the products we sell, reducing New Zealand’s reliance on fossil fuels and running a zero-waste, carbon-neutral organisation for our operational activity.
“The bigger issue for us is how do we help New Zealanders transition through this period of disruption into low- to zero-carbon transport energy? It’s something we feel a responsibility towards, and something we are very focused on as a business,” says Bennetts.
Z has identified three market spaces that they think are part of the transition for diversifying the company away from fossil fuels: alternatives to fossil fuels, the last mile (80% of New Zealand live within 5km of one of Z’s stores), and mobility as a service.
Bennetts cites automated vehicle sharing as one example they’re exploring.
Mike Bennetts, Z Energy
Z has also invested $30 million into a bio-diesel plant that is about to be commissioned.
‘With all the EVs coming into the market, we know we will have a reduced consumer business, but the B2B sector - the trucks, trains, boats, planes and tractors – are still going to need fuel. Biofuel is part of our commitment to helping New Zealand transition to a lower carbon transport fuel,” he says.
Bennetts says that he is in a position of needing to innovate a business around a product that can’t really be innovated, and that represents a big risk. He sees his role as trying to manage the risk involved in those decisions but says that for Z, doing nothing would be a much bigger risk.
“Z’s core product is 100 years old and has limited utility, and if we did nothing that might be the death knell for the business. But instead we are innovating everything around that product – the retail environment, customer experience, and opportunities that come from exponential technologies.”
Despite the uncertainty, Bennetts even has ambitions for growth, because he believes that for Z, scale is an important part of being able to adapt.
“I think the brand and scale we achieved from buying Caltex becomes really, really important as our core business is disrupted.
About the Suncorp New Zealand Business Success Index
In 2018 Suncorp New Zealand spoke to 600 New Zealand companies to find out what success today looks like for them and how they are tracking in the 12 months since the inaugural Suncorp New Zealand Business Success Index launched in June 2017.
Suncorp New Zealand conducts the annual survey to find out what is important to businesses, what is holding them back, how they perceive risk, and how they see their businesses evolving in a disruptive market.