by John Keller | Apr 10, 2014 | Fuel Price Management, Industry News, PriceAdvantage, Retail Fuel Margins
In the US EIA “Short-term and Summer Fuels Outlook” released today, we see these predictions for the summer of 2014 (April – September).
- US consumption of gasoline will be slightly higher (10,000 gallons) than the same period in 2013
- Brent crude oil prices will be $2 per barrel lower than the same period in 2013
- The US regular unleaded retail gas price will average $3.57, one cent lower than the same period in 2013, with these regional averages:
- East Coast $3.53 (same as 2013)
- Midwest $3.55 ($0.05 lower than 2013)
- Gulf Coast $3.37 (same as 2013)
- Rocky Mountain $3.52 ($0.09 lower than 2013)
- West Coast $3.85 ($0.02 lower than 2013)
- The US diesel retail gas price will average $$3.87, two cents lower than the same period in 2013
From a fuel price management perspective, what does it mean if these predictions come true?
- Fuel volumes would essentially be unchanged across the entire US market, unlike in the summer of 2013 when the overall US fuel market increased by 90,000 gallons.
- Wholesale costs to fuel retailers would be slightly less than last year, possibly as much as $0.048 per gallon less.
- Depending on the region, fuel retailers may be able to see an increase of fuel margins where the fuel price holds relatively steady but wholesale costs are less.
- Overall fuel sales as measured in dollars would be less for regions such as the Midwest, Rocky Mountain, and West Coast. Publicly held companies who have their sites in these regions may report lower overall fuel revenues if volumes are essentially the same and street prices are lower. That’s why financial analysts shouldn’t pay too much attention to this metric that is outside the control of the retailer. But with careful attention played to margins, fuel profits may remain strong, and that’s worthy of attention.
Obviously there is lots of uncertainty related to the future cost of crude, since a quick series of unexpected events could cause these predictions to be way off. That’s why the report shows a 95% confidence level of crude prices to be anywhere in the range of $60 to $130 per barrel. But for modeling purposes, this report does show one reference point that is useful for planning purposes.
by John Keller | Apr 8, 2014 | Customer News, Fuel Software, PriceAdvantage
The PriceAdvantage team would like to extend a warm family welcome to Kwik Chek / McCraw Oil, our latest partner and customer. Kwik Chek and McCraw Oil are based in Bonham, Texas, northeast of Dallas, and have locations throughout Texas and Oklahoma.
Kevin Smartt, CEO of Kwik Chek and Bill Wilson, President of McCraw Oil were looking for a fuel pricing solution that could find additional margins and efficiencies in their business. Smartt and Wilson needed a tool to reduce the time it takes to get data from the stores and then quickly turn around a price change to their Gilbarco and VeriFone POS systems. After months of evaluating various solutions, they decided that PriceAdvantage SMART Fuel Pricing was the best in class. They found that PriceAdvantage not only automated this process but also provided the price change confirmation feedback that was critical.
“We selected PriceAdvantage because their team understands our business needs and ultimately provides the best out-of-the-box solution giving us optimal fuel pricing control and management,” said Smartt.
“With our dealer locations we were experiencing delays in getting our pricing strategies implemented in a timely manner. PriceAdvantage allows us to be proactive to market changes, and gives us the pricing accountability and efficiency we need. This will allow us to capture additional profit for both our dealers and for McCraw Oil,” said Wilson. “We’re excited to begin the roll-out and look forward to a quick implementation.”
This implementation also includes the PriceAdvantage integration with PDI Enterprise.
Kwik Chek CEO Kevin Smartt is a member of the NACS Board of Directors, also serving on the NACS Research Committee along with Edward Holmes of Holmes Oil Company, Varish Goyal of Vintners Distributors, and Joseph Sheetz of Sheetz Inc., all of whom are PriceAdvantage customers.
Welcome Kwik Chek and McCraw Oil – we look forward to our mutual ongoing success together!
by John Keller | Apr 7, 2014 | Customer News, Industry News, PriceAdvantage
The New York Times published an interesting interview with Kim Bowers, CEO of CST Brands. The interview may be found here.
CST Brands became a PriceAdvantage customer in 2011 when they were under the Valero umbrella, completing their rollout to all stores in 2012. CST Brands has been using PriceAdvantage with great success, as the financial results show.
