By Deborah Baska, VP Marketing Operations
Added April 23, 2009
Despite popular consumer belief, continuously reinforced by media headlines, gasoline retailing is no one’s idea of a “get rich quick” business. I recently came across this video (link at the bottom of this page) on the NACS (National Association of Convenience Stores) website which literally made my jaw drop.
When asked how much they thought retailers made on a gallon of gasoline, the majority of those interviewed said $1-$2.00/gallon!
According to the April 2, 2009 OPIS Retail Fuel Watch, the first quarter of 2009 had the “worst rack-to-retail margins on record”. To put it in even more simple terms, breakeven on fuel currently averages 12 to 13 cents per gallon. In first quarter 2009, fuel retailers saw an average 9.8 cent markup per gallon—you do the math!
So, what are we in the fuel retailing business going to do about these dire times? I hope we are going to rally ourselves to be “fit for the fight”! I recently traveled to Manhattan, KS, to meet with Retail Strategies expert, Chris Harris, who proclaimed to a classroom of convenience store managers, “You are in a war and Walgreens is the enemy!”
Now why is Chris picking on poor Walgreens? What I think Chris is saying is that we have to get over our “poor me” attitude and realize that the good ole days are gone. Today, you don’t operate a convenience store to sell gas—you operate it to sell convenience—whatever that means to your customer! Our competition today is not other gasoline retailers; it is all retailers selling convenience along with a wide assortment of products at competitive prices in a reassuring environment .
So, are you going to roll over and play dead? Or are you going to be “fit for the fight”? As a gasoline retailer, you are not helpless and you don’t have to be a victim of the economy. According to Chris Harris, you do have to be in tune with the “Consumer Drivers of Retailing” and you have to have “Precise In-Store Execution”.
Have I peaked your interest? If so, check back for my next installment when I will share more insights from Chris Harris’ Retail Strategies workshop.
Referenced Video:
http://www.nacsonline.com/NACS/News/NACSTV/Pages/WhatDoRetailersMakePerGallon.aspx?tag=Gas%20Prices.
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