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Market study explains consumer preferences

Convenience Store Decisions published the results of a study from Market Force that identifies the key factors that drive customers to select their favorite fuel retailers. Over 10,000 consumers were surveyed. Approximately 73% were women and 27% were men.

The results were split into two categories:  Convenience Stores and Big Box (including grocery stores). When asked where did they last visit for their most recent trip to refuel, 71% visited a c-store, and 28% visited a big-box retailer.

The key determining factors for selecting a fuel retailer were

  1. Price
  2. Payment Options
  3. Fuel Quality
  4. Ease of Entering and Exiting

“The brands are tightly clustered in nearly every category, which shows just how fiercely competitive this industry is,” said Cheryl Flink, chief strategy officer for Market Force Information. “With drivers having so many options to choose from, gas stations and convenience stores must excel in areas beyond price, such as offering multiple payment options or specialty foods to attract loyal, repeat customers.”

What does this mean from a fuel price management perspective? When determining fuel pricing strategies, the strategy of gaining volumes simply by offering low prices may not be the best way to optimize overall store profits. Take into account the competitive strengths and weaknesses of each location in terms of the consumer determining factors listed above, and see if the market will bear higher margins based on what the store has to offer. Use fuel pricing software like PriceAdvantage to experiment with different strategies. Execute the fuel pricing strategies so you can be sure every store is always priced where you want it to be all the time.  And monitor store results with fuel volume and margin analysis, the correlation between forecourt and in-store transactions, and competitor behavior such as which competitor is first to lead and which typically follows.

PriceAdvantage allows you to deliver retail fuel excellence, and develop loyal customers who are delighted to recommend your stores to others.

CST fuel optimization shows strength

In the May 6, 2016 financial report, PriceAdvantage customer CST Brands reported that Gross Profit on fuel sales improved to $75 million from $63 million in the same quarter 2015.

Kim Lubel, Chairman and CEO of CST Brands said: “We showed continued strength in fuel gross profits in the U.S., as a result of a favorable fuel margin environment and our continued fuel pricing optimization initiatives.”

We at PriceAdvantage are proud to be a key part of how CST Brands executes on those fuel pricing optimization initiatives. CST Brands has been using PriceAdvantage for pricing all U.S. stores since 2012.

Are you ready for price increases?

Here we are heading into the end of February and everyone in the retail fuels business knows the season of rising gas prices is just around the corner. It happens every year: refinery prices increase, wholesale costs go up, and eventually the retail fuel marketer must respond.

We’re already seeing signs of this season being upon us. According to the Lundberg Survey, the average unbranded rack price for Regular Unleaded across the US has risen over seven cents since February 10. In the Midwest, the regional unbranded rack price average has shot up almost $0.23 per gallon in ten days. Yet refiner margins are still low, and pressure to increase margins continues to build .

Demand is higher year to date than 2015. That makes sense because in 2015, total US miles traveled broke a new record at 3.1 trillion miles. That record has stood since 2007, before the recession started. This number reflects miles traveled by passenger vehicle, bus, and truck. All indications are that 2016 will continue with similar numbers.

What does this mean to the Retail Fuel Manager? I recently spoke with one of our customers who manage a large number of locations across a number of dramatically different markets. He said that as he sees big increases in wholesale cost like what has happened recently in the Midwest, he’s faced with playing a game of chicken. Retailers are looking at each other to see who is going to move first. In order to be most effective in this retail fuel pricing game, you must go beyond simply responding to replacement cost and competitor price changes. You must have access to retail fuel pricing software that quickly shows you historical fuels volume performance for a store and market, compared to budget targets. You must be able to quickly see actual fuels margins store by store and across a region. You must be able to track past history of your prices vs. competitor prices, to get a sense of typically who moves first. And of course, the best retail fuel pricing strategy is a well executed fuel pricing strategy: once you determine the proper price for each grade at each location, you must be able to execute those prices out to the street across all locations.

