by John Keller | May 24, 2013 | Fuel Price Management Solutions, Fuel Price Optimization, Fuel Pricing Strategy, Fuel Software, Retail Fuel Margins
According to the latest OPIS report, average retail fuel margins in the US were essentially unchanged this week. Retail fuel margins were up $0.001 per gallon to stand at $0.124 per gallon. Year to date retail fuel margins were down $0.002 to $0.167 per gallon. Average retail fuel margins for this quarter dropped $0.008 and now stand at $0.178 per gallon.
According to NACS, at these margins c-stores are operating at break-even levels at best, after all costs are taken into consideration. The mid-west refinery problems in the US are now clearing up, so that will provide cost reductions in the mid-west and Rocky Mountains, allowing c-stores to catch up even as they drop their retail prices. But it is this shift in cost and margins that require careful calculations to balance volumes with margins, and remain competitive while the market evolves.
Fuel software for retail fuel price management systems are the only way the fuel analyst can make the most profit in these turbulent times.
by John Keller | May 7, 2013 | Fuel Price Management, Fuel Pricing Strategy, Industry News
In another blog article, I wrote about how savvy fuel pricing analysts are optimizing fuel prices and margins by focusing on the other grades besides Unleaded Regular. In a recent Today in Energy article, the US EIA revealed that average pricing spreads between Premium and Unleaded is at an all-time high of $.30 per gallon, first reached at the end of 2012, and maintained so far in 2013.
That may seem startling to the long-time fuel analyst, but when viewed from a percentage of price standpoint, the spread has remained at relatively the same levels since mid-2009. From a fuel price management standpoint, that means if you’re used to maintaining the standard $.20 spread between Premium and Unleaded Regular from years ago, it may be time to revisit your fuel pricing spread strategies and come up to the averages seen across the country.
by Grant Garrison | May 2, 2013 | Fuel Price Management, Fuel Price Optimization, Fuel Pricing Software, Fuel Pricing Strategy, Fuel Pricing Technology
Speed is one of the key components of pricing optimization, as reacting to market changes faster than competitors will always keep retail fuels managers ahead of the game. Tracking the pricing strategy of all local competition enables chains to meet consumer demand with greater accuracy and efficiency. The days of sending a rep to drive around and check the prices at other stations are long gone. Now, the best possible method of ensuring pricing optimization is with application of a fuel pricing software solution.
Software offers many benefits which are unavailable with traditional fuel price analysis. Trying to track price changes via a self-developed system leads to headaches and aggravation for everyone involved. No department can be expected to become the go-to source for fuel pricing information. Tracking and recording all the changing data with in-house tools will gradually increase in complexity until it builds to total chaos. Instead of that, software pricing integration tools provide a one-stop hub where managers can access the data they need and apply it to their pricing strategy.
In order to effectively track competitor price changes, companies should obtain access to data provided by a resource such as the OPIS Radius Report. This real-time information service can gather retail fuels prices for all competitor stations within a region. Be it a 2-mile, 5-mile, or 10-mile radius, managers can use these tools to track fuel prices history in their operating environment and respond to price changes without ever leaving headquarters. It’s easier and more intelligent than it’s ever been to monitor the competition, understand their pricing strategy, and beat them to the market.
Price tracking technology has completely changed the way in which we size up the competition in the retail fuels market. Pricing reports can now be integrated with software such as PriceAdvantage to pull content directly from the report and present the data in an easily understandable interface. Making intelligent pricing decisions is no longer a complex, labor intensive task, but an effortless one. Managers can now maximize their pricing optimization by gathering the data online, porting it into comprehensive software solutions, and then instantly push any price changes to the street.
This capability to instantly visualize competitor behavior gives even non tech-savvy managers an edge in their market. It gives them the tools to react to trends and market shifts before the competition even knows what they’re doing. By the time other regional chains utilizing outdated software can react to these new conditions, the company with the right tools can be leapfrogging them to the next trend.
Don’t settle for substandard systems or business processes. Technology has made it easier than ever before to define strategy and outmaneuver competitors. Stop chasing prices and make the competition start chasing you!
by John Keller | Apr 16, 2013 | Fuel Price Management, Fuel Pricing Strategy, Industry News
In anticipation of growth in the emerging liquid natural gas market, TravelCenters of America announced an agreement with Shell where TA will provide LNG truck stations at up to 100 locations along US interstate highways.
