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- 18 Jul
Competing Against Walmart Fuel Discounts
Walmart joined the retail fuel price loyalty game this summer, partnering with Murphy Oil to offer $.10 discounts on fuel when the purchase is made using one of the Walmart payment cards. Loyalty reward incentives are becoming mainstream across retail fuel c-stores and grocery store chains.
So the question is, how can the fuel manager compete? The answer lies in understanding the fuel pricing strategy at Murphy.
Murphy focuses their fuel price management solution around the urgency of fuel price changes. At Murphy, the fuel price strategy is a volume game. Murphy uses price as their number 1 advertising, as their billboard. Murphy advertises their price on enormous gas price signs, projecting such confidence that the consumer believes Murphy must have a low price since the sign is so bold. Murphy has reached such operational efficiencies in the fuel price change process, they can react extremely quickly to hourly wholesale price fluctuations. Murphy routinely changes fuel prices 2-3 times per day to squeak out the highest possible volume and profit hour by hour, based on these hourly wholesale price fluctuations. Speed to the street wins. When wholesale prices go up, retail price changes can happen almost immediately. When wholesale prices go down, Murphy can make it very difficult on the stores around them by dropping retail prices right away. Murphy sells such high volumes of fuel, the difference of a fraction of a penny, multiplied out times every gallon sold across their enterprise, yields huge profits.
The only way to compete against Murphy is to implement a fuel price management solution that watches Murphy prices like a hawk. Subscribe to the OPIS Radius report and get pricing feeds througout the day. Track every Murphy price move by allowing store and territory managers in the field to quickly report new Murphy prices to headquarters, or better yet, empower these managers to use their mobile device to change prices immediately when Murphy moves. Then the fuel manager can know what’s happening in the field in real time, and analyze store performance in terms of my price vs. competitor price, and gallons sold as compared to the same day of the previous four weeks. With this fuel price management solution, fuel managers can quickly make adjustments to their Murphy competitor strategy, and maintain the strategy that makes sense, whether it is matching Murphy, or staying within the price differential that the market will bear.
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