One could say that recently it was relatively easy to make money in retail fuels because of falling wholesales prices and healthy margins. But as we head into the spring, this is when times get tougher and it takes more insight and faster response times to maximize retail fuel and overall store profits.

AAA predicts highest Labor Day travel

AAA is predicting that this Labor Day weekend we’ll see the highest travel miles in seven years. The prediction is for a 1% increase over last year, and the fifth consecutive increase in miles traveled by automobile this holiday weekend. The weekend officially starts Thursday September 3 and concludes Monday September 7.

More details can be found on CSPNet.com here.

Timing for these high travel mile numbers couldn’t be better for fuel retailers since according to the latest OPIS retail fuel margins on NACS Daily, fuel margins are up 0.159 per gallon this week to a whopping 0.345 per gallon. Even the midwest seems to have recovered from the refinery outage that caused retail fuel prices to skyrocket and fuel margins to plummet.

From a fuel price management perspective, this is a key money making weekend, where fuel pricing software is key for keeping an eye on competitors, volumes, and margins in order to make the best of the opportunity.

CrossAmerica Partners buys 41 stores

CrossAmerica Partners announced today the acquisition of One Stop, a chain of 41 company owned c-stores based in West Virginia. Read more about the announcement published in Convenience Store News here.

In December 2014, the partnership of CrossAmerica Partners and CST Brands announced the acquisition of the 22 store chain Landmark Stores operating in San Antonio and Austin, as well as the 64 store chain Erickson Oil Products, Inc. operating in Minnesota, Michigan, Wisconsin and South Dakota. In November of last year, the partnership of CST Brands and CrossAmerica Partners closed the acquisition of Nice N Easy, a 77 store chain in central New York state.

The announcement today marks the fourth chain of c-stores acquired by CrossAmerica Partners, now a wholly owned subsidiary of CST Brands.

CST Brands selected PriceAdvantage for their fuel pricing system in 2011, back when they were under the Valero umbrella. The field Operations folks at CST Brands have found the PriceAdvantage mobile component to be one of their most helpful applications.

Fast Max increases fuel volumes

Kocolene, an operator of 22 Fast Max stores throughout Indiana and Kentucky, experienced a 3% increase in 2014 fuel volume sales after just one year of using PriceAdvantage fuel pricing software – exceeding the national average increase by 2%. At the same time, the fuel retailer was able maximize fuel margins to create a substantial increase with overall gross fuel profits. The 2014 performance improvements are featured in a recent case study alongside other organizational benefits derived from using PriceAdvantage mobile fuel pricing technology. The case study may be found here.

In early 2013, Fast Max executives realized their manual, tedious processes for obtaining market data and setting fuel price changes needed updating. By adopting PriceAdvantage mobile fuel pricing technology, Fast Max was able to replace manual phone and paper processes for collecting competitive fuel prices, gained immediate access to accurate competitive information and market data, and automated price changes from headquarters to the store POS system and fuel price signs.

Within the first year of using PriceAdvantage, Fast Max increased its fuel sales and productivity. PriceAdvantage allowed Fast Max to quickly and easily catch developing trends in the market, signaling when an adjustment in their pricing strategy was needed to capture fuel sales. “Using PriceAdvantage, we have seen a 3% gain in fuel volumes over the previous year while maximizing margins and experiencing significant growth in gross profits. On top of that, we have a relationship with PriceAdvantage that feels more like a partnership.” Lance Gentry, Vice President of Operations.

By using PriceAdvantage mobile fuel pricing software, Fast Max corporate management reviews data, receives alerts and makes price changes on their smart phones, as well as perform many functions without having to call each store and interrupt a team member or manager who may be assisting customers. PriceAdvantage streamlined the entire pricing process and provided store managers and team members more time to service and sell to customers, as well as perform other tasks.

Fast Max chose the PriceAdvantage subscription pricing model that provided rapid software implementation with minimal upfront costs or hardware investments. This flexible model allowed Fast Max to license specific software components, enabling them to create an affordable solution to meet their specific needs. With the demonstrated increase in sales, PriceAdvantage easily delivered a measureable ROI.