by John Keller | Oct 11, 2013 | Fuel Pricing Strategy, Industry News, Retail Fuel Margins
The latest OPIS report reveals that retail fuel margins across the US dipped $0.019 per gallon this week. Average retail fuel margins across the US are now at $0.236 per gallon, the lowest levels since September 13. The year to date average retail margin is $0.189 and the quarter to date average margin is $0.246 per gallon. For the last six weeks, the average retail margin has been $0.233 per gallon.
Two weeks into the quarter, we’re off to a strong start. Let’s hope that we can maintain margins at this level and finish the year strong.
by John Keller | Oct 10, 2013 | Fuel Price Optimization, Fuel Pricing Strategy, Fuel Pricing Technology, Industry News
In a recent ZDNet article titled “The future of retail is dynamic pricing. So why can’t we get it right?”, a panel of ‘dynamic pricing’ experts representing companies including Best Buy and Ace Hardware provide lessons learned that can be applied to retail fuels pricing. Here are the highlights, and some thoughts on how they’re directly applicable to retail fuels pricing.
- It has become very easy for customers to research prices. For retail fuels pricing, this customer research has extended beyond the physical sign to the virtual price sign, as in GasBuddy, and all the OPIS-fed sites like MapQuest, Garmin, and AAA. How can you be sure these virtual price signs are always accurate? With PriceAdvantage, use the OPIS and GasBuddy exports as part of the fuel price change confirmation, and rest easy that every time a price change is complete, all these online sites are brought up to date.
- Retailers now have access to mainstream technology that allows them to quickly respond to market changes and make price changes at a moment’s notice, thereby insuring that their prices are always relevant. But this “change management” can be complex to execute effectively. In the retail fuels arena, this speaks to the difference between responding to a market change with a proclamation of a price change to your stores, and responding to a market change with a well executed automatic price change that includes confirmation and an audit trail upon completion. The PriceAdvantage SMART Fuel Pricing patented technology works with your Gilbarco, NCR, VeriFone, and AutoGas POS, along with your electronic price signs, to insure that every price change is executed within the compliance of the weights and measures regulations.
- The key to success is the right foundational data with the best information you can get, so you can have the best execution of your strategy, aligning pricing with the brand, and with your position in the market. In retail fuels management, that means carefully monitoring cost and competitor information from multiple sources including agents in the field and OPIS. And it means routinely reporting on historical pricing to make sure your pricing is where you want it to be relative to the competition, whether that is low price leader, middle of the pack, or premium experience. This strategy needs to be monitored not only on a store by store basis, but on a zone by zone basis, according to differences from market to market and convenience of location. In some areas pricing will need to be more aggressive, without giving fuel away across the entire enterprise.
These retail giants have a lot of wisdom to share, and it is all relevant to the retail fuels industry. PriceAdvantage allows you to apply the wisdom of these giants, without having to invest millions in the technology they use.
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 | Oct 7, 2013 | Fuel Price Management, Fuel Pricing Strategy, Industry News
Navigant Research has recently published a report projecting the annual compounded growth rate of plug-in electric vehicles at 18.6% through 2022, significantly higher than the projected growth of the light duty vehicle market. Four US states in particular are pegged as being the growth leaders in projected annual sales: California, New York, Washington, and Florida. Los Angeles, San Francisco and New York City are projected to have the largest sales of plug-in electric vehicles among all North American cities through 2022.
The study attributes the accelerating growth to the dramatic increase in plug-in electric vehicle options in the North American market. Where once it was a choice between the Nissan Leaf and the Chevy Volt, new mainstream choices include Tesla, Ford, Mercedes Benz, Toyota, Mitsubishi, Honda, and Fiat, with new offerings coming soon from BMW and Volkswagen.
When measured by percentage of overall vehicle sales by state, the highest concentration of annual plug-in electric vehicle sales is expected to be in Hawaii, California and Oregon.
