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.
by John Keller | Oct 22, 2013 | Customer News, Fuel Price Optimization, Fuel Pricing Strategy, Industry News
A USA Today article titled “Park, pump and pig out” touts the c-store trend of offering gourmet food. PriceAdvantage customers Parker’s, Rutter’s, and Sheetz are mentioned specifically, and Greg Parker is quoted briefly.
Here’s a clip from the article:
“We currently do $6 million in annual sales,” Parker says. “Our store was actually picked by TripAdvisor last year as the fourth-best restaurant in the city.”
That’s probably because the crab stew consistently wins awards. And the extensive wine list works well with the upscale Southern comfort foods served. Its charming, 6,000-square-foot space doesn’t hurt, either. A renovated automobile dealership from the late 1800s with Mediterranean-style architecture, it is certainly eye-catching, a place where you want to linger.
“Our head chef trained under the tutelage of her grandmother,” Parker says. “We all revere her food.”
I wrote another blog post about how Fuel profit optimization is most powerful when viewed as part of the overall gross profits of the store. In some cases, the advertised fuel price is strategically used as an advertisement to attract customers to the high margin food and store merchandise product offerings. In other cases, it is the quality food that drives traffic to the store, and customers will fuel up after finishing their meal.
No doubt overall store profitability needs to be measured in terms of fuel, merchandise and food. PriceAdvantage working in conjunction with PDI allows you to see the correlation between these three pillars of profitability, determine the market profile of each location with its specific elasticity between product categories, and optimize profits based on the synergy of all strategies working in union.
by John Keller | Oct 21, 2013 | Fuel Pricing Strategy, Industry News, Retail Fuel Margins
The latest report from OPIS reveals that retail fuel margins across the US had their largest weekly drop in two months. Overall retail fuel margins across the US dropped $0.053 per gallon to an average of $0.183 per gallon. That is the third consecutive weekly drop that combined to erase all margin gains achieved during the month of September.
The year to date average margins remain at $0.189 per gallon but the Q4 average margins dropped two cents to $0.225. The six week average retail margins now stand at $0.235 per gallon. This week one year ago retail fuel margins were nearly identical to this year, at $0.230 per gallon. Last year the latter half of October had an increase of $0.13 per gallon, followed by a $0.20 decline through the month of November.
It will be interesting to see if the patterns of 2012 repeat this year.
by John Keller | Oct 11, 2013 | Fuel Pricing Strategy, Industry News, Retail Fuel Margins
The latest OPIS report reveals that retail fuel margins across the US dipped $0.019 per gallon this week. Average retail fuel margins across the US are now at $0.236 per gallon, the lowest levels since September 13. The year to date average retail margin is $0.189 and the quarter to date average margin is $0.246 per gallon. For the last six weeks, the average retail margin has been $0.233 per gallon.
Two weeks into the quarter, we’re off to a strong start. Let’s hope that we can maintain margins at this level and finish the year strong.
by John Keller | Oct 10, 2013 | Fuel Price Optimization, Fuel Pricing Strategy, Fuel Pricing Technology, Industry News
In a recent ZDNet article titled “The future of retail is dynamic pricing. So why can’t we get it right?”, a panel of ‘dynamic pricing’ experts representing companies including Best Buy and Ace Hardware provide lessons learned that can be applied to retail fuels pricing. Here are the highlights, and some thoughts on how they’re directly applicable to retail fuels pricing.
- It has become very easy for customers to research prices. For retail fuels pricing, this customer research has extended beyond the physical sign to the virtual price sign, as in GasBuddy, and all the OPIS-fed sites like MapQuest, Garmin, and AAA. How can you be sure these virtual price signs are always accurate? With PriceAdvantage, use the OPIS and GasBuddy exports as part of the fuel price change confirmation, and rest easy that every time a price change is complete, all these online sites are brought up to date.
- Retailers now have access to mainstream technology that allows them to quickly respond to market changes and make price changes at a moment’s notice, thereby insuring that their prices are always relevant. But this “change management” can be complex to execute effectively. In the retail fuels arena, this speaks to the difference between responding to a market change with a proclamation of a price change to your stores, and responding to a market change with a well executed automatic price change that includes confirmation and an audit trail upon completion. The PriceAdvantage SMART Fuel Pricing patented technology works with your Gilbarco, NCR, VeriFone, and AutoGas POS, along with your electronic price signs, to insure that every price change is executed within the compliance of the weights and measures regulations.
- The key to success is the right foundational data with the best information you can get, so you can have the best execution of your strategy, aligning pricing with the brand, and with your position in the market. In retail fuels management, that means carefully monitoring cost and competitor information from multiple sources including agents in the field and OPIS. And it means routinely reporting on historical pricing to make sure your pricing is where you want it to be relative to the competition, whether that is low price leader, middle of the pack, or premium experience. This strategy needs to be monitored not only on a store by store basis, but on a zone by zone basis, according to differences from market to market and convenience of location. In some areas pricing will need to be more aggressive, without giving fuel away across the entire enterprise.
These retail giants have a lot of wisdom to share, and it is all relevant to the retail fuels industry. PriceAdvantage allows you to apply the wisdom of these giants, without having to invest millions in the technology they use.
by John Keller | Oct 7, 2013 | Fuel Price Management, Fuel Pricing Strategy, Industry News
Navigant Research has recently published a report projecting the annual compounded growth rate of plug-in electric vehicles at 18.6% through 2022, significantly higher than the projected growth of the light duty vehicle market. Four US states in particular are pegged as being the growth leaders in projected annual sales: California, New York, Washington, and Florida. Los Angeles, San Francisco and New York City are projected to have the largest sales of plug-in electric vehicles among all North American cities through 2022.
The study attributes the accelerating growth to the dramatic increase in plug-in electric vehicle options in the North American market. Where once it was a choice between the Nissan Leaf and the Chevy Volt, new mainstream choices include Tesla, Ford, Mercedes Benz, Toyota, Mitsubishi, Honda, and Fiat, with new offerings coming soon from BMW and Volkswagen.
When measured by percentage of overall vehicle sales by state, the highest concentration of annual plug-in electric vehicle sales is expected to be in Hawaii, California and Oregon.
Retail fuel managers competing in these states and cities need to be carefully monitoring the demand for electric charging stations, and consider a five to ten year plan that includes the electric charging station as a product offering. While liquid fuels are unquestionably destined to be the majority of fuels sales, ignoring the demand for electric charging could lead to consumers going outside the c-store market to re-fuel, and a loss of in-store revenue opportunities.
