Brian Norris, Jeff Lenard and Keith Reid discuss findings from this year’s Fuel Leaders issue during a Convenience Matters podcast episode.
By Keith Reid
Each year, NACS produces a podcast to discuss FMN’s 2023 Fuel Leaders issue. NACS Vice President of Strategic Industry Initiatives Jeff Lenard moderated the Convenience Matters podcast episode with Keith Reid, FMN editor, and Brian Norris, OPIS executive director of retail data and product management.
Reid has covered the fuel retail industry for more than 20 years. In 2013 he helped found FMN Media LLC, a multifaceted digital and print media company that focuses on the needs of petroleum marketers, retailers and commercial fuel buyers. The company was acquired by NACS in 2020 and he serves as the brand’s editor and editorial director.
Norris joined OPIS in 2005, working in a variety of sales and marketing roles before joining the OPIS Retail division. Over the last 12 years, his focus has been ensuring the accuracy and integrity of OPIS retail pricing, margin, market share, and volume data and helping develop the suite of OPIS Retail analytics products.
This interview has been shortened and edited for clarity. The full podcast can be found HERE.
Lenard: Why is the FMN’s 2023 Fuel Leaders issue important and what the readers can get out of the data?
Reid: From a big picture standpoint, there are probably two main takeaway areas. First, this gives our readers a solid overview to benchmark their operations in a handful of key areas against the top 50 companies that have been identified as true leaders in the industry. You can go to the full OPIS report to get much more granular data beyond that. But this provides an opportunity to look at their peers nationally and any direct competitors that might be in their markets.
The second takeaway is that any company can be efficient and successful. You have some of the largest companies in the industry in the Top 50, such as Circle K with over 6,000 sites. Also on the list is Delta Sonic, which operates 31 sites, so you really get a mix. And the top five are usually somewhere in between that. What’s encouraging is the thought that you can be a smaller operator, but if you execute properly and take advantage of your staff live up to your mission statement, know the market and use technology, you can be just as efficient as any other leading company in the industry.
Lenard: When we look at pricing strategies and the Top 50, what really comes to the fore?
Norris: The most successful brands aren’t necessarily discounters. I think what they realize is that if they offer a fair price with a strong brand, there are other things that create customer loyalty. Is it a safe station? Is it well lit? Are the bathrooms clean? Can I go in and get a variety of things that I may need? That’s part of the value proposition that consumers are looking at when they’re determining where they go to fill up. Of course, the fuel price is important, and for some subsets of customers if you’re not the lowest price you’re not getting their business. There’s nothing you can do about that, but that’s not everybody.
These brands that are the most successful really figured out what that formula is for their brand.
You have some of these brands, Sheetz for example, that tend to be an average pricer in their market. The Wawas, the Maveriks and some of these other brands that might be slightly discounted to the market average, but not super low. And then you have the Buc-ee’s of the world that are way below market average.
So, it really depends on the brand and what your position is in the market when you’re determining that. Rotten Robbie’s, for example, they’re in the San Francisco Bay area. Their margins are still strong. California margins are very high. But that tends to typically be a dealer operated market where there are a lot of branded sites, and branded sites tend to be priced significantly higher than an unbranded site. They’re still making very healthy margins, but they’re very low compared to the market average because they’re an unbranded operator and they price at a discount. So a lot of it depends on where you are.
One thing I want to bring up that I think is important for the industry to understand is that there’s also the factor of what percentage of the customers’ monthly income or their wallet is going towards fuel, overall. When prices are higher, consumers are much more sensitive to who is cheaper, so I think brands need to maybe pay attention to that.
A combination of these different data sets is needed to understand the overall volume picture. What’s my market share? Am I losing market share?
When Russia invaded Ukraine a couple of years ago prices that summer went through the roof. The national average ended up somewhere around $5. We saw in our market share data the way that the big box and grocery were just absolutely stealing market share from the traditional convenience space. And I think it’s because they realized that, okay, we’re the aggressive pricers here. People are willing to wait in a line at Costco to save 30 cents a gallon when your prices are $5, whereas they’re probably less likely to do so when prices are $3.50. So, that’s an important part of the picture that I think some in this space don’t pay close enough attention to, as it’s not always just how you’re pricing against your competition.