CST Brands has a representative on the PriceAdvantage Customer Advisory Board.
by John Keller | Apr 4, 2014 | Fuel Price Management Solutions, Fuel Price Optimization, Fuel Software, Industry News, PriceAdvantage
On page 90 of the March issue of Convenience Store News magazine, there is some interesting survey insight regarding c-store retail fuels sales, comparing 2013 to 2012:
- 40.9% of c-stores surveyed said gas price volatility caused a decrease in store traffic.
- 38.6 % said gas price volatility caused a decrease in profitability.
- 27.3% said gas price volatility caused a decrease in sales.
- 13.6% said gas price volatility caused improved margins.
- 17.3% said they had increased gallons sold per transaction.
- 32.7% said they had decreased gallons sold per transaction.
- 50% said they had the same gallons sold per transaction.
What are we to make of this? Savvy c-store chains are able to manage what they measure, and develop effective fuel pricing strategies that fit into the overall profitability of each store. That means optimizing store traffic, acknowledging cases when sales and gallons sold per transaction may be lower, but managing every penny to optimize profits, both at the forecourt and in the store.
PriceAdvantage in conjunction with PDI allows you to directly see the correlation between fuels sales and other transactions of any kind. We call this the Volume Correlation report, unveiled at NACS and released in PriceAdvantage version 2013.3. Using PDI information, you can quickly see the correlation between fuel promotions and in-store sales, number of transactions, and average transaction size by product category, overlayed on top of volumes sold and price per gallon.
How do c-stores survive in today’s volatile fuels market? The old adage “You can’t manage what you can’t measure” holds true. With PriceAdvantage c-stores manage what they measure.
by John Keller | Mar 24, 2014 | Customer News, Fuel Price Management Solutions, Fuel Pricing Software, Fuel Pricing Strategy, Fuel Pricing Technology, Fuel Software, PriceAdvantage, Retail Fuel Margins
Earlier this month, CSPnet.com reported that CST Brands has identified 100 stores that are candidates for sale. You may find the article here. This is part of an ongoing effort at CST Brands to “assess its asset base and close convenience stores that are no longer core to its ongoing strategy”.
Kim Bowers, the CEO of CST Brands, said in the latest earnings call that in 2013 CST Brands closed 11 stores based on their “lower cash flow levels”. In other words, CST Brands pruned their portfolio of stores to rid the company of their bottom performers.
PriceAdvantage provides the analysis views and reports to quickly zero in on the under-performing locations by comparing store performance to target, to last year, and to other stores. Easy to read tools such as heat maps with color coded push pins show at a glance stores that are dragging down entire regions with their lower fuel volumes and fuel margins.
CST Brands, when they were under the Valero umbrella, worked closely with the PriceAdvantage team to develop precisely these sorts of views and reports so they could optimize their entire fuels business. Since rolling out PriceAdvantage across all their stores in 2012, CST Brands now reaps the benefit of this rich information in PriceAdvantage to deliver on the promise to Wall Street that CST Brands will continue to identify the stores that are the best candidates for sale, and the best candidates for the CST Brands wholesale business.
by John Keller | Mar 24, 2014 | Customer News, Fuel Pricing Software, Fuel Pricing Strategy, Fuel Software, PriceAdvantage
The first meeting of the PriceAdvantage Customer Advisory Board was held at the corporate headquarters of CST Brands in San Antonio, Texas, and the meeting was a smashing success.
The members of the PriceAdvantage Customer Advisory Board are
- Tony Castro, Manager Fuel Pricing, CST Brands
- Gabe Olives, Director of Fuels, Rutter’s
- Bryan Zeiger, Director of Fuel Marketing, Spinx
- Joe Wills, Fuels Manager, The Wills Group
- Lance Gentry, Director of Fuels and Information Technology, Kocolene
- Jeff Bush, Director of Fuel Management, Parker’s
Tony Castro showed us how CST Brands uses their PriceAdvantage fuel software to manage fuel prices across each of their stores, as well as how CST Brands uses PriceAdvantage for executive level reporting. We also had a lively discussion about what is most important for the upcoming releases of PriceAdvantage.
The mission of the Customer Advisory Board is to connect industry leaders for the purpose of innovation. The PriceAdvantage team has always put an emphasis on customer collaboration, and the Customer Advisory Board is one more way to make collaboration happen.
We learned a lot from our inaugural gathering, and I look forward to our upcoming meetings as we build the future of PriceAdvantage together.
