Perceptions Carry Weight at the Pump

LAS VEGAS -– Consumers have no problem talking about their reasons for visiting their chosen retail outlets, but knowing the difference between what they say they do and what they actually do can be a big help for convenience and fuel retailers, according to "Con$umer Perceptions at the Pump," an educational session held Tuesday at the 2014 NACS Show.

"Half of the U.S. population is at a convenience store every day; we should know what they're thinking," said Jeff Lenard, vice president of strategic industry initiatives for NACS, the Association for Convenience & Fuel Retailing. To accomplish this, NACS began surveying consumers in 2009 and recently took those surveys monthly.

The survey results show that no one likes buying gas, but as gas prices drop, consumers are happy –- only rarely do lower gas prices and optimistic consumer sentiment not link up, Lenard explained.

Additionally, different demographic groups shop at different times, with men tending to fill up in the morning and women filling up in the afternoon more often.

Consumers predictably choose a gas station based on price, but this is most important at night. In the morning, station location carries more weight, possibly due to the need to fill up during the morning commute. Older consumers are somewhat less sensitive to price and tend to be more loyal to a specific location, fuel brand or rewards program.

Lenard noted that customers do have an idea of the price at which they will change their behavior to save money -– generally around $4 per gallon -– but this price exists on a moving scale and isn't something retailers can count on to always hold true.

Certain factors beyond pricing should also be considered, according to Kalibrate's Ian Thompson, senior vice president of strategy. Seven elements are "at least as important as pricing": pricing intelligence, location intelligence, market intelligence, merchandising intelligence, facility intelligence, operations intelligence and brand intelligence.

Additionally, the key retail c-store drivers are location, facility, merchandising, price and brand operations, Thompson said.

Understanding these factors and capitalizing on the knowledge can increase market efficiency, which is determined by comparing market share to share of fuel sales. For example, if there are 100 sites in a market and a chain owns 10, it has a market efficiency of 1 if it captures 10 percent of fuel sales. 

Thompson cited one gas station chain that achieved a market efficiency of 6. "I can guarantee it wasn't through price," he said.

Companies with the highest market efficiency measure themselves repeatedly, use data to measure, benchmark and assess where they can improve, and make decisions supported by that data and added human intelligence and experience, according to Thompson.

"I guarantee if you truly understand market intelligence…you'll get more customers and have more success," he noted.