In today’s OPIS report, retail fuel margins showed yet another decrease, extending their loses to four consecutive weeks. Retail fuel margins dropped $0.018 per gallon to an average of $0.144 per gallon.
Average retail fuel margins across the US are now at the lowest levels since February of this year. Quarter to date retail fuel margins are down slightly to $0.203 per gallon.
On the second day of THE Tech EVENT put on by NACS, Scott Hartman, CEO and president of Rutter’s Farm Stores, and long-time PriceAdvantage customer (and user of the software), spoke about convenience store technology trends.
“Now we can data mine everything that happens in the store,” he said. “I can change my digital gasoline signs from my iPhone or iPad.”
Rutter’s has been using PriceAdvantage to set retail fuel prices at their stores and electronic Skyline signs since 2011. Mr. Hartman uses GasBuddy OpenStore on his mobile device to send prices to PriceAdvantage, leaving PriceAdvantage to take care of the fuel price management change and confirmation processes to the NCR POS and Skyline signs.
PriceAdvantage can then broadcast the latest prices out to GasBuddy and OPIS so that all social media and websites have the latest store price information, and company stores always appear on the map.
Scott Hartman’s ongoing commitment to and success with c-store technology has made him an inductee into the PCATS Hall of Fame. We at the PriceAdvantage team are honored to be associated with such a c-store technology icon and we look forward to our mutual ongoing success.
In another blog article, I wrote about how savvy fuel pricing analysts are optimizing fuel prices and margins by focusing on the other grades besides Unleaded Regular. In a recent Today in Energy article, the US EIA revealed that average pricing spreads between Premium and Unleaded is at an all-time high of $.30 per gallon, first reached at the end of 2012, and maintained so far in 2013.
That may seem startling to the long-time fuel analyst, but when viewed from a percentage of price standpoint, the spread has remained at relatively the same levels since mid-2009. From a fuel price management standpoint, that means if you’re used to maintaining the standard $.20 spread between Premium and Unleaded Regular from years ago, it may be time to revisit your fuel pricing spread strategies and come up to the averages seen across the country.
The latest OPIS report on May 3 shows average retail fuel margins in the US have dropped for the third consecutive week. This week the average retail fuel margins decreased $0.035 to $0.162 per gallon. That is the third week in a row where retail fuel margins have lowered by $0.03 per gallon or more.
This three week trend has brought the average US retail fuel margin to levels last seen March 1. Year to date average retail fuel margins continue to stand at the $0.173 per gallon level. Quarter to date average retail fuel margins are now at $0.207 per gallon.
Speed is one of the key components of pricing optimization, as reacting to market changes faster than competitors will always keep retail fuels managers ahead of the game. Tracking the pricing strategy of all local competition enables chains to meet consumer demand with greater accuracy and efficiency. The days of sending a rep to drive around and check the prices at other stations are long gone. Now, the best possible method of ensuring pricing optimization is with application of a fuel pricing software solution.
Software offers many benefits which are unavailable with traditional fuel price analysis. Trying to track price changes via a self-developed system leads to headaches and aggravation for everyone involved. No department can be expected to become the go-to source for fuel pricing information. Tracking and recording all the changing data with in-house tools will gradually increase in complexity until it builds to total chaos. Instead of that, software pricing integration tools provide a one-stop hub where managers can access the data they need and apply it to their pricing strategy.
In order to effectively track competitor price changes, companies should obtain access to data provided by a resource such as the OPIS Radius Report. This real-time information service can gather retail fuels prices for all competitor stations within a region. Be it a 2-mile, 5-mile, or 10-mile radius, managers can use these tools to track fuel prices history in their operating environment and respond to price changes without ever leaving headquarters. It’s easier and more intelligent than it’s ever been to monitor the competition, understand their pricing strategy, and beat them to the market.
Price tracking technology has completely changed the way in which we size up the competition in the retail fuels market. Pricing reports can now be integrated with software such as PriceAdvantage to pull content directly from the report and present the data in an easily understandable interface. Making intelligent pricing decisions is no longer a complex, labor intensive task, but an effortless one. Managers can now maximize their pricing optimization by gathering the data online, porting it into comprehensive software solutions, and then instantly push any price changes to the street.
This capability to instantly visualize competitor behavior gives even non tech-savvy managers an edge in their market. It gives them the tools to react to trends and market shifts before the competition even knows what they’re doing. By the time other regional chains utilizing outdated software can react to these new conditions, the company with the right tools can be leapfrogging them to the next trend.
Don’t settle for substandard systems or business processes. Technology has made it easier than ever before to define strategy and outmaneuver competitors. Stop chasing prices and make the competition start chasing you!
