by John Keller | Nov 21, 2013 | Fuel Price Management, Fuel Pricing Technology, Industry News, Retail Fuel Margins
Today Ford announced that the first 2014 model F-150 that can run on either CNG or LPG is now rolling off the assembly line. With the combined gasoline and CNG, the range of the F-150 will be up to 750 miles, with an estimated mileage rating of 23 mpg highway and 19 mpg city. Ford is now the first manufacturer to offer a CNG / LPG capable half-ton pickup.
Natural gas upfits can range from $6000 to $9500 depending on tank capacity. At the time of this posting, the national average for unleaded fuel is $3.29 while the average for CNG is $2.10. Nearly 20 states in the US offer tax incentives or rebates for CNG converted vehicles. These vehicles are being targeted toward the business and fleet buyer. For example, in Florida, the fleet buyer can take advantage of $25,000 in rebates starting next year.
Ford also announced that by summer of 2014, they will be offering eight commercial vehicles with a natural gas prep option, more than any other full-line manufacturer.
Besides the advantage of a lower cost per gallon, natural gas also burns more cleanly and 85% of natural gas is produced in the US.
Add this all up for the convenience store fuel retailer, and it’s yet another indicator that natural gas is gaining momentum as an alternative fuel option. Is it time to consider adding it to your fuels portfolio?
by John Keller | Nov 19, 2013 | Fuel Price Management Solutions, Fuel Price Optimization, Fuel Pricing Technology, Fuel Software, PriceAdvantage
Rafe VanDenBerg is the editor-in-chief at MindBrew and contributor to PricingBrew, the online community for pricing professionals. He just wrote an article titled “Are pricing people too isolated to innovate?”. While this article was addressed to B2B pricing professionals, the questions discussed are directly applicable to fuel pricing strategies in the c-store business.
The article is based on results from a recent research study, and there are two critical statistics that apply to c-store fuel pricing:
- 70% of the respondents have worked for fewer than three companies in their career.
- Most people reported that their go-to source for pricing information and education is people within their own company.
First of all, in the c-store industry, it has been my experience that people stay in the business of c-stores often for their entire careers, and frequently work for only one company the whole time. That is certainly true for family run businesses, and even when the family is not involved, moving from company to company is somewhat rare and only happens several times through a person’s career. So there’s no doubt that the first point in this study is true for our industry.
Second, it has also been my experience that fuel analysts without fuel pricing software commonly price their fuels “the way it’s always been done.” That way is typically based on what others before them did, like the father or grandfather of the business. And if there is no fuel software to provide insight and analysis into what is really happening in the market, can you blame them?
The article raises the question that if fuel analysts follow in the footsteps of others before them, how can these people tell if there is a better way, to innovate, and to gain competitive advantage?
PriceAdvantage fuel software has proven that with its analysis views, reports, and optimization, the fuel analyst can evaluate whether or not they are using the optimized pricing strategies, and where there may be places to increase margins or volumes. Data and information is pulled from disparate sources and presented in a consolidated location, in a user friendly way, so that trends can be evaluated and what-if scenarios can be explored. And that is the enabler for fuel analysts to innovate and break out of the way it has always been done, to bring out profits never seen before.
by John Keller | Nov 18, 2013 | Customer News, Fuel Price Optimization, Fuel Pricing Strategy, Fuel Pricing Technology, Fuel Software, Retail Fuel Margins
In the latest financial report from CST Brands, for the fiscal quarter ending September 30, 2013, there is an interesting note about how the company has shifted its fuel pricing strategy since the spin-off from Valero.
On page 37 of the report, there is a paragraph under the title “Motor Fuel Strategy”:
“Prior to the separation and distribution, our business existed as an outlet for our former parent’s products and the focus was on maximizing consolidated parent company profitability. Occasionally, we priced motor fuel with the overall objective of increasing motor fuel gallons sold with less emphasis on retail motor fuel gross margin. This resulted in a higher profit generated by our former parent’s refining segment, which was beneficial to their consolidated earnings performance. As a separate company, we generally manage our motor fuel pricing to maximize motor fuel gross margin. This strategy, from time to time, may result in different motor fuel gallons sold from historical levels as a result of our being separated from our former parent company.”
The change in the CST Brands motor fuel strategy is evident in these numbers:
Fuel volumes, in gallons per site per day: 5,003 in Q3 2013 vs. 5,131 in Q3 2012
Fuel margins, in cents per gallon before credit card fees: $0.20 in Q3 2013 vs. $0.13 in Q3 2012
Unlike with other c-store chains which announce changes in fuel pricing strategies and then deliver results that conflict with their goals, CST Brands delivered results completely in line with their new mission as a new company.
From a fuel price management perspective, corporate fuel strategies will change in emphasis from time to time. CST Brands has been successfully using PriceAdvantage as their exclusive fuel pricing software for all their company owned stores since 2012, first under the Valero parent which had one retail fuel objective focused on volumes, now as their own CST Brands entity with the new fuel objective focused on price and margin optimization.
As one of our customers told me after I congratulated him on the strong quarterly results of his company, “A great product yields great results.”
Do you have the fuel pricing software that allows you to deliver great results no matter what corporate objective, like CST Brands does?
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 | 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 16, 2013 | Fuel Price Management, Fuel Price Optimization, Fuel Pricing Technology, Industry News
California plans to increase the number of hydrogen fueling stations in their state from 9 to 109 over the next ten years, according to PetrolPlaza news. Governor Jerry Brown signed the bill committing $20 million per year to build out the hydrogen fueling infrastructure.
Plans are in place to have 12 new stations in California by early 2014, and there is already funding for seven more stations. Auto manufacturers acknowledge this commitment is critical to the adoption of hydrogen vehicles they plan to introduce in the coming years. Toyota says they are on track to deliver a mass production hydrogen vehicle in 2015. Hyundai also plans to lease 1000 hydrogen cars in the US in 2015.
While this doesn’t mean petroleum fuels are going to be dethroned as the highest volume fuel product offered by fuel retailers, it does mean that in certain markets, particularly in California, it may make sense to look into a hydrogen station as part of the c-store overall branding. At least it projects a progressive image, and hydrogen is certainly going to offer much higher margins than traditional fuels, given the lack of competition and market maturity.
