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.
by John Keller | Apr 1, 2013 | Fuel Price Management, Fuel Pricing Software, Fuel Pricing Technology
To avoid failure in modern retail fuel pricing, retail managers should employ the myriad technological solutions available for fuel pricing optimization. Automating the fuel pricing process using effective fuel pricing software has become a vital practice for transforming fuel operations. Retail fuel managers across the country must start identifying problem areas and rolling out technological solutions.
Shifting internal operations towards an automated fuel pricing solution can save corporate managers many hours of intensive research and labor. Given the vast amount of data flying into pricing systems each day, no one person or even any corporate team can be expected to keep all data up-to-the-minute when making pricing decisions. The potential to automate and normalize fuel pricing processes across multiple locations has never been easier, or more essential.
The capacity for centralized control of fuel pricing is one of the primary reasons for upgrading. In the past, it was necessary for most corporate locations to have a dedicated modem for processing all electronic transactions. The stores themselves had none of the necessary technology, such as back-office PCs, point-of-sale networks and WAN. Due to PCI compliance initiatives, technology at the individual site level has been significantly upgraded within the last few years. Currently, every pricing related device can be controlled directly from headquarters. All pump dispensers and electronic price signs can be updated immediately from a remote location. This shifting of infrastructure has greatly increased efficiencies by allowing price controls to be altered the moment price changes occur, eliminating delays and matching consumer behavior.
These sorts of cloud-based fuel pricing solutions streamline operations and improve reaction time. They significantly improve on traditional technology by offering users comprehensive analytical tools, proficient price management, and easy-to-understand dashboards which monitor site performance. These gas price solutions increase speed-to-the-street and give customers more relevant pricing information, leapfrogging any competitors using outdated systems. Streamlining the pricing process can enable price changes to take merely minutes at a time, delivering customers superior pricing based on current information.
The advances in modern fuel pricing equipment have completely changed the marketplace. Every aspect of fuel pricing within the retail c-store business can now be implemented along the same channels. Prices can be changed, adapted, and controlled all from the head office through the use of modernized, intelligent software solutions. This high level of automation capability guarantees a quick response to competitor behavior, and allows analysts to apply total fuel pricing optimization.
by John Keller | Mar 29, 2013 | Fuel Pricing Strategy, Industry News
One of the most interesting trends we’re following on this site is the growth of natural gas as a viable product for c-stores to add to their fuels product portfolio. In December of 2012 we discussed when it may be time to add CNG to your fuels product line. And in January 2013 we reported on the independent fuel retailer IGS building a network of CNG fueling stations.
Now according to Reuters, ENN Group has announced plans to build a network of Liquified Natural Gas (LNG) stations across the US to target long-haul trucking companies. Almost half of the garbage trucks sold in the US last year run on Compressed Natural Gas (CNG), but the long-haul trucking market is significantly higher than that municipality market.
The typical LNG station costs $1m to build. Liquified Natural Gas stations cost less than CNG stations because LNG stations have the liquid fuel trucked in, and do not tap into natural gas lines.
The new stations are being built under the company BluLNG, a partnership created with the Salt Lake City company CH4 Energy Corp. The CH4 Energy Corp had already built one CNG and LNG station in Salt Lake City prior to the partnership, and now five stations are operating, with three more stations scheduled to be opened within the next few weeks.
Both Blu and Clean Energy (who already has 70 LNG stations) plan to build 50-60 new stations this year. Clean Energy has an arrangement with Pilot Flying J for these stations. Blu’s longterm strategy may be to build up to 500 stations, one source said. Shell has also said they are working toward an arrangement with TravelCenters of America, LLC to build natural gas stations at their truck stops.
Whether or not you choose to add natural gas to your fuels product portfolio, as the natural gas momentum continues to build, it will contribute to the overall shrinkage of the traditional petroleum market pie. And that makes it a trend that is too important to ignore.
by John Keller | Mar 29, 2013 | Industry News
In the city of Greer, South Carolina, the Greer Commission of Public Works has installed a new fast fill CNG station with two hoses. The fast fill stations take 3-4 minutes, where the slow fill stations require an entire overnight visit. The 3-4 minute refill is a critical metric because it is equivalent to how long it takes to fill up using traditional fuel.
Unleaded gas is averaging $3.35 per gallon in Greenville County and the CNG cost is $1.70 for the gas gallon equivalent (GGE). That makes CNG half the price of unleaded for the cars and trucks that can access the station.
The Commission of Public Works has three CNG vehicles now, with two more coming in Q2. In addition, several local companies including AT&T and Frito-Lay have shown interest in refueling at the CNG station.