Retail fuel managers competing in these states and cities need to be carefully monitoring the demand for electric charging stations, and consider a five to ten year plan that includes the electric charging station as a product offering. While liquid fuels are unquestionably destined to be the majority of fuels sales, ignoring the demand for electric charging could lead to consumers going outside the c-store market to re-fuel, and a loss of in-store revenue opportunities.
by John Keller | Oct 7, 2013 | Fuel Pricing Technology, Industry News
In yet another indication that CNG is gaining visibility in the c-store retails fuel product portfolio, Gilbarco announced plans to feature their new Encore CNG dispenser at the upcoming NACS show in Atlanta next week.
Gilbarco touts the new dispenser as offering fuel retailers the opportunity to take advantage of higher retail fuel margins, and the increasing popularity of clean alternative fuels. Key aspects of overall customer satisfaction when customers move from traditional to alternative fuels include a familiar refueling experience, especially a comparable fill rate. The new Gilbarco Encore CNG dispenser offers both. And for the fuel retailer, the new Gilbarco Encore CNG dispenser provides a seamless upgrade path including integration with the forecourt controller, thereby integrating fully with existing payment and loyalty systems. PriceAdvantage SMART fuel software integrates with Gilbarco to provide full roundtrip confirmation that retail fuel prices have been changed at the POS, sign and pump.
Last year at NACS we saw GE unveil the “CNG in a box” retail solution. Since then we have seen announcements of fuel retailers entering the CNG retail fuels market, and plans for CNG highways to be built. With the new Gilbarco CNG dispenser, one of the largest players in retail fuels adds to the mindshare and momentum of CNG.
by John Keller | Oct 4, 2013 | Industry News, Retail Fuel Margins
The latest OPIS report reveals that average retail fuel margins across the US reversed their four week trend, dipping $0.027 per gallon to $0.255 per gallon. Throughout the month of September, average retail fuel margins across the US rose $0.111 per gallon from $0.171 per gallon to $0.282 per gallon. The drop this week nearly offsets the increase in average retail fuel margins from last week, but still leaves the average fuel margin at the highest level since August 16.
The year to date average retail fuel margin across the US increased $0.002 to a strong $0.188. The six week average retail fuel margin is $0.221 per gallon.
These fuel margins are at the highest level of any opening week for each of the three quarters this year.
These numbers seem to indicate that while fuel retailers across the US used September as their opportunity to take advantage of falling costs, the competitive environment is now leading to price drops that allow for maintaining volumes.
by John Keller | Oct 4, 2013 | Uncategorized
Home CNG filling stations have been available for years, but at an up-front cost of $6000 and a four year payback, unit sales have been tiny and the technology has not caught on across mainstream America.
But GE, Whirlpool and Eaton are working on new home filling units that could cut the cost down to $500. And that has the attention of Honda, the auto company currently offering one of the only CNG powered passenger cars in the US.
CNG is now priced at $1.40 per gallon, and CNG powered passenger cars have a driving range of 200 miles, far better than most electric vehicles currently on the market.
While there are over 120,000 gasoline stations across the US, there are currently only 605 CNG stations open to the public in the US. But if in the next few years these affordable home CNG filling stations become mainstream, and more CNG powered vehicle offerings become available, there will be an increased CNG market available for fuel retailers to tap in to as more drivers away from home will be looking for a CNG fill-up.
As I wrote last year, GE announced at the 2012 NACS show a “CNG in a box” offering for fuel retailers, providing an opportunity for margins even higher than in the store. On the east coast of the US, there is a coming CNG highway planned to extend from Pennsylvania to West Virginia. Retail stations providing CNG are growing in number in Georgia.
