For a while, in many parts of our great nation dealers and convenience chains had enjoyed better-than-anticipated fuel margins for far longer than expected. My message today — COVID-19 or not — is to remind one and all not to overlook the promotion and polish that bring fuel customers into the store to spend where the margins are even higher and price-points matter less to the consumer.
Now that customers are returning, revenues, perhaps, are best used for things like acquiring new retail sites, improving existing retail locations, purchasing new rolling stock, paying down a bit of debt and, most of all, for building a veritable reservoir of liquidity for when margins fall to precarious levels and you need to protect your hard-earned fuel and inside volumes.
These times are somewhat easier to accept if you remember that, by protecting your investment in fuel volumes and staying strongly competitive, you are automatically protecting all of your inside volumes from “Soup to Nuts” and “ABC” (Alcohol, Bread, Chips … ).
From time to time we all complain and curse less-than-desired fuel volumes, but seldom do we ever hear anyone do the same regarding inside store sales – that is because our inside sales volumes, replete with firm and steady margins, are indeed protected and made possible by virtue of the draw created by our inviting fuel prices and reliable brand.
It has been shown that while consumers may bypass your store and make a left hand turn to a neighboring station to save a couple pennies on a gallon of gasoline, they mostly ignore overpriced candy bars, beef jerky, bottled drinks, etc., that are five or ten cents more costly than competitors’ prices.
It has been close to painless for you to match the retail prices of the biggest convenience store retailers as margins have grown or remained steady, while the “Big Boys” have continued filling their war chests. Well, my guess is, based on past history and business practices, that those retail giants will emerge like hungry grizzly bears from a long winter’s hibernation, ready to eat their share and yours, too!
Lord knows that with the advent of spring and the need for terminal operators to clear their tanks for summer fuel blend requirements, the major retail giants will once again end up with the last of the likely, heavily discounted winter blend product, providing them with a huge price advantage for a month or so.
Invest In Your People and Place
So, what can you do? You can stay competitive.
You can reinvest some of those fat fuel margins back into your businesses as well as some of the profits from the increase in inside sales you gained by virtue of retailing fuel at the same price as the major players. All while still maintaining an attractive gross margin.
You can invest in new uniforms for your people. Preach the importance of ATTITUDES and SMILES and GREETING and THANKING CUSTOMERS! You can implement a “Second Chance Lottery” contest. Improve and expand your coffee bar and offerings. Have a weekly beer and soft drink special. Start a two-pack cigarette contest or a two-fer Bic lighter contest. Add a simple item or two to your deli. Or make sure that the first thing each customer senses when entering your restrooms is a pleasant odor.
Your customers will notice these changes right away and will appreciate them. You must realize that all customers get to make choices each and every day: “Where will I purchase my fuel today?” “Where can I grab a quick, hot breakfast item or pastry?” “Do I go to Starbucks today for that great choice in wake-me-up drinks despite the super high prices and slow service or do I settle for Jimmy’s fairly decent, inexpensive coffee that’s close by?”
Do everything you can to make your shop the answer to those questions. Be the customer’s store of choice. Stay as competitive as possible and protect both your fuel volume as well as your inside sales volume.
Now that the nation’s lawns are green, the sun is shining down and the smoke from the Fourth of July fireworks has barely drifted away, it’s time to show off your squeaky-clean stores and be ready to execute your great Summer Sales Initiative!
Jim Callahan has more than 40 years of experience as a convenience store and petroleum marketer. His Convenience Store Solutions blog appears regularly on CStoreDecisions.com. He can be reached at (678) 485-4773 or via e-mail at [email protected].