by John Keller | Feb 1, 2010 | Fuel Price Management, Fuel Price Optimization, Retail Fuel Margins
NACS Online published an interesting article about a pricing study conducted at the University of Miami School of Business Administration, where they found a pricing strategy that resulted in a 200 percent increase in sales and a 55 percent increase in profits. An excerpt is pasted below:
“Researchers have found that retailers can increase sales and profits if they increase the price of a sale item to its original cost in gradual steps. The “Steadily Decreasing Discounting” strategy comes after the initial sale when you progressively increase the price back to its regular level versus in one shot.”
“The researchers found that SDD is more effective for two reasons: first, consumers consider past prices but also forecast future prices. So when consumers see a trend of increasing prices, they forecast higher future prices and are more inclined to make a purchase today. Second, if buyers expect prices to increase, they are more likely to make a purchase to avoid feeling regret. With the incremental pricing of SDD, increases are comparatively less significant, and the consumer is therefore more likely to buy immediately—even after having missed the initial sale.”
This research has direct applicability in the volatile pricing environment of the Fuel Manager. As the Fuel Manager adjusts his pricing upward to accommodate for higher replacement costs, he can be more effective if he steadily increases the price gradually over several days, rather than in one shot. As consumers become aware of repeated street price increases, they are likely to fill up sooner rather than later, with the reasoning that they have to jump in to the buying process now before the price of gas goes even higher.
As the Fuel Manager is monitoring the market response to these price changes, it’s more critical than ever to have access to Fuel Pricing software that can make it clear how price changes are effecting sales volume and competitive pressures at each individual store.
by John Keller | Jan 31, 2010 | Fuel Price Management, Fuel Price Optimization, Retail Fuel Margins
The c-store industry is lucky to have the PCATS (Petroleum Convenience Alliance for Technology Standards) organization to facilitate the cooperation and collaboration between customers, service providers and vendors in the c-store ecosystem. One of the sub-groups in PCATS is the Motor Fuels working group.
The Motor Fuels working group promotes electronic communication between retail fuel buyers, suppliers and delivery vendors to:
- Manage fuel inventory levels
- Minimize freight and transportation costs
- Provide speed of order placement
- Improve speed of response to demand changes
- Manage fuel pricing and monitor competitor pricing
The Motor Fuels Working Group established the standards currently implemented by retailers, jobbers and major oil companies using bills of lading, electronic funds transfers, credit card settlements, invoices and fuel pricing.
In 2010 the committee will focus on:
- Developing use cases for existing wholesale fuel and distribution standards
- Refining existing standards as needed to ease implementation
- Developing use cases for retail fuel price management and competitive price collection
- Define an implementation roadmap for new standards
Yours truly sits on the PCATS Motor Fuels working group, and I’ll be providing insight into the vendor and customer needs around managing fuel pricing and using fuel pricing software. The next meeting is scheduled to be held during NACSTech in New Orleans May 4-6. I’ll keep blogging to keep you up to speed regarding decisions made by this working group.
by John Keller | Jan 29, 2010 | Fuel Price Management, Fuel Pricing Technology, Retail Fuel Margins
I love my Droid phone. I use it off and on all day and I’m always looking for new reasons to use applications on it. That’s why I was pleasantly surprised this morning to see an important update to my Where application. The Where app is a location-based mobile platform that allows you to see important information about your location like local restaurants, movies, traffic and weather. I’ve been using it to lookup local gas prices. According to past press releases, Where receives gas price information from Garmin, who receives gas price information from OPIS, as well as GasBuddy.com, another OPIS partner.
The latest update this morning allows the Droid user to report an updated gas price. Think gasbuddy.com, but from a Droid-specific application. It’s yet another way for consumers to report gas prices they see on the street and feel like they’re contributing to the community.
There are well over 25,000 active accounts for Where, and recent reviews in the Android Market include:
“Everything in 1 app. It’s awesome and quick…this app should get an award.”
“Far and away the best app on the Market right now!”
The Where app is also available for the BlackBerry, Palm Pre, and iPhone.
Fuel Managers would do well to keep track of the prices that are being reported for their stores on Where. If they see an inaccurate report, an update is a simple click away.
by John Keller | Jan 21, 2010 | Fuel Price Management, Fuel Price Optimization, Retail Fuel Margins
I just read a great interview with Stan Sheetz on smartplanet.com in their Smart People section. Mr. Sheetz is President and CEO of Sheetz, a c-store chain with 368 locations in the Mid-Atlantic states, headquartered in Altoona, PA. It’s a quick, insightful and entertaining read where Mr. Sheetz discusses the importance of using technology to be more efficient, cost effective, and closer to their customers. He discusses a new iPhone app they’re working on, automatic inventory replenishment, and what Sheetz will look like 10 years from now. Mr. Sheetz comes across as a hip and fun guy to work for, and a forward thinker.
Sheetz was recently named the #1 Retailer to work for in Pennsylvania, as named by the Best Places to Work in PA group. The group compiles employee surveys to come up with their results. Based on who their President and CEO is, no wonder Sheetz employees like working there so much
The interview may be found here.
