by John Keller | Nov 18, 2013 | Fuel Price Management, Industry News, Retail Fuel Margins
As we read more and more about the growth of the natural gas fueling station infrastructure, and the coming of more natural gas engines, it’s important to be aware of how a natural gas product offering can impact retail fuel margins at the c-store.
Clean Energy Fuels is a provider of natural gas for transportation in north America, with a network of both CNG and LNG stations across the US and Canada, totaling more than 348 stations. In the most recent fiscal quarter, Clean Energy delivered 56.4 million gallons of fuel.
The typical quarterly margin for Clean Energy is in the $0.30 per gallon range. Compare that to the most recent Murphy quarterly margins of $0.148 per gallon, and the most recent CST Brands quarterly margins of $0.16 per gallon (after $0.04 credit card fees). That means the Clean Energy retail natural gas fuel margins are approximately two times the margins of traditional fuels.
Granted, the fuel volumes of natural gas are nowhere near the fuel volumes of petroleum fuels. But as the growth of natural gas continues, double margins become increasingly intriguing.
by John Keller | Nov 14, 2013 | Fuel Price Management Solutions, Fuel Price Optimization, Fuel Pricing Software, Fuel Pricing Strategy, Fuel Pricing Technology, Fuel Software, Retail Fuel Margins
When analyzing the overall profitability of a c-store, there’s a fundamental question that needs to be answered: do increased fuel volumes correlate to increased in-store sales and therefore overall store profits? Some would argue the answer is “of course – more customers to the forecourt obviously equates to more customers in the store, so there’s a direct correlation”.
But is that true 100% of the time? Our PriceAdvantage team spent some time with industry experts at the recent 2013 Outlook Leadership Conference in Scottsdale, Arizona and the insight they provided may be surprising. Some of the folks we talked to said you can always count on the same percentage of forecourt customers coming into the store, and you can always count on the same per-dollar transaction average in the store; so therefore increasing traffic to the forecourt will directly correlate to increased store profits.
But others told us that as you modify your fuel pricing strategy, the buying profile of the forecourt customer changes too, and the percentage of these forecourt customers shopping inside the store changes. Further, the nature of what purchases this new customer makes in the store also changes. In other words, changing a fuel pricing strategy may mean you can’t count on the same percentage of converting forecourt customers to in-store customers, and you can’t count on the same per-dollar transaction average in the store.
What’s the right answer? We believe that it’s not “either / or”, it’s “both / and”: with some stores the customer buying profile is static and one you can count on to predict in-store profits, while with other stores the customer profile is more dynamic based on your fuel pricing strategy.
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.
This type of rich analysis comes out of the box with PriceAdvantage and its integration with PDI, allowing fuel managers to optimize the entire business at the c-store, both at the forecourt and inside the store.
by John Keller | Nov 8, 2013 | Fuel Price Management Solutions, Fuel Price Optimization, Fuel Pricing Software, Fuel Pricing Strategy, Industry News, PriceAdvantage, Retail Fuel Margins
In October 2013, PetrolPlaza recorded an interview with me to discuss the unveiling of the new PriceAdvantage “Margin Percentage” report. The full interview can be found here.
This new report allows retail fuel managers to view retail fuel margins as a percentage of fuel price. Traditionally retail fuel margins have always been measured in terms of cents per gallon, with a generalized definition of success as being $0.15 – $0.20 per gallon. The problem with this thinking is that this number was defined back when retail fuel prices were in the sub-$2.00 per gallon range. Now that retail fuel prices are at $3.00 levels and above, these same cents per gallon ranges represent a much lower percentage of the retail price. Compared to other c-store product category margins, these are a very low percentage of price indeed, and that can be quite alarming to marketing managers who are less familiar with the fuels business.
In fact, marketing managers are often perplexed when fuels managers express fuels margins in terms of cents per gallon. That’s where this new report provides a nice bridge between retail fuels groups and marketing. The traditional cents per gallon way of measuring fuels margins is not going away any time soon, so this report displays side by side margins as cents per gallon, and as percentage of price. Thus the Margin Percentage report acts as both a translator between two divisions of the company, and as a new perspective into profits.
