FPCQ0215 Petrogram - Fall 2015 - (Page 14)
Optimal Inventory Options
Without the right strategies and tools in place, tracking such line items as fuel
pricing and in-store inventory can be a tricky - and costly - proposition.
By Marilyn Odesser-Torpey, Associate Editor, Convenience Store Decisions
ith stores located in highly competitive marketplaces, Kyle Lawrence,
president of Kimball, Mich.-based
By-Lo Oil Co., found himself constantly
adjusting fuel pricing for the company's
Speedy Q Markets.
"Basically, I was spending most of my
time doing pricing, especially for five of the
stores that are in the most competitive areas,"
Lawrence said. "Sometimes I would have to
move prices three times a day. It was time
consuming and some changes could take
hours before they were confirmed."
And it was not only Lawrence's time that
was being consumed with tracking and changing prices. Before price changes could be
implemented, they first had to be approved
by district managers. "Too much of the operations team's time and attention were being
focused on pricing changes instead of working
with the stores," Lawrence said. "Our store
staff was feeling that they weren't getting the
support they needed; they were not feeling
their time with their supervisors was valued."
Tracking fuel prices is just one duty where
technology is enabling retailers to better manage inventory via iPads and iPhones as well
as Wi-Fi-enabled, handheld devices that alert
managers to when SKUs are unavailable or
remind them of their last order times.
FuEL PRICE MAnAGEMEnT
In 2012, the company tested a cloud-based
fuel price management software solution
from PriceAdvantage, a division of Colorado
Springs, Colo.-based Skyline Products, in five
of its Speedy Q stores. The software gathers and provides instant access to real-time
volumes, margins and replacement costs;
analyzes competitive pricing data; automatically communicates price changes to the point
of sale (POS) and issues confirmations of
the changes. In addition, the company sends
a suggestion if a competitor in the marketplace is charging as little as a penny less
price for fuel.
Lawrence explained that the software
"allows you to set your strategy."
"It tells us if we want more volume, we
should go to one price; if we want more margin, we should go to a different price. It visually
illustrates the trade-off of choosing volume
versus margin," Lawrence said. "It shows us
all of our options and is worthwhile even if it
just confirms that what we're already doing
As soon as Lawrence decides to move
a price, he can just push a button and the
change is transmitted directly to the POS. At
the same time, an alert is sent to the district
manager. "I'm hardly ever at my desk, so it is
important that I have the ability to change the
prices on the go," Lawrence said.
In fact, automating the collection and
analysis processes of the fuel pricing data
has freed him and his team to work on other
areas of the business. It also significantly
reduces the incidence of manual human error,
View past issues of Petrogram online at www.fpma.org
which can result in lost revenues. The software is now in place in all 18 of the Speedy
Q Market locations.
If enough is good, is more even better?
Not when it comes to inventory, said
Lesley Saitta, CEO and managing partner of
Impact 21 Group, a global consulting company for the petroleum/convenience, c-store,
retail and refining industries. Retailers are
being squeezed by lower fuel margins, rising
credit card fees and increased labor costs, so
every dollar counts, especially when monitoring inventory. Keeping shelves fully stocked
and avoiding excess inventory that can tie up
dollars and reduce margins is a balancing act
that every convenience store retailer must
face every day.
Saitta explained that maintaining optimal
levels of inventory of all items is difficult for
businesses like c-stores that carry a wide
variety of items and often operate in more
than one market area.
"Inventory is the largest investment inside
the store, but it has also been a black hole
for dollars," Saitta said. "Most average retailers have 14-16 days of inventory on hand
for cigarettes and are getting deliveries at
least once or twice, some even three times a
week, and they're carrying items they don't
need. In addition, categories like other tobacco
products (OTP), which is growing rapidly, can
still have excesses in some items."
Table of Contents for the Digital Edition of FPCQ0215 Petrogram - Fall 2015
FPMA’s 2015-2016 Board of Directors
Florida Takes on Loss Prevention
Best-Selling C-Store Food Items
Optimal Inventory Options
Boost Sales by Measuring the Right Things
FPMA Featured Advertiser Marketplace
Calendar of Events
Index of Advertisers/Advertiser.com
FPCQ0215 Petrogram - Fall 2015