11 May 2021

What the Colonial Pipeline Cyber Attack Means for the Convenience Store Industry

By: Brittany Maroney

Strategy

On May 7th, Colonial Pipeline, one of the nation’s largest suppliers of gasoline, diesel, and jet fuel, announced that a significant cyberattack would be causing massive shutdowns of its pipeline operations. Almost immediately, 45% of the gas supply to the southeast was eliminated, with the expectation that it would remain shuttered for days. Now days later, operations are still on pause. What could events like these mean for the industry as a whole and how does your loyalty program allow you to navigate these events?

While the convenience store industry is no stranger to gas shortages, disruptions to supply mean operators need to pivot quickly to offset fuel revenue declines. When the availability of a product such as gas dwindles, it is even more imperative to have the right digital loyalty strategy in place to drive purchasing habits away from dependencies on the pump and into new channels. Categories such as tobacco products, caffeinated beverages, alcohol, and household essentials are items that become even more sought after during periods of disruption, providing alternative channels to continue to drive profits and customer engagement. This is the time to make your loyalty program work for you.

CYBERSECURITY RAMPS UP AS A THREAT 

While all the details of the attack are still unknown, this is what we have learned. Late on Friday, Colonial Pipeline became aware of a ransomware attack in which hackers attempted to encrypt at least one company computer, threatening to hold it hostage until the company paid a ransom. To mitigate risk, the company shut down all computers until the threat could be resolved. Late on Monday, the FBI confirmed that an eastern European organization called DarkSide was responsible for compromising the Colonial Pipeline’s networks. Statements from Colonial Pipeline have reassured the public that they are doing their best to develop a system restart plan; however, they still have not provided a date on when the whole operation will be back online.

Cyberattacks such as these continue to become more prevalent and widespread for organizations of all sizes. While many organizations attempt to prevent such occurrences through preventative training, specialized software, and additional security protocols, the current state of cyber-preparedness across the industry varies from organization to organization. 

THE INDUSTRY IMPACT

As of Monday, the U.S. government announced that it would temporarily relax rules on fuel being transported by road. This means drivers in 18 states can work extra hours when transporting refined petroleum products and enables oil products to be shipped in tankers up to New York to provide a temporary supply chain. While U.S. fuel prices at the pump remained unaffected on Monday, there are still fears of the effect if the shutdown is prolonged. Long-term shutdowns would immediately create shortages in Atlanta and Tennessee, followed by New York and additional eastern states. Over the weekend, gas prices surged an additional 4.2% and were at the highest levels since 2018. 

With all that said, the industry should still be prepared for future product spikes and volatility. With the pandemic mostly behind us here in the U.S., the expectation is that soon roads will return to pre-pandemic traffic, packed with road warriors and summer vacationers. With staffing shortages already predicted for summer fleets, many tanker operators are concerned about the lack of qualified drivers and the number of drivers that retired during the pandemic’s peak. Possible shortages would have an immediate impact on convenience store owners that typically depend on fuel sales to drive loyal customers through their glass doors. To ensure that in-store traffic stays high, operators should turn to data-driven offers and targeted campaigns that entice customers to purchase from other categories besides fuel.

OVERCOMING FUTURE CHALLENGES

The Colonial Pipeline incident highlights the risk ransomware can pose to critical national industrial infrastructure, not just businesses. As convenience stores continue to eye the future, they also understand that profitability at the pump must be balanced with customer lifecycle loyalty within their four walls. Data-driven digital solutions like the Punchh Loyalty & Engagement Platform allow operators to deliver targeted offers to their customers, over the right channel, and at the right time. 

Punchh offers an innovative, fully integrated AI-powered loyalty solution that safely and securely unifies customer data, driving customers into the store. As organizations continue to collect data (and keep that data secure), their loyalty provider remains a critical partner in ensuring their business and customers’ information is safe, secure, and ready to offset any challenges the summer of 2021 might bring.  

Learn more about Punchh Loyalty solutions for Convenience Stores and Gas Stations.