May 3, 2019
READING TIME ~
Two words come up constantly in the petrol retail business…
Volume and Margin.
Every retailer has a margin target. Whether it’s written down, in your head, sent to the bank, required by the investors or part of a new business strategy, it’s there somewhere.
This is always on a retailer’s mind. Site value, fuel supply contracts and shop sales are all impacted by the level of volume.
In all this it is very easy to forget the most important business metric:
After all, what is the point of having a high margin if nobody is buying your fuel? And why bother having huge volumes at low margins? And what makes it even more difficult, is that the two tend to compete. In many circumstances, sites are elastic to price and governed by consumer purchasing habits. The competition is lurking. And they are often supermarkets, even if you are a supermarket yourself!
So everyone is looking for that sweet spot. Maximising profit whilst keeping the customer happy.
That is the game.
Have you been winning this game?
You probably know how you are getting on already from your weekly/monthly reports. Maybe your accountant does this for you. But sadly – at this point – it’s too late to change the numbers.
This is why we’ve now added gross, net and business profit alongside your volume and margin data. You can now see if your current volume and margins are hitting your sweet spot as it happens.
And if it isn’t, you can make a change!
So, what actually are these numbers?
Well, as you already know, Edge is able to work out a live weighted and blended margin by grade, site and portfolio, in real-time.
Gross profit is your sales minus your cost of stock Net profit is your gross profit, but removing fuel card service charges.
Business profit is your net profit, with bunkering commission added.
And there you have it. Game changer.
Want to find out more? Email email@example.com to speak to a team member today.