Data is the foundation of a successful fuel pricing strategy.

Turkey, travel and time with family are the hallmarks of a typical Thanksgiving holiday in the U.S. Yet, despite 2020 being an atypical year, millions of Americans took to the airways and highways this past week in what became one of the busiest travel periods since the COVID-19 outbreak brought much of the U.S. to a standstill in March.

Convenience stores—and the data that powers them—were the center of much of that travel, enabling them to provide road-weary drivers with energy drinks, children with their favorite snacks, and of course, vehicles with fuel. Each data point collected at the forecourt and the register provides valuable insight and understanding to help retailers develop and execute a successful fuel pricing strategy.

Here are six types of data c-stores should take advantage of to maximize their fuel pricing performance:

8 Fundamental Fuel Pricing Strategies
A guide for convenience retailers

Point-of-sale data

The amount of data that’s available today can be daunting and overwhelming. But data without actionable insights doesn’t benefit your fuel pricing strategy. Instead, focus on making good use of the data that’s available. One of the ways to do that is by integrating your point-of-sale system with your fuel pricing system. The integration provides direct access to your transaction log data, which is typically collected every few minutes. The data contains information like fuel transactions, gallons sold, payment types, and more that can directly impact your fuel pricing strategy’s effectiveness and responsiveness.

Integrating this data into your fuel pricing solution allows you to identify demand abnormalities in the field and react as they occur. So, how does that work? By looking at the historical data from your transaction logs, you can determine a “normal volume” baseline. Let’s say, for example, an unexpected ice storm in your area results in an unplanned road closure near your competitor’s site. Real-time transaction data showing volume outside your normal range should trigger alerts to take immediate action and adjust your pricing, if appropriate for your business.

ERP data

Your ERP is the backbone of your c-store operation. Integrating it with your fuel pricing solution is critical to ensuring you have the data to optimize your pricing strategy. Doing so provides visibility into your in-store sales so you can compare that to your fuel price position and gallon sales. But why is that visibility so important? Think about the last time you stopped at a convenience store. It was probably an unplanned stop to fuel up, and perhaps it also resulted in an impulse purchase inside the store. It’s a known fact that gas prices impact in-store sales. Having real-time visibility into that relationship, which can vary from site to site, is extremely helpful when setting your prices and doing analysis to improve your pricing strategy.

These insights can also be expanded to category-level sales to determine the full impact on margin. For example, perhaps you’re interested in seeing the relationship between fuel and in-store coffee sales during a particular time of day. The resulting information could potentially impact changes to your forecourt pricing strategy, causing you to run a promotion where customers can fill up their tank and get a free cup of coffee.

Competitor data

Collecting accurate and timely competitor data is one of the most important aspects of retail pricing. Fuel prices are a highly visible method of attracting traffic, so it’s vital to have the pricing position you want compared to the competition. Traditionally, store, district or regional managers would collect this information manually. While it is perfectly acceptable to continue that process, convenience retailers should consider supplementing their information gathering efforts with data feeds that deliver live insight into changes as they occur in their local market. This offers a much more accurate view of competitor prices and allows fuel pricing managers to respond in real-time.

Historical data

In a recent chat with a retailer, he commented that his strategy for the last 20 years was to price as close to a nearby competitor as possible. So, when margins got tight, he kept his prices 5-8 cents above his competitor’s and noticed there wasn’t a significant impact on volume. Essentially, his philosophy was you don’t know if something will work until you try it.

Testing new strategies against historical data should be an essential part of every convenience retailer’s fuel pricing strategy. Having the right technology makes it easier to conduct those tests, measure the results and use the data to make adjustments. For example, if you’d like to create a test strategy for a particular site, you can compare data from the current site to historical data from a control site to better understand how you priced this time last year and how it performed. The control site should have similar characteristics and performance metrics as the test site. Then, in real-time, you can set your new strategy, the date you want the test to start, and the day you want it to end. The system should be able to track the experiment as it goes through the days or weeks you want to run that test.

Loyalty data

Pricing strategies are unique to each convenience retailer. Consequently, the way one convenience retailer uses the solution to achieve their specific goals will likely be different than the competitor down the street.

Individual use cases aside, many convenience retailers are attracting and retaining customers by effectively applying data from their loyalty program to their fuel pricing strategies. Pairing these strategies provides the flexibility to incentivize loyal consumers with various offerings ranging from discounted fuel prices to a free fountain drink after a certain number of fill-ups. The composition of the offerings and the communication channels used to drive the program should both be designed with your volume and margin goals in mind.

Commodity pricing data

What happens when the impact of an unexpected explosion at a remote oil facility can be felt across the world at the local neighborhood convenience store? That happened just last year. Or let’s take a more recent example with this year’s protracted oil crisis that continues to rage on. Disruptions are unpredictable and add even more volatility to an already complex industry. Commodity pricing data gives you an accurate, macro-level picture of what’s happening and can be fed directly into your system to further optimize your pricing strategy and secure a competitive advantage.

According to the latest NACS/Nielsen Convenience Store Industry Count, there are nearly 153,000 convenience stores in the U.S. Nearly 80 percent of them sell fuel. More than ever, it’s essential for convenience retailers to use the data and tools at their disposal to maximize their margins while providing the best possible experience for their customers.

You can thrive in today’s digital economy. Contact us today to learn how we can help you transform your business.