The September issue of CSP magazine included an article titled “Stop Making Cents?“. It was this issue that introduced the idea to the PriceAdvantage team, and we’re proud to say that between the time when the article was released in September, and the NACS show in October, we were able to develop and demonstrate the Margin Percentage report in our NACS exhibit booth. Customers and prospects loved it, with the feedback being that this report will make it so much easier to communicate with Marketing departments, and to ultimately optimize store profits.
by John Keller | Oct 30, 2013 | Customer News, Fuel Price Management Solutions
The PriceAdvantage team would like to congratulate Parker’s on the grand opening of their 32nd store.
According to Convenience Store News, Parker’s celebrated the official grand opening of their new state-of-the-art location in Statesboro, Georgia. The 3,200-square-foot retail store is the third Parker’s location in Bulloch County.
Parker’s features its 1-Cent Wednesday Fueling the Community program at the Statesboro location. On the first Wednesday of every month, Parker’s sets aside one cent of every gallon of gas purchased to donate back to local schools.
Parker’s has been using PriceAdvantage for retail fuel pricing across all their stores since November 2011. Parker’s has added seven stores since then. The Parker’s PriceAdvantage implementation incorporates their Skyline electronic price signs, as well as their VeriFone POS system, PDI back office system, and GasBuddy OpenStore.
by John Keller | Oct 28, 2013 | Customer News, Fuel Price Management, Fuel Pricing Technology
Greg Parker can now add “Entrepreneur of the Year” to his growing list of awards and industry recognitions. The Savannah Area Chamber of Commerce has just named Mr. Parker the 2013 Entrepreneur of the Year. The Griffin Report named Greg Parker C-store Innovator of the Year earlier this year. Convenience Store News named him the 2013 Tech Executive of the year in April. In August this year Parker’s was named one of the fastest growing companies by Inc. Magazine. Greg is the President and CEO of The Parker Companies, and a loyal PriceAdvantage partner and customer.
Parker’s selected PriceAdvantage as their enterprise fuel software in November 2011. Since then, Parker’s has successfully been using PriceAdvantage in conjunction with PDI, VeriFone, and GasBuddy OpenStore to manage their entire retail fuel pricing lifecycle. “We are always looking for innovative solutions to increase our efficiencies in the store, allowing our store employees to focus on customers and enhancing their shopping experience,” Greg Parker said. “PriceAdvantage Enterprise does exactly that by giving us control over fuel pricing from headquarters, or from the field, streamlining our overall fuel pricing process, helping to maximize profits and grow our business. Parker’s stores strive to be recognized for quality products at competitive prices and now we can communicate our fuel prices faster and easier in a matter of minutes through PriceAdvantage and OpenStore, both at the store and online,” Mr. Parker said.
The PriceAdvantage team is proud to work closely with Greg Parker and The Parker Companies as each of us plays a key role in our mutual success.
by John Keller | Oct 22, 2013 | Fuel Price Management Solutions, Fuel Pricing Strategy, Industry News
Colorado Governor John Hickenlooper and Oklahoma Governor Mary Fallin publicly thanked General Motors for bringing to market a 2014 Chevy Impala bi-fuel model that will operate on both CNG and gasoline.
Last year 15 governors solicited auto manufacturers for CNG vehicles as an effort to reduce dependence on foreign oil, protect the environment, and save money on state fleet costs. “By transitioning state fleets to CNG cars, Oklahoma taxpayers stand to save thousands of dollars per vehicle on fuel costs”, said Governor Fallin.
The 15 states involved in last year’s CNG vehicle solicitation now have more than 17,000 mid- and full-sized sedans in their fleets. The new bi-fuel Chevrolet Impala will offer 150 miles of natural gas range while providing full gasoline capability for an additional long distance range.
There is no question that CNG is poised for growth in the fuels US market. When and where to introduce CNG into your fuels management strategy requires close monitoring of your markets. The c-store offering CNG in the right markets will benefit from higher retail margins for this new product.
