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 8, 2013 | Fuel Price Optimization, Fuel Software, Industry News
According to Recargo, a software and services company providing guidance to drivers and industry supporting the adoption and growth of plug-in car technology, the number of electric vehicle charging stations in the US has grown from under 2000 stations in 2011 to over 20,000 stations in 2013.
These charging stations fall into several categories. There are 11,720 stations that can add about 25 to 30 miles of range in 60 minutes. There are about 368 stations that can add about 50-60 miles of range in 20 minutes.
One of the ways Recargo makes its money is by collecting data on the electric car industry. Recargo projects there will be 170,000 electric vehicles on the US roads by the end of 2013, including both 100% electric vehicles and plug in hybrids. According to Recargo, the average salary of the electric car owner is above $200,000.
Recargo provides an app called PlugShare that shows public charging spots across the US. The app has been downloaded 200,000 times.
What does all this mean to the retail fuels manager? It should serve as a wake up call that the US is seeing a transformation of the electric vehicle and the electric charging station into the mainstream, especially in California, the state with the highest number of electric car charging stations in the US.
While the electric charge may or may not be the high margin fuels alternative, certainly in-store sales and food opportunities abound with the charging times the electric vehicle customer is accustomed to.
by John Keller | Aug 28, 2013 | Customer News, Fuel Pricing Software, Fuel Software
The PriceAdvantage team would like to congratulate Parker’s on their grand opening of two new c-stores. These new stores bring the total Parker’s count to 32.
Parker’s rolled out PriceAdvantage with an integration to GasBuddy OpenStore, their VeriFone POS system, and Skyline electronic price signs in January of this year. Since then Parker’s has opened three new stores in just seven short months.
Greg Parker, CEO of Parker Companies said, “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.”
Parker’s operates their PriceAdvantage system in the cloud, allowing them to allocate IT resources to other areas.
by John Keller | Jun 27, 2013 | Customer News, Fuel Pricing Software, Fuel Software, Industry News, PriceAdvantage
More and more we’re seeing PriceAdvantage customers adapt GasBuddy OpenStore as their digital marketing solution. First it was Rutter’s, then it was Parker’s, followed by Family Express. CST Brands, formerly Valero, is the fourth PriceAdvantage customer to use both PriceAdvantage as their fuel software system for managing retail fuel prices, and GasBuddy OpenStore for digital marketing.
The synergy between the two solutions is powerful. When the fuel analyst pushes the optimized prices to the street, and the fuel price changes are completed at the POS, pumps and electronic price signs, the confirmation message is returned back to PriceAdvantage with a time and date stamp audit trail showing the exact time of completion.
Once the price changes are complete, PriceAdvantage through its integration automatically publishes the newest gas prices to GasBuddy OpenStore. From there the prices can be distributed to the various GasBuddy sites, making sure the latest and most accurate prices are on the GasBuddy map. This process also helps make sure every store appears on the GasBuddy map and doesn’t drop off due to a lack of price report updates.
PriceAdvantage offers a similar integration with OPIS, where upon completion and confirmation of the fuel price changes, PriceAdvantage publishes the latest price information to OPIS, from which the prices are distributed to the entire OPIS network including MapQuest, Garmin, and AAA.
Gas price signs have already moved from the old fashioned manual suction cup, to the electronic gas price sign, and are now adding the digital virtual sign seen on the Web. With PriceAdvantage and the integrations to GasBuddy OpenStore and OPIS, the price signs are current across every type, maximizing all marketing and branding efforts.
