- 25 Nov
J.P. Morgan rewards CST Brands for in-store margin focus
In a recent update, J.P. Morgan announced they will begin financial coverage of CST Brands and Murphy USA. In their initial report, they make specific mention of their preference to the CST Brands strategy of focusing on higher margin in-store merchandise through larger store formats. The reason they gave was “Against a backdrop of stagnant gasoline demand and volatile fuel margins, the industry appears to be focused on growing higher-margin, in-store convenience merchandise through larger store formats. We prefer CST’s growth story, with new format stores driving margin growth over time and reducing the company’s dependence on fuel margins.”
In a blog dated November 14, 2013, I wrote about the correlation between fuel volumes an in-store sales. PriceAdvantage now allows you to select an unlimited number of product categories from an imported set of data from PDI, and run a report showing the correlation between retail fuel volumes and retail fuel prices with the selected data. That means you can see how fuel promotions impact in-store product category sales, along with the number of in-store transactions. You can even see how promotions of one in-store product category impact sales of another in-store product category, along with fuel volumes and fuel prices.
Clearly this strategic thinking is inline with what J.P. Morgan rewards. CST Brands has been a loyal PriceAdvantage customer since 2012. Does your fuel software allow you to investigate these correlations and maximize both fuel and in-store margins?