SCOTTSDALE, Ariz. -- Declining gas volumes, heavy competition from inside and outside the convenience store channel, and regulatory burdens are just a few of the challenges that make the business of selling fuel one tough slog. For two retailers who attended an educational session on fuel pricing strategy at CSP's 2014 Outlook Conference, the key is taking control of the offer before it takes control of you.
Tom DiMercurio, CFO at Flyers Energy LLC, Auburn, Calif., shared a long list of challenges that his 40-store chain faces, including increased costs from the state's air and water regulations as well as from remodels due to resistance at the community level.
While it can be tough to control exterior factors that shape costs, retailers can control how they react. When it comes to fuel pricing, "Our No. 1 strategy is to invest in business intelligence and tools," said DiMercurio. For Flyers' West Coast sites, this means maintaining volume with the idea that margin can be made up later during more favorable pricing environments.
Rather than reacting to a P&L after the fact, Flyers aims to develop decision support tools to use on an ongoing basis, "so that we become proactive rather than reactive." This includes using fuel-pricing management software from PriceAdvantage to examine market pricing trends. The chain can create an alert that tells it when a close competitor makes a price move. Acting on the information quickly is the key.
"It's about getting information quicker and using our decision support tools to help follow through," he said.
At The Spinx Co., Greenville, S.C., great employees are part of the more than 70-store chain's formula to success. When it comes to fuel pricing, this is also true.
"Even with the best tool out there, if you don't have the right people using it, it won't be successful," said CEO Steve Spinks, who notes that the company has four people dedicated to this part of the business.
Both Flyers Energy and Spinx rely on a multitude of data sources to help guide their fuel pricing decisions, including price data from PriceAdvantage, Oil Price Information Service (OPIS), Kalibrate and GasBuddy gas price surveys. But perhaps the most reliable, valuable source of pricing information is the retailers' own pricing surveys.
But they also are active users of the technology and information. For example, this means having the will to challenge and test preconceived pricing notions, such as what the spread between different grades of fuel should be. But fuel pricing software cannot fine-tune technique without the retailer directing it.
"It's just a tool--you can't leave it on autopilot," said Spinks.
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