Increase profitability by revealing the link between fuel sales and in-store sales

Kalibrate have recently released an eBook “The link between fuel sales and in-store sales — and how it can be used to increase profitability” which discusses a data led approach to analyzing your gas stations and convenience stores — and boosting profitability.

You can download the eBook here, or read on to find out more about the approach.

According to NACS, the National Association of Convenience Stores, 80% of fuel in the US is sold through convenience stores with gas station facilities. And although every country has nuances in their fuel and convenience offerings, our experience at Kalibrate is that across the globe, gas and convenience go hand in hand. But more often than not — fuel sales and in-store sales are treated as separate business functions.

The management of forecourt and in-store services are executed by separate teams reporting to different managers. The relationship between the two groups — and the impact they have on each other — is not always considered.

It is generally accepted that:

• a strong fuel business can drive inside sales
• a robust convenience store offering can create loyal customers

but creating strategies that strengthen their combined power isn’t often prioritized.

Understanding how fuel sales and in-store sales are intrinsically linked can help both fuel and convenience managers to create strategies that increase overall profitability.

Why do we need to look at combined profitability?

The impact of COVID-19 and the rise of alternative fuels have propelled a decline in fuel volumes globally. The way fuel retailers traditionally generate profit is shifting and will continue to adapt in the coming years. In a world where the fuel and convenience revenue mix is changing, looking at your entire site holistically can drive performance improvements across the board.

With the right insight — fuel, and specifically fuel price, can be used as a lever to increase convenience store revenue, and boost overall site profitability.

Most fuel retailers have multiple profit centers. Whether you offer convenience store goods, QSR, car wash, or other ancillary services — combining them, can provide new ways of defining profit, and identify opportunities to drive new profits. When one profit center wanes, can the others be optimized to drive profit up?

NACS reports: “selling gas helps support the convenience store business model of providing access to everyday items conveniently and leads to 165 million transactions a day, including 30 to 40 million fill-ups a day.”

But it’s not always as simple as that. Because one size doesn’t fit all.

A blanket strategy change, applied to all sites as standard, is unlikely to yield the results you require.

Because no two sites are ever the same. No two sites have the same competitor base, the same facility offer, the same traffic passing by, the same mix of customers, or market environment.

And so — although the data from NACS suggests that fuel sales are intrinsically linked to convenience stores transactions, it really needs to be measured on a site-by-site basis. For any strategy to be positively impactful, it needs to be based on granular, site-by-site intelligence that factors in specific market conditions.

By calculating the fuel-store relationship on a site level for your entire network, you can unlock the secret to improved overall profitability.

Download the eBook to learn more