These natural gas stations will be specifically for large over the road trucks. Shell will construct at least two natural gas fueling lanes at each location and bear the burden of the cost at each location. Shell will then provide the natural gas at each location. Both Shell and TA will market the natural gas fuel to their customers.
The two companies are hopeful that the first locations may be operational within one year’s time.
From a fuel price management perspective, this is another market indicator that natural gas, specifically LNG for large trucks, may soon be taking away noticeable market share from traditional fuels volumes. According to the US Department of Energy Alternative Fueling Station Indicator, there are approximately 28 public LNG stations in the US currently.
by John Keller | Apr 12, 2013 | Fuel Price Management Solutions, Fuel Pricing Strategy, Industry News, Retail Fuel Margins
In the NACS State of the Industry Summit, OPIS Chief Oil Analyst Tom Kloza predicted wide and volatile fuel price swings in 2013. Mr. Kloza said smart fuel marketers will be able to take advantage of these cost swings by buying low and selling high.
The PriceAdvantage fuel pricing software solution from Skyline Products can play an important role in aiding with the timing of these buying decisions. The Daily Rack Cost Summary report in PriceAdvantage displays supplier cost provided by OPIS, making it easy for fuel analysts to review different supplier options for a rolling five day period, and compare to what the competition is paying. Not only does this report aid in deciding where to buy from, it also shows the fuel analyst whether he is at a competitive advantage or disadvantage in each of his markets. By consolidating this OPIS information feed into the PriceAdvantage fuel price management solution, fuel analysts can find answers to their critical pricing decisions in one centralized location, and reduce time to conclusion.
The Profit Actual Cost report in PriceAdvantage allows the fuel analyst to quickly see in-ground margins based on past purchases. When taken in conjunction with the replacement cost information presented in the PriceAdvantage fuel pricing screens, the fuel analyst has a complete picture of store performance and margins.
The Margin Analysis views in PriceAdvantage present by market and by store the weighted actual margin, weighted actual cost, and average replacement margin. These views make it easy to slice and dice the information by commodity, market, and date range. Heat maps display relative performance of regions to one another, and stores to each other.
PriceAdvantage provides the complete breadth of information and rich analysis you need to quickly make the most of your fuel buying and fuel pricing opportunities and to optimize the balance between margins and volumes. We can expect the volatility of 2013 to continue for years to come, so savvy fuel analysts will need to decide not if they should embrace the best fuel price management solution, but when.
by John Keller | Apr 8, 2013 | Fuel Price Management, Fuel Price Optimization, Fuel Pricing Strategy, Retail Fuel Margins
The retail fuel price management game is one of balancing volumes and margins. As we watch the retail fuels volume market size shrink, or at best remain steady year over year, competition for that shrinking pie continues to intensify. If you’re not careful, the race for volume market share can be a race to the bottom for retail prices, and profits.
According to a report from the National Association of Convenience Stores, the average fuel retailer breakeven point is 12 cents per gallon, taking into consideration store operating expenses, amortization of equipment, inventory shrink, and credit card fees. So when we see the average Q1 retail fuel margins for 2013 are at $0.159 per gallon, that means fuel retailers are making very little net profit from fuel sales.
How do savvy retail fuel analysts optimize volumes and margins? By focusing on the margins of the commodities other than unleaded, like mid-grade, premium, and diesel. They analyze the strength of their product offering compared to the competition, and identify stores of opportunity where they may have exclusivity. They may discover “mid-grade stores” that can tap into that market because the competition doesn’t offer mid-grade. Or there may be “diesel stores” that have a superior offering because of pump layout and ease of access.
PriceAdvantage aids with this optimization and analysis by providing easy to use views and reports showing product volume sales, profits, margins, and competitor product offerings, by commodity. And in order to make sure you are optimizing the pricing spreads between commodities, PriceAdvantage offers a built-in cost report showing the replacement cost differential between commodities, listed by supplier.
As the fuel price management landscape continues to be more competitive, only fuel pricing software like PriceAdvantage provides the rich optimization analytics to make the best pricing decisions that lead to maximum profits.
