By David Bennett, Senior Editor
Despite traditionally thin margins, fuel sales still remain the center of gravity for most convenience stores. That conception was on full display during the last few months as declining fuel prices have supercharged in-store sales for most convenience retailers.
As a result, c-stores experienced record in-store sales of $214.9 billion last year, according to the newest industry figures unveiled at this year’s State of the Industry Summit, an annual conference hosted by the National Association of Convenience Stores (NACS).
More and more, in-store sales have gained an additional boost via forecourt advances and smarter pump technologies that allow for media-rich promotions. Broadband signals allow c-stores to make fast promotion updates to single or multiple dispenser pay points.
Also, customer services tied to fuel retailing now reflect the modern consumer, incorporating advanced pay-at the-pump innovations—spurred in part by a mobile wallet economy. Integrated point-of-sale (POS) systems also provide retailers access to powerful backend tools that enable them to control and grow their business with greater ease.
And ease and convenience is the name of the game. At more locations, once a transaction at the pump is
completed, a POS will email a receipt to the customer and then a follow up message the next day, thanking the individual with a special offer. If a customer is already in a database, a credit card swipe will cause the POS to prompt the cashier with the matching name to associate with the sale. Developments in forecourt rewards programs—by dollars spent or number of visits—have become integrated Twitter and Facebook marketing tools to make sure customers stay engaged.
Operationally, there’s also fuel station tracking control software on the market that provides optimal profitability rates to the fueling process. Controllers now are designed under stringent security standards to try to ensure protected information. In other fueling systems, remote accessibility allows the POS to connect to the price sign so it changes the digits automatically.
Eric Bunts, the director of information technology at Mirabito Holdings Inc., is helping his company revamp its POS system to meet its long-term objectives that pertains to many facets of its operation, including fuel.
Mirabito Fuel operates 75 Quickway Food Stores, Mirabito and Convenience Express locations. Its petroleum products include brands such as CITGO, Exxon Mobil and Sunoco. The company also provides gas and electricity services to customers in Connecticut, Massachusetts, New Jersey, New York, Ohio and Pennsylvania through its Mirabito Gas & Electric unit.
“We’re changing our point-of-sale provider and it requires an entire reconfiguration of our sites, from the fuel controller to the point-of-sale platform itself, and all the internal wiring and all of the interfacing that goes with that,” Bunts said.
Before converting to a POS designed by transaction technology provider NCR, and a back-office operation supported by ADD System, the planning process first began in 2013 with Mirabito weighing how best to meet new Payment Card Industry (PCI) Data Security Standards.
Given the proliferation and severity of data breaches in the last 18 months, the newly-released standards are designed to mitigate risk of financial fraud when using credit cards. Jan. 1, 2015, was the mandatory deadline for compliance with PCI DSS Version 3.0.
The new requirements impact merchants at all levels, but especially the Level 1 retailers that handle the largest number of credit and debit transactions.
Another challenge comes from the significant number of merchants, POS integrators and other payment providers looking to certify new EMV-capable devices in response to the mandated fraud liability shift from bank to merchant in 2015.
After being completely installed, the system is still in its testing phase at only two locations near its headquarters of Binghamton, N.Y.
“We’ll have enhanced configuration capabilities at the pump,” Bunts said. “We’ll be able to do more program-specific interfacing; we’ll able to control the ad pump messaging. The transaction time is greatly decreased. We’ll have much more visibility on flow rates, and essentially—pump health. So, we’ll not only be able to better implement our loyalty and customer-centric programs, but we’ll gain maintenance and infrastructure-monitoring capabilities as well.”
IN THE CLOUD
The transportation horizon is already crowding with electric cars, hybrid cars, diesel or gasoline cars as well as the emergence of hydrogen fuel cells. Future fueling sites might not boast traditional fuel dispensers as much as act as transportation docking stations for the latest vehicle auto manufacturers will be producing at the time.
What seems futuristic is fast becoming reality.
For example, the features of the cloud aren’t futuristic anymore. More c-stores are lifting their fueling operations to greater data heights, such as Brentwood, Tenn.-based MAPCO Express, which in 2014 developed a customer app that syncs to the cloud.
Once the customer arrives at the pump at his local MAPCO and opens the app, the app recognizes which pump the customer is at using geolocation. The customer confirms his pump location, and then pays via PayPal through the app. He only has to leave his car to pump the gas.
MAPCO last August rolled out its mobile app with PayPal to 276 participating MAPCO stations in the Southeast.
Howard Curtis, director of marketing and customer relationship management for MAPCO, explained that with the MY MAPCO app, customers in Alabama, Arkansas, Georgia, Louisiana, Mississippi and Tennessee can pay for gas on their mobile phones without ever needing to open up their billfolds.
Feedback from customers has been positive overall, but the cloud-driven system will still take time to be adopted on wide scale because it’s such a departure from typical pay-at-the-pump offerings to which most customers are accustomed.
“We have years and years of paradigms around getting out of your car, sticking your credit card in the pump, filling up your car and going,” Curtis said. “We have to overcome that muscle memory with customers with new advancement of mobile payment.”
To entice customers to use the app, MAPCO offers three cents off per gallon, while PayPal is offering two cents off per gallon for a total of five cents off per gallon of gasoline.
Perhaps the most critical decision was choosing the best mobile payment platform that would best meet MAPCO’s goal. In the end, the retailer customized its own option, based on cloud technology.
“We decided to do that because while adoption around a particular wallet would happen over time, we didn’t feel like it was the right decision to partake in one particular wallet and put a bet on a pony that we didn’t know was going to win, so we decided to invest in our own app and get it in front of consumers as quickly as we could and leverage PayPal’s creditability with consumers and security, etc.,” Curtis said. “We’re seeing increased adoption every week.”
So what about those attendants that still carry out the tradition of pumping customers’ gas, braving the rain and the cold to provide a service that is almost extinct? They still exist in New Jersey and Oregon. In those states, attendants are required to pump gasoline because customers are barred by statutes from doing the fueling up themselves.
Store owners and operators like Manjit Guleria are still looking to upgrade their fueling capabilities where they can. Guleria, owner of Guleria Enterprises Inc., operates seven c-stores in New Jersey—six that he owns are branded Citgo.
Though company attendants handle fueling and direct transactions with motorists, there are other upgrades from a fuel controller aspect, which the company is considering.
“We are in talks with companies,” Guleria said. “There is software that mostly monitors gas readings,” that lets you know how a fuel dispenser is operating, and can be adjusted to gain more efficiency. Of course, like anything, such upgrades come at a price.
“Cost is a bit of an issue,” Guleria said. “So you have the one-time cost and then you reap the benefits.”
Safeguarding Data at the Pump
With data security a growing concern in retail channels, new policies are in play to make customer data safer. Many larger retailers were subject to new Payment Card Industry (PCI) Data Security Standards beginning Jan. 1, 2015. The “Level 1” retailers who process fewer transactions will be phased in to also conform over a multi-year period.
By Oct. 1, 2015, card issuers will be required to replace traditional credit and debit cards that have magnetic stripes with new cards featuring EMV technology. EMV (an acronym for Europay, MasterCard and Visa) requires that embedded chips be used in cards, a practice common overseas.
The chips, when used in conjunction with PINs, are viewed as a safer solution by c-store merchants, though some U.S. credit card corporations and major banks have stated previously they intend to issue cards without PINS, citing reports that requiring PINs would actually turn off customers.