Today Valero announced financial results for Q1 of this year, and it exceeded Wall Street expectations. From a fuel price management perspective, we’ll focus here on the retail division, now known as the company CST Brands.
The US Division of CST Brands had an operating income increase from $11 million in the first quarter of 2012 to $18 million in the first quarter of 2013, mainly due to higher fuel margins. Fuel margins per gallon increased from $.05 per gallon in 2012 to $0.08 per gallon in 2013. The gallons per day per site measurement held steady year over year, up slightly from 5,046 gallons per day per site in 2012 to 5,048 gallons per day per site in 2013.
The US Division of CST Brands has been using PriceAdvantage as their fuel price management system for all their retail stores since the fall of 2012. The average number of company-operated fuel sites for the quarter was 1033.
The Canadian division of CST Brands does not use PriceAdvantage as their fuel price management system. Fuel margins in Canada were the same year over year at $0.26 per gallon, but the total fuel volumes were down from 3.097 million gallons per day in 2012 to 2.987 gallons per day in 2013.
OPIS reported this week that average retail margins across the US dropped again. For the week ending April 26, average retail fuel margins were down $0.037 per gallon to $0.197 per gallon.
The drop in margins these past two weeks has slowed the growth in the year to date average margins, but at $0.173 per gallon, year to date margins are still the highest of the year. The six week average now stands at $0.215, just slightly above the Q1 average that was $0.212.
According to the latest report from OPIS, average retail fuel margins across the US lost $0.034 per gallon this week. Despite the up and down margin gains and losses over the past four weeks, overall US retail fuel margins for 2013 continue to be on the rise.
The year to date average for US retail fuel margins in 2013 are now at $0.172 per gallon, up from $0.168 per gallon for the year, according to last week’s report. The average US retail fuel margin in 2013 is now the highest of the year.
The margin for the week has been over $0.16 per gallon each week since March 1. From a fuel price management perspective, that means retail fuel margins are now at a level where profits can recoup the losses that started the first two months of 2013.
The Pennsylvania state house passed three natural gas tax credit programs, and sent them to the state senate for review. If passed, Pennsylvania will provide financial help for companies to convert approximately 1000 fleet vehicles to natural gas. In addition, the program provides $5m for building 10 natural gas refueling stations in high traffic corridors. The program also provides incentives to purchase heavy duty vehicles that run on natural gas.
It is too early to know for sure if the Pennsylvania state senate will also pass the program, but if it does, Pennsylvania would be one more state acknowledging the importance of natural gas as an alternative fuel. And from a fuel price management standpoint, c-stores in the state like Rutter’s, Royal Farms, and Sheetz would be wise to start planning for a time when natural gas becomes part of their fuels product portfolio so they take advantage of the new opportunity natural gas customers provide.
The most effective way to cut delays and interference out of the fuel pricing process is through the application of automated fuel pricing software. A lack of structure within the pricing system will lead to miscommunication and late changes. Automating your strategy with a fuel price management system allows you to adjust fuel prices with greater speed and stay ahead of your competitors. Streamlining the fuel pricing process paves the way for maximizing fuel profits. Retail fuels managers need only realize the potential of modern technology.
Fuel pricing software is now leagues ahead of where it stood even a decade ago. Modern advances have increased speed-to-the-street and enabled one-click price control of POS, fuel pump, and electronic price signs. In the past, managers and headquarters had to continually interact to keep things running. Communication had to be maintained to ensure that price changes were enacted. Now price changes can be made centralized from headquarters so that employees can focus on site responsibilities. This eliminates execution delays and effectively makes regional price changes as easy as a click of a mouse.
Another process simplified by implementation of this technology is competitor analysis. Rather than have agents in the field visit the locations or collect field intelligence through other disparate means, managers can now track the information on every competitor move through one centralized UI. All recent fuel cost history can be viewed and taken into consideration when making changes and managers can instantly adjust store prices in reaction to competitor moves. Modern software can also be set-up to send notifications to headquarters in response to any industry price changes. Technology has freed fuel managers from reacting, and now they can act based on up-to-the-minute data.
Maybe one of the most attractive facets of fuel pricing software is its ability to present users a complete picture of the industry. By analyzing price movements, fuel volume sales, and competitive surveys, fuel analysts can view both real-time and historical price change information allowing for better decision making abilities. Leveraging this technology improves processes and reduces operating expenses. There are no interruptions in the price change channel, as it’s all taken care of via the same tool. Technology provides a method for tracking price change implementation throughout the entire process. These fast pricing reactions, coupled with reductions in delivery delay, show the value of modern fuel pricing solutions.
So stop wasting time calling every location in an effort to coordinate fuel price changes. Instead, utilize specialized fuel pricing software to streamline, automate, and maximize profitability in your retail fuel operations.
