Imagine you see an uptick in fuel sales volumes across your network. You're not sure why, but you'd like to keep it up. You see a business opportunity here, but without information about what's driving the increase, you don't have the tools to capitalize accordingly.
Your gut says it's because gas prices are low, or maybe it's the summer travel season. Maybe it was a change in competitors' pricing. Without verifiable information, there's no way to know.
But there are some places to start sorting out wishful thinking from facts.
How Do Consumers React to Low Fuel Prices?
Especially given the media fervor around low prices at the pump, consumers might see these savings as an opportunity. You'd think they'd follow the advice of financial professionals and save their pennies to pay down debt or save for college or retirement. But for half the people, you'd be wrong. Instead, many people are likely to:
1. Spend more on gas and high-octane gas
Ideal for your business, unless your margins are significantly lower
2. Spend more on other retail purchases
Ideal for convenience store business
So you can see how low gas prices might boost sales volumes. The answer to the question posed in this article's title, then, is of course "helping." But what if that's only true at certain times of day or in certain locations?
There are a multitude of factors that contribute to your fuel sales volumes — and while low fuel pricing is one of these factors, it isn't the sole motivator for drivers fueling up at your sites.
Defining Your Fuel Retail Success
The success of your fuel business is due to more than just the price on the pump. Capitalizing on low fuel prices to drive overall profit requires a focus on the integration of retail factors. A successful pricing strategy should be supported by an integrated understanding of site location, market competition, good merchandising, adequate facilities, quality operations and brand power.
Of course the value of each of these elements varies from business to business. For example, merchandising is less important for a business with a small retail footprint. A business servicing an area where people travel to and from work on the night shift should have hours that accommodate those workers. If a warehouse store with gas pumps opens a couple miles away, they could draw your customers away. Your awareness of these elements' contributions to your network's success will help you focus on what has the greatest impact for you.
Bear in mind that no one element can predict your performance, but the weakest one will hold you back. Improving each element depends on a market-by-market and site-by-site analysis.
That calls for accurate data, visibility into competitor pricing, the ability to execute new pricing quickly to test hypotheses, real-time surveying and, of course, integrated systems. Without these, you won’t be able to understand the impact of low fuel prices on sales volumes. You'll be stuck guessing how your pricing tactics help or hurt your business success.
You know in your gut that low fuel prices are an opportunity. But to capitalize on that opportunity, you need to turn instinct into intelligent action. Using insights generated from accurate, verifiable data, you can manage your business for reliable performance and total site profitability.
Learn more about how to achieve total site profitability by reading our 7 Elements white paper.