Obviously the GPW is an early adapter in the area of CNG, but other utility companies have said they are already saving $100 per day by operating their garbage trucks on CNG, so clearly GPW is not the first in the marketplace.
This is one more indicator that fuel managers would be wise to monitor the adoption of CNG as a fuel alternative, as CNG continues to gain momentum and mindshare. Perhaps in 3-5 years, or maybe sooner, it would be time to make plans to include CNG in your product offering.
by John Keller | Mar 29, 2013 | Retail Fuel Margins
OPIS reported this week that retail fuel margins gained back the $0.02 loss of last week, and are back to $0.220 per gallon.
For the first quarter of 2013, retail fuel margins averaged $0.159 per gallon. It was March that saved the quarter. Average retail fuel margins for January were $0.148, average retail fuel margins for February were $0.105, and average retail fuel margins for March were $0.212.
The first quarter of the year is typically challenging for c-store store margins. But to finish up the quarter with an average of $0.159, when NACS says typical retail margins across an entire year are in the $0.16 range, and better margin quarters are ahead of us, the 2013 year is looking promising.
by John Keller | Mar 28, 2013 | Fuel Price Management Solutions, Fuel Price Optimization, Fuel Pricing Software
In a recent issue of Advertising Age, I came across an interesting insert from a company named Collective about reaching people across all their multiple devices. It was written from the perspective of breaking down silos between devices when building an advertising campaign, so people will get the same message while watching TV, as they get while browsing the Web from their smart phone, tablet, or PC.
One of the parts of the document discussed the prevalence of people owning multiple devices, the most common time of day people use each device, and the nature of the tasks they perform while on each device.
From a fuel price management perspective, this discussion caught my attention because fuel analysts must be highly attentive to the dynamic market in which they compete, including while travelling, after hours during the business week, and on weekends. In order to still have a personal life, fuel analysts are turning to their mobile devices to monitor changes, and to respond to those changes quickly. For example, it is now possible using PriceAdvantage from a tablet or smart phone to review a set of proposed price changes triggered by competitor price movements, and strategy business rules built to respond to those competitor price movements. Using PriceAdvantage on a mobile device, fuel analysts can review store and market performance to make an informed decision about what the new optimized price should be. And from that tablet or smart phone the fuel analyst can use PriceAdvantage to initiate the price change and track the status of the price change, paying special attention when price changes are deemed late.
The beauty of all this is that fuel analysts can quickly take care of business from the field during half time of their kids’ soccer game, or from the couch during March Madness. Fuel analysts have these devices with them all the time anyway, so allowing these devices to increase fuel pricing efficiencies only makes sense. In the case of one territory manager of a Skyline customer, PriceAdvantage was the tipping point to convince him to buy a smart mobile device just so he could take care of business while away from the desk.
Even if you don’t own a mobile device, having PriceAdvantage at your finger tips is a logical replacement to the headaches of the homegrown Excel-based fuel price management solution because it improves efficiencies while on business travel. One customer told us of the nightmares of being away from the office in the days before PriceAdvantage. He would have the office assistant email all the spreadsheets he needed, but since he didn’t have access to a printer, he would try to make sense of it all on a tiny laptop screen. Because it was such a handicap to be away from the office, he would only take care of pricing a subset of stores and hope for the best with the others when he was on business travel. Now that PriceAdvantage is in place, he allows the assistant at the home office to accept the proposed prices at those stores where the strategy pricing rules have generated proposed prices where all the strategy criteria is met, so he can focus on the remaining exceptions. And with his laptop and a VPN connection, he can access the entire fuel price management system and have access to all the rich analysis and optimization capabilities it provides. Being away on business is no longer a hindrance, and he doesn’t even miss a beat while on the road.
Whether you’re checking email on the smart phone first thing in the morning or last thing at night, or using the tablet while refueling at Starbucks, or in a hotel between store visits, PriceAdvantage allows you to always be in touch, and always operate at peak efficiency.
by John Keller | Mar 27, 2013 | Fuel Price Management Solutions
According to a San Antonio news source, Valero has one hurdle remaining before they can spin off the convenience store side of its business into its own entity.
The point of the spinoff is to give Valero share holders more value, as investors and financial analysts recognize the value of the retail operation on its own, beyond the refinery business. Other similar retailers have a trade valuation of $2 billion, according to Valero CFO Mike Ciskowski, so this spinoff would add $2 billion to Valero shareholder value.
But the IRS has yet to issue a private letter ruling, confirming that shares in the new company can be treated as a tax-free distribution to shareholders. Ciskowski isn’t alarmed, and expects the letter is likely to come in the next month or so, since Valero is in month five of a typical six month process.
The new company will be called CST Brands Inc., taken from the Valero brand “Corner Store”. The company will operate 1900 sites in the US and Canada, and will be publicly traded on the NYSE.
Roughly 1030 of those Corner Stores are in the US and use PriceAdvantage to manage the entire fuel price management cycle. The close customer partnership with Valero allowed the PriceAdvantage team to deliver industry leading analytics and optimization features to the product over the course of the last 15 months.
by John Keller | Mar 22, 2013 | Industry News, Retail Fuel Margins
OPIS in their report this week showed US retail fuel margins were down for the second straight week. Retail fuel margins across the US now average $0.195 per gallon, down $0.023 per gallon from last week.
With one week to go for the quarter, average retail fuel margins now stand at $0.154 per gallon, which is roughly the average of January this year. We can expect the average Q1 retail fuel margins for this year will be in this same range since there isn’t enough time to bring up the three month average.
On the positive side, the average retail fuel margin now stands at $0.210 per gallon. If Q2 can begin with retail fuel margins at that level, it will make for a good headstart to the calendar year.
by John Keller | Mar 22, 2013 | Fuel Price Management Solutions, Fuel Pricing Strategy, Industry News
The PriceAdvantage team would like to congratulate the GasBuddy OpenStore team on their announcement of E-Z Mart becoming a customer. E-Z Mart is the latest c-store chain to recognize the importance of social media in the fuel price management process.
The PriceAdvantage and OpenStore teams recognized the importance of integrating social media into fuel price management several years ago, and started working together in late 2010. It was then that we began developing an integration that allowed PriceAdvantage to post the latest fuel price changes to OpenStore, and then in turn to the GasBuddy sites. Rutter’s was our crucial partner as we built out to the requirements, and the initial implementation was completed by Rutter’s in 2012. In 2013 Parker’s completed their combined implementation as well. And PriceAdvantage customer Valero is also pushing fuel prices to GasBuddy.
More and more we’re seeing the marketing department saddling up with the fuel pricing team, as both groups are recognizing the importance of making sure customers see the most recent and accurate fuel prices on the map, using OpenStore to broadcast marketing promotions, all to drive more traffic and fuel volumes to the store.
by John Keller | Mar 18, 2013 | Fuel Price Management, Fuel Pricing Strategy, Fuel Pricing Technology
Advances in technology and fuel pricing software have made it much simpler for retail fuel managers to increase speed-with-the-street and react quickly to market changes; they need only take advantage of the myriad technology solutions available. The key to fuel pricing is the ability to make changes quickly. Any company which sees this and then enacts strategies to improve its on-site technology will see its business improve, along with customer satisfaction.
A PriceAdvantage customer, Kocolene Marketing, recently selected our fuel pricing software solution for implementation at all of its stores across Indiana and Kentucky. Automation of the fuel pricing process has given fuel managers the power to change prices, more often. This level of customization enables them to alter prices at stores directly from headquarters. This has transformed fuel operations for each of their stores, and lead to a new standard of internal pricing optimization.
Removing the store manager from the critical path doesn’t interrupt flow, it enhances it. With one click, those with access to up-to-the-minute data can alter prices and meet market conditions. Delays between fluctuations in the market and price changes are a thing of the past. Now managers can capitalize instantly on new conditions, and eliminate any and all execution delays. Technology has freed us from focusing on competitors for pricing data. Mobile access and advanced signage enable us to make decisions based on what’s going on halfway around the world, not just two blocks away anymore.
In fact, one of the more effective fuel pricing tactics today is a technology upgrade, especially in a region where the competition may be dragging its feet. Being the first to upgrade to a new system often creates a perception that your site is right out of the gate on any advances. Relying on outdated equipment to meet the customers’ needs is equivalent to leaving money on the table. Store-by-store protocols based on maintaining high margin-per-gallon won’t suffice to move the business forward. With modern fuel management services enhanced by top-of-the-line equipment, fuel managers can now isolate the connections between price changes and profitability. This lets them see how to shift their pricing strategy, along with enabling them to make changes the moment they wish to.
The function of any business is to make money, and driving revenue in the retail fuel business can often be a difficult game. Consumer behavior and environmental factors are shifting constantly, creating a volatile market where it can be difficult to get a solid foothold. Fortunately, technology is there to help. By reviewing their site’s existing equipment, identifying where upgrades can be made, and implementing new advances in fuel pricing software and technology, c-store retailers can be confident they’re remaining ahead of the curve.