Fuel retailers need to keep a close watch as this CNG infrastructure grows in size across the US, and decide when it makes sense to add CNG to their product portfolio, and take advantage of the fuel margins the opportunity offers.
by John Keller | Sep 30, 2013 | Fuel Price Management Solutions, Fuel Price Optimization, Industry News, PriceAdvantage
A team representing PriceAdvantage just spent the week at the Insight NACS Future of Convenience industry show in London. It was an exciting time for us because for the first time we were able to show off the international capabilities of PriceAdvantage, where we can now price fuel in any country, without constraint for gallons or liters, or number of digits to the left or right of the decimal. Where previously PriceAdvantage was only able to handle prices ending in nine tenths, PriceAdvantage can now price fuel to three digits to the right of the decimal, and unlimited digits to the left of the decimal. That means from now on PriceAdvantage is a powerful solution for any country in the world. In addition to this internationalization of the product, we were able to show off the first localized version of PriceAdvantage, fully translated into French.
But this tradeshow was exciting for us in another way as well. It became clear throughout the conference that the same problems PriceAdvantage addresses for our US customers are shared with c-store fuel retailers everywhere. As one speaker put it, there are no unique problems in the c-store business around the world, just the same problems in different parts of their lifecycle. Here are three examples.
1) Retail fuel volumes continue to decline year over year. According to the Belfast Telegraph, petrol sales continue to plunge, as much as 5.8% from January to June of 2013 compared to the same period last year. That represents a decrease of 512 million liters. Diesel fuel sales increased over the same time period, but only by 270 million liters, not enough to result in a net gain. The article attributes the loss to changes in consumer behavior to cut back on their driving.
2) Grocery chains and c-store chains are in a major battle for fuel volumes. This article in the London business newspaper City A.M. reports that supermarkets are in a fuel pricing war. The article goes on to say that the supermarket chain Sainsbury’s just cut their petrol prices by 6 pence and diesel by 4 pence in a battle with Tesco and Asda.
3) Fuel profit optimization is most powerful when viewed as part of the overall gross profits of the store. In many cases, the advertised fuel price is strategically used as an advertisement to attract customers to the high margin food and store merchandise product offerings. One speaker called fuel, merchandise, and food the three pillars of c-store profitability. As retail fuel managers learn about correlations between fuel volumes and in-store profits, and how these correlations vary depending on the markets in which they compete, the fuel managers can use fuel software to optimize volumes and margins based on differing market profiles and with an eye to overall store profits across all categories.
September 2013 represents a significant milestone for PriceAdvantage as it is our launch into markets outside the US. We will continue to introduce more capabilities for our customers around the world, providing a dramatic ROI in a short time frame, by solving industry problems no matter where they may be on the fuel management timeline.
by John Keller | Sep 30, 2013 | Industry News, Retail Fuel Margins
For the fourth straight week, retail fuel margins across the US have increased week over week according to the latest OPIS report. OPIS reports an increase of $0.113 cents per gallon since August 30.
Retail fuel margins across the US are now at $0.282 per gallon, up $0.042 per gallon from last week. Retail fuel margins are now at their highest levels since July 5, and the second highest levels for all of 2013.
The year to date average now stands at $0.186 per gallon, the highest of the year. The average retail fuel margins for calendar year Q3 finished at $0.207, up slightly from the margins of Q2 which were $0.191 per gallon, but down slightly from the Q1 margins which were $0.212 per gallon. The six week average stands at $0.210 per gallon, the highest since July 12.
From a fuel management perspective, fuel retailers across the US had a strong Q2 according to these OPIS reports. In calendar year 2012, the US retail fuel margins for Q4 averaged $0.230 per gallon. Hopefully history will repeat itself and fuel retailers will finish up 2013 with strong fuel profits.
by John Keller | Sep 21, 2013 | Industry News
According to the latest OPIS report, the US national retail fuel margins increased for the third consecutive week, reaching a healthy average of $0.240 per gallon. The increase this week was enough to uptick the average retail fuel margins for the year to $0.183 per gallon, the highest year to date retail fuel margins of 2013.
The average retail fuel margins across the US for this quarter now stand at $0.201 per gallon and the six week average stands at $0.206 per gallon.
We are now into the second week of the annual transition from summer to winter blends, and with the likelihood of Syrian bombings decreasing, it is reasonable to be optimistic that retail fuel margins will continue upward.
