- 05 Nov
CST Brands discusses how they do retail fuel pricing right
In the second quarterly financial report since spinning off from Valero, CST Brands reported a successful quarter of effectively implementing fuel pricing strategies that balanced fuel margins and fuel volumes. These strategies varied according to the market profile of the store and the corporate goals of that store, offering an ideal model of how to manage retail fuel pricing right.
Kim Bowers, CEO of CST Brands, explained that in this quarter CST brands used a fuel strategy that sacrificed fuel margins to build volume and traffic at their new stores (categorized as NTI, or New To Industry stores). CST Brands used an opposite fuel pricing strategy for their established stores to optimize margins, without the concern of potentially sacrificing fuel volumes. This is where the retail fuel pricing strategy gets even more interesting: this fuel margin optimization strategy at established stores did not seem to have an effect on in-store merchandise sales. That means CST Brands is earning more overall profits at these stores, which of course is the ultimate measure of success.
Kim Bowers said in the analyst call “At our new stores, we look at balance, pushing volume from time to time to generate traffic. For our legacy stores, we have to strike a balance between margin and volume. We need both. At those stores, we’re more focused on that optimal balance. It’s a corner-by corner-analysis.”
Under the Valero name, CST Brands selected PriceAdvantage as their sole retail fuel pricing software for all their stores in 2011. They completed the full implementation in 2012. The PriceAdvantage implementation is a complete closed loop process that includes OPIS Radius Reports for competitor surveys and competitive analysis, PDI volume and cost information for performance analysis, PriceAdvantage Optimization for retail pricing guidance, VeriFone POS and Skyline electronic price signs for seamless price change execution, and retail fuel price publishing to the web via GasBuddy OpenStore.
The PriceAdvantage team is proud to have CST Brands as a strong partner and customer and to share in our mutual success.