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- 16 Aug
Fuel price optimization strategy must include rapid market responses
In the Q3 financial release from The Pantry, the CEO included a statement regarding how the c-store chain plans to improve their retail fuel margins and volumes. From the press release: “The company is implementing a fuel-pricing technology that will be designed to track and project street postings, to be more responsive to market elasticity, Hatchell said, adding that the software is currently “learning” to do its job by building sales histories and collecting data.”
This statement speaks to a critical component of an effective fuel price optimization strategy: rapid responses to fuel price changes in the retail market. Retail fuel prices in 2012 have been exceptionally dynamic and rapid. The Houston market saw a one day $0.20 price increase this year, something usually only seen once a career. It is easy for stores to be left behind when the first movers in a market make their price change. Lagging behind can result in missed opportunities, lost business, and even negative margins.
One way to maintain quick responses to market changes is to view OPIS Radius report content in your Fuel Price Management software. In PriceAdvantage, it is simple to compare the gasoline pricing reported by OPIS to what is reported by the store managers, in a “survey says vs. OPIS says” user interface. This keeps the store managers honest with their survey reporting, and alerts the Fuel Manager when a price change occurred that the store manager may have missed.
A second way to maintain quick responses is to automate the price change process to the street. This is the basis of what PriceAdvantage was built on from day one, replacing a manual phone call and fax process, with a one-button-click price change push to the store sign, POS and pump. Confirmation messages back complete the closed loop to make sure the price change was successful.
The third way to remain nimble in the retail fuel market is to post the latest store prices to all virtual mapping applications. GasBuddy and OPIS are the two content providers to virtually every gas price mapping application in the market. PriceAdvantage customers such as Valero and Rutter’s have already recognized the benefits of posting their latest gas prices online.
As the competition for retail fuel continues to get tougher, there will be winners and losers. A robust fuel price management software will allow the winners to execute an optimized gasoline pricing strategy, and become dominant winners in each retail fuel market.
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