July 28, 2022
We are very much in the era of the fuel pricing strategy.
For many years, the majority of independent retailers would set prices in response to their competitors. This would be in one of three ways:
1. Matching their prices to keep hold of customers
2. Beating them by pricing lower to increase volume sold
3. Pricing higher when unable to match or beat their prices
Getting visibility on what your fuel cost you used to be complicated. You’d have to pay to receive a benchmark price (likely Platts) in order to work out what you'd pay ahead of your invoice.
Of course, the internet led to email and then to fuel supplier portals, putting an end to this uncertainty. Now you almost always know the cost of a specific delivery as it lands on site, even if you don’t know when you’re ordering it due to the ‘lag’.
But still, for many years, fuel retailers stuck with the same three strategies: match, beat, or price higher.
Because even with better cost price data at your fingertips, you lacked visibility of the other pillars of fuel pricing; volume, margin, profit and execution. These would all be assessed after-the-fact and as we know all too well, you can’t change the past!
The good news is that now, most of this data is available to you in real time. Volume, margin, profit, and the status of price execution can be seen live in the EdgePetrol app, but one key pillar is often still left behind; competitor pricing.
Regardless of what your new strategy is, your competitors still influence what you can charge for fuel at your site. And in times of volatility, that hurts twice as much.
Visibility on competitor pricing isn’t just important for retailers - it’s important for the consumer too. While newspapers sensationalise the issue, the UK’s fuel market is highly competitive, making it near-impossible to profiteer at the pump. If customers aren’t holding you accountable for your fuel price, your competition certainly will.
So when it comes to competitor pricing, what options do you have and how reliable is the data?
What is it?
Taking a drive to see what your competitors are charging. Usually actioned by Station Managers and in smaller companies, by business owners.
Pros
It’s factual, if only at the time it was seen. Observing the pole sign price with your own eyes lets you know for sure what your competitor charges for their fuel.
Cons
Other than the inconvenience of driving round every site on the ‘morning moped’, the price can change from this afterwards. Some operators with smaller portfolios know to wait until their competitor has checked the price, before setting their actual price for the day!
Also, if you work on a Commission Operator model (the store is run by another business leasing the space), their incentive to give an accurate price or even run this survey is minimal.
They want your fuel to be as cheap as possible so more people come and visit the shop - your margin is not their concern. Giving a monetary incentive based on fuel performance here to keep this up to date could serve you well.
Keeping track of this data is also a challenge as you’ll have to manually enter it, whether into a spreadsheet or software like EdgePetrol.
Who should use it?
This is probably suited for smaller, single station operators that can drive past all of their competitor stations on the way to work.
What is it?
PriceViewer is Experian Catalist’s service providing daily competitor price information via email. You can select up to ten ‘marker sites’.
PriceViewer sends out an email every weekday morning to your head office and/or directly to your site, which contains a dedicated secure link to your own web-based report showing the prices of your main site and the marker sites being monitored. Once accessed, the reports can be printed directly or exported to an Excel file.
Pros
This really is factual (although not always timely) information as it is coming directly from the sites when certain fuel cards are used.It’s also the most widely used pricing methodology for fuel retailers, putting you on a level playing field with much of the market, particularly larger portfolio players. It’s also very reasonably priced.
Cons
While factual from the point of view that this price really existed, the prices offered are yesterday’s at best. Since the price comes from fuel cards, diesel is the more reliable of the two data sets. Premium grade pricing may also be a bit behind.
Catalist does provide the date the price was received though, so you have a clear understanding as to the relevance of the data.
Who should use it?
If you have a larger portfolio or are commission operated, Catalist is for you. Equally, if you are a really busy single site operator, Catalist can save you the time from having to worry about driving round sites. Here at EdgePetrol, we recommend it regularly.
What is it?
Social platforms that allow consumers to enter prices - think Waze.
Pros
The data is comprehensive, accessible from absolutely anywhere, and best of all, it’s free!
Cons
It’s manually entered and subject to manipulation. Not just by consumers, but potentially by your competition who might enter a price just to get one up on you. Be warned!
Who should use it?
Difficult to say. It’s good for a sense check and also great to see what your consumers might see. You can get caught out pretty easily, though.
What is it?
On the EdgePetrol platform, if you choose to share your live price, you’ll receive other local Edge users’ live prices too.
Pros
This is the most accurate, real-time pricing data out there. It comes directly from the point of sale as the transaction happens. It doesn’t get more real-time than that.
Cons
Although EdgePetrol has over 1000 sites across the UK using the app, we recommend you supplement this data with Experian Catalist.
Who should use it?
EdgePetrol users!
But, most importantly, ask yourself if you are using all five pricing pillars to optimise your fuel pricing decisions?
Don’t let your competition set your pole price for you.
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