by John Keller | Apr 10, 2013 | Fuel Price Management, Fuel Pricing Software, Industry News, Retail Fuel Margins
Before releasing their complete “NACS State of the Industry Report of 2012 Data”, the National Association of Convenience Stores released some key c-store metrics for the US 2012 calendar year. Fuel price management statistics follow:
- Motor fuels sales increased 2.9% to a record $501.0 billion. Obviously this is related to the price of fuel throughout the year, but it is an interesting statistic to consider when comparing 2012 c-store corporate financial reports, and calculating market share across c-store chains.
- First quarter 2012 sales and profits were the best of any other quarter, while fourth quarter sales and profits were the worst. This is another interesting statistic to consider when reviewing c-store corporate financial reports, and the numbers showing comparisons to the previous quarter and prior year.
- Motor fuels sales accounted for 71.5% of total sales. That means once again, fuel price management addressed the largest product category by far in terms of revenue dollars.
- Motor fuels accounted for 35% of profit. From a fuel price management perspective, that means fuel price management is a discipline that requires watchful care because profits are relatively slim compared to other product categories.
- Motor fuels gross margins for the year were $0.178 per gallon before expenses, compared to $0.182 per gallon in 2011. These figures are yet another indicator of the increased competitive pressure in the fuel price management environment as c-stores compete for decreasing fuels volumes and margins shrink.
- Credit and debit card fees added 5.1 cents to every gallon of gasoline sold at convenience stores in 2012. That means we can immediately drop the 2012 margins to $0.127 before other expenses that could be an additional $0.07 per gallon. This means fuel analysts are frequently working with overall net fuel margins for the year in the neighborhood of $0.05 per gallon.
Only with a robust fuel pricing software system can fuel analysts optimize profits in the largest c-store product category, when the environment continues to be such a challenge.
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.
by John Keller | Apr 8, 2013 | Fuel Pricing Software, Industry News
In a similar way as the US, retailers in the UK are experiencing shrinking demand for retail fuel volumes, as reported by The Financial. Retail sales volumes are down 3.5 billion liters from 2007 to 2012. That represents a 9.3% decrease in the overall UK retail fuel market.
But as the overall retail fuels volume market is shrinking, the product makeup of the market continues to shift in the favor of Diesel. Diesel retail fuel volumes last year represented 49% of the overall market, as compared to 39% in 2007. Diesel retail sales volumes were 14.8 billion liters in 2007, and 16.7 billion liters in 2012, an increase of 12%.
The biggest reason for the UK market decrease is the same as for the US: improved vehicle fuel efficiency. According to a study by the University of Michigan, the average fuel efficiency rating for new vehicles is four miles per gallon higher than in 2008.
Just as in the US, as retail fuels volumes in the UK continue to shrink, and fuels retailers fight for an ever-shrinking size of the fuels volume pie, competition will continue to intensify. In this environment, fuels analysts need to be at the top of their game, and use best in class fuels optimization technology for their fuels price management solution.
by John Keller | Apr 5, 2013 | Customer News, Fuel Price Management Solutions, Industry News
Convenience Store News released their list of the “Top 20 Growth Chains” and three PriceAdvantage customers made the list.
Fikes Wholesale, the parent company of CEFCO Convenience Stores, made the list for the second straight time. They improved on their 10th place ranking in 2012 to a fifth place ranking in 2013. CEFCO added 61 new stores last year, a 31% increase year over year, bringing their total count to 255 stores as of December 2012. CEFCO has been using PriceAdvantage as their complete fuel price management solution for over three years.
Valero Corner Stores has also made the list for two straight years, ranking eighth in both 2012 and in 2013. In 2013, Valero Corner Stores added 34 stores, bringing their total company owned store count in the US to 1030 as of December 2012. Valero rolled out PriceAdvantage to all their stores in 2012.
Sheetz is another repeat c-store chain on the list with a 2013 ranking of 12th, an improvement from their ranking of 17th in 2012. Sheetz added 23 stores last year, bringing their total store count to 434 as of December 2012. Sheetz has been using PriceAdvantage for their fuel pricing since 2009.
The PriceAdvantage team is proud to have such strong partnerships with CEFCO, Valero, and Sheetz, and we are proud to share in their success.
by John Keller | Apr 5, 2013 | Fuel Price Management Solutions, Industry News
The wait is over, as the remaining hurdles for spinning off the retail division of Valero have been cleared, and the common stock for the Corner Store company will trade on the New York Stock Exchange under the symbol CST.
The IRS has issued a private letter to Valero acknowledging that the distribution of CST Brands’ common stock will be treated as a tax-free distribution to Valero shareholders. That was one of the remaining hurdles. The last hurdle was for the Valero Energy Board of Directors to approve the spin-off, and that happened on April 4.
Valero share holders will receive one share of the new CST stock for every nine shares of Valero stock.
According to Convenience Store News, Valero was ranked eighth in the Top 20 Growth Chains of c-stores in 2012, when they added 34 stores across the US. Total store count is now 1030.
The Corner Stores chain uses PriceAdvantage for their Fuel Price Management needs across all their US stores.
by John Keller | Apr 5, 2013 | Fuel Price Management, Industry News, Retail Fuel Margins
According to the weekly OPIS report, retail fuel margins across the US lost $0.045 per gallon this week to settle at $0.175. Average retail fuel margins across the US are now the lowest since early March, a full $0.09 less than their peak on March 8.
Average retail fuel margins for this year are continuing their upward trend started on February 22, when average fuel margins were at $0.127.
According to a generally accepted NACS statistic, the break-even point for c-store retail fuel margins in the US is $0.12 per gallon. That means there have been nine weeks out of the 14 weeks so far this year where the average retail fuel margin is above the break-even point.
From a fuel price management perspective, 2013 is shaping up to be another year when margins are tough. Fuel managers will need to employ the best fuel pricing software technology possible in order to optimize fuel profits by balancing volumes and margins. PriceAdvantage provides the rich analytics, reports and optimization prices fuel managers need to make the winning decisions.
