February 17, 2021
Why retailers are favoring strategy over business plans
Having run and exited my own small business, I know first hand that a business model is a template.
It is something that helps me interact with the outside environment. It guides me towards making the correct internal decisions.
It should be continuously evolving, evaluated at regular intervals and scoped to perfection over time.
But don’t be fooled by the business plan; it is not the same as strategy.
Strategy is the implementation of a business plan.
Cool beans. So why am I telling you all of this?
Well, the fuel retail business plan is written. The market has created a business model that has become the new top standard by ‘flipping the script’ on previous ways of operating.
Most retailers are no longer focused on selling fuel. The plan has changed. The business plan is now ‘retail hub’.
And it’s this business model which helped sustain the market through the pandemic. Through lockdowns and reduced volumes. As it will through the margin squeeze being caused by rising oil prices.
But the differing results between retailers...this is based on strategy.
The main thing business plans do not consider is rivals and how to compete against them. This is where strategy comes in; outperforming others through innovation.
As I’ve mentioned in previous blogs, this is particularly exciting as on the surface, fuel retailers sell the same product. It’s only when you look deeper do you see how these strategies are working.
And this brings me to fuel pricing…
...and the Contingent Theory. The Contingent Theory explains that there is no such thing as a perfect strategy. There are no safe points. We are in a reduced volume market with a lot of competition that is growing their economies of scale through market consolidation. There are risks everywhere you look.
But, the benefits of creating a strategy and taking those risks far outweigh the cons. Our CS team has been lucky enough to sit with customers who have not amended their pricing strategies for years and help them consider new ways of thinking.
The results are outstanding and it makes marketing’s job very easy when we are able to talk about 30x ROIs and 18%+ profit increases.
So, whether you are using EdgePetrol or not, make sure you are constantly thinking about your pricing strategy and whether or not it is right for your business plan.
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