Convenience Matters Intro:
[Music] You’re listening to Convenience Matters, brought to you by NACS. We’ll talk about what we see at stores and what the future may hold for our industry.

Jeff Lenard:
And today we’re going to talk about one of the most common questions, the Oil Price Information Service gets and we’re going to go into great detail. I’ll give you a clue: It’s about fuels leaders.

Jeff Lenard:
Welcome Convenience Matters. My name is Jeff Lenard with NACS and today we’re going to have a little bit of a fuels round table. We’re going to talk about, as I mentioned earlier, one of the most common questions that OPIS gets and we’re going to be joined by two people. One is Keith Reid. He’s the Editor of Fuels Market New and wrote a story in the issue based on the topic we’re going to talk about. And joining him is also Brian Norris, Executive Director of Retail Fuels at OPIS. So, welcome gentlemen.

Brian Norris:
Thanks for having me.

Keith Reid:
Thanks, Jeff. Pleasure to be here.

Jeff Lenard:
So, Brian, let me just start with you. This is a very popular report. The Fuels Leaders, can you just basically walk us through what it is and why do you go about this listing of fuels leaders?

Brian Norris:
