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CEO Corner

Know How Fuel Affects the Store

 

2008 sure has been a volatile year for the fuels industry. From a rise to unprecedented price levels during the summer, to a crash in both price and demand this fall, this rollercoaster looks to continue in 2009.

The fall in demand, in particular, can get pretty scary for some fuel retailers, especially if you consider the relationship between demand for gas and inside store sales.

KSS has done research that shows this Fuel-Shop link does indeed exist and can have a major impact on a retailer’s operations on a site-by-site basis. The key is finding out how strong the fuel-shop link influence is and how it varies by site and over time.

By answering those questions, retailers can manage fuel pricing in a way that increases overall site profitability by analyzing the relative contribution of both fuel and store operations and how they interact.

Technology can assist retailers with this process. It occurs in three stages, which I have simplified below:

Stage 1 - data analysis and modeling establishes the relative strength and nature of the fuel-shop relationship.

Stage 2 - take the findings from Stage 1 to configure an extension to a fuel price management system, which helps retailers set annual budgets for fuel volumes. Thus, maximizing the integrated margin for each site.

Stage 3 – track, analyze and report progress from Stage 2 (through set budgets).

If you’d like to view our study on the Gas-Store link, just click “Whitepapers” on the column to your left, and then sign up for the “Gas-Store” report.

 

 

24 December, 2008

 

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