CEO Corner
“How to Keep Your Sanity Pricing Fuel in Volatile Times”
Prices are way Up, Prices go way Down. Margins are Worst ever, Margins are Best ever. Volume is Declining. Just a few of the consequences in 2008 as fuel costs have hit record highs and declined rapidly with a recessionary economy.
How do you make sense of the volatility in costs and retail pump prices? How do you maintain strategies that continue to meet business objectives for your fuel business as well as in-store merchandise?
As a former retailer I know too well the uncertainty and unpredictability of fuel margins. In 2008 we have experienced margins in the US as low as 4 cpg and as high as 40 cpg. To a large degree street margins are controllable. However effective pricing can ensure the “available margin” is obtained.
In addition to managing margins your fuel pricing strategies ensure that:
- a site or group of sites meets fuel volume objectives;
- you are appropriately positioned in the market to key competitors;
- your brand is valued right to consumers;
- a consistent price image is reflected to the consumer;
- customer loyalty is maintained;
- prices are maintained in line with cost changes;
- compliance with government regulations is guaranteed; and
- fuel traffic meets expectations for inside store merchandise traffic and sales.
Given so many factors fuel prices impact it is important to document strategies, understand competitor impacts and set realistic volume and margin targets and have a robust and reliable process and system to consistently execute and monitor.
Having a reliable process and system will provide confidence to “Keep Your Sanity in these Volatile Times”.
November 14, 2008
"Bob Stein, CEO and President of KSS, is a veteran of the convenience store sector. His eighteen years experience at Dairy Mart Convenience Stores Inc. as Chairman, President and CEO., combined with his knowledge of fuel pricing practices gained at KSS, uniquely positions him to provide commentary and insight into the events affecting fuels wholesalers and retailers."
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