by John Keller | Oct 1, 2010 | Fuel Pricing Strategy, Industry News
The market research firm NPD Group reports that convenience store traffic and sales were up for the quarter ending June 2010 compared to a year ago. Convenience store traffic was up 8% and sales increased 11% over 2009. This is a reversal in the trend from 2009, when the number of visits was down.
The report is based on tracking the behavior of 49,999 convenience store shoppers in the USA. Over an average 30 day time period in the second quarter, the average number of visits customers made to a convenience store rose from 6.1 visits in 2009 to 6.4 visits in 2010.
The number of pay at the pump visits to buy fuel only are virtually the same year over year, while visits to purchase at the store only are increasing. The number of visits to buy both fuel at the pump and items in the store are declining. Consumers say the top two reasons for visiting convenience stores remain “convenience location” and “in-and-out-quickly”.
The research was reported by National Petroleum News at http://bit.ly/b2UBLA.
by John Keller | Aug 26, 2010 | Customer News, Fuel Price Management, Fuel Pricing Strategy, Industry News
On August 19, 2010 I wrote a blog article discussing how critical it is for Fuel Managers to be diligent about adapting their fuel price management strategy in order to quickly react to the constant changes in their fuel markets. One example I gave is how fuel retailers are adapting fuel rewards programs, allowing them to gain market share without having to adjust their fuel price management strategy.
Today Kroger announced the expansion of their fuel and grocery reward program to 48 Shell stations in the Roanoake Valley and Lynchburg areas of Virginia. Customers accumulate points on their Kroger loyalty cards when they purchase groceries, and points can be used for cash discounts at the pump.
Carl York, a spokesman for Kroger’s mid-Atlantic region office in Roanoke said “Fuel is definitely important to us. We’ve learned that it’s a nice fit with the grocery business. We can drive grocery sales by providing fuel centers. This partnership with Shell allows us to have a bigger footprint to make our fuel promotion more impactful”.
This is another example of the volatility in the fuel market. Fuel Price Managers who compete against Kroger need to carefully monitor the impact this reward strategy has on the market. As we all know, consumers love a fuel bargain, and they will travel out of their way to cash in their discounts. Competing c-stores may need to adjust their fuel prices down to minimize any loss of market share.
by John Keller | Aug 19, 2010 | Fuel Price Management, Industry News, Retail Fuel Margins
According to the US Energy Information Administration, the U.S. average retail price for regular gasoline decreased almost four cents from last week to $2.75 per gallon but was $0.11 per gallon higher than this time last year. Prices were down throughout the country except for a gain of a cent to $2.80 per gallon in the Rocky Mountains. East Coast and Gulf Coast prices each lost three cents to fall to $2.68 per gallon and $2.61 per gallon, respectively. The Midwest registered the largest price decrease, seven and a half cents, to settle at $2.68 per gallon. The West Coast prices remained the highest in the Nation after dropping less than a penny to average $3.10 per gallon, while California prices declined less than a cent to remain at $3.17 per gallon.
Retail diesel fuel prices fell a penny to $2.98 per gallon, $0.33 per gallon above last year. Price changes were mixed, with the East Coast falling two cents to average $2.98 per gallon. The Midwest and Gulf Coast prices were down by more than a penny to $2.95 per gallon and $2.93 per gallon, respectively. The Rocky Mountain region tallied the largest price increase, moving two cents higher to $3.01 per gallon. West Coast prices were the highest in the country, gaining half a cent to settle at $3.13 per gallon, while California prices increased slightly to $3.19 per gallon.
by John Keller | Aug 19, 2010 | Fuel Price Management, Fuel Price Optimization, Fuel Pricing Strategy, Industry News
The Washington Post published an interesting article about BP and its brand recovery efforts. According to John Kleine, executive director of the BP Amoco Marketers Association, which represents the station owners, BP retail fuel sales are returning to previous levels. After the spill, sales dropped off 40 to 50 percent at some stations on the Gulf Coast. Now in most cases retail fuel sales are down only about 10 percent on the gulf and less than 5 percent in other parts of the country.
Station owners said they began facing angry protests after the spill and turned to BP for help. The company gave them signs and took out print and radio advertisements emphasizing that the stations were locally owned and operated. BP helped the owners at some stations with customer appreciation campaigns including free car washes and free cups of coffee. Corporate staffers flew in to stand in driveways and listen to customers’ concerns, Kleine said.
“Where the owner is known in the community, there is a less significant impact,” Kleine said. “I think BP has to recognize that the local face is really a value to their brand even more so than anybody thought.”
I’m certain that the increased community awareness of local dealer ownership as Mr. Kleine describes is helping BP fuel price sales return to normal. And as news of the gulf spill continues to diminish, and public attention wanes, positive public feelings about BP will return to previous levels. But I believe there’s another key factor in play here. In a previous blog, I explained the rebate incentives BP is passing on to fuel dealers, allowing dealers the opportunity to reposition themselves in their local markets with lower priced fuel, rather than the premium fuel price strategy they previously enjoyed. This Washington Post article doesn’t mention these rebates, but I have to believe the lower fuel prices are making a significant difference.
by John Keller | Aug 12, 2010 | Customer News, Industry News, PriceAdvantage
Convenience Store Decisions picked Rutters as their winner of the 2010 Convenience Store Chain Of The Year award. Rutter’s is the second consecutive chain under 100 stores to receive the award, emphasizing that it’s not the size of the chain that matters, rather the quality of its offering. Rutter’s has evolved from small town player to industry leader and has impacted the way the industry does business, especially in the area of technology. President and CEO Scott Hartman has emerged as an industry leader instrumental in pushing technology standards that allow convenience retailers to compete more effectively with supermarkets and mass merchandisers.
“Retailers are under enormous pressure as they battle depressed margins, unprecedented competition and high credit card processing fees both in store and at the pump,” said Tom McIntyre, group publisher of The Convenience Store Decisions Group. “The purpose of the Chain of the Year Award is to showcase the best of the best in convenience retailing and Rutter’s certainly meets that definition.”
Skyline Products is proud to have Rutter’s as a PriceAdvantage customer for over five years.
by John Keller | Aug 4, 2010 | Fuel Price Optimization, Industry News, Retail Fuel Margins
On August 4, 2010, CNN.com reported details of the BP fuel price discounts as explained by a representative of OPIS.
Here’s what BP is offering, according to Tom Kloza, chief oil analyst at the Oil Price Information Service:
- Up to a penny off the wholesale price of a gallon
- A rebate if distributors keep up their fuel sales
- A discount in the rate BP charges service stations for customers who use credit cards
- A “temporary voluntary allowance” worth a penny a gallon
All told, the discounts add up to between three and four cents a gallon, he said.
CNN also reported anecdotally that one BP station in McLean Virginia was selling fuel prices $.03 lower than the competition across the street.
Traditionally BP dealers market fuel prices at the premium end of the fuel pricing spectrum. Clearly fuel pricing strategies are now impacted by the BP incentives. Competing c-stores of BP will need to adjust their market positioning in response to the new fuel price positioning of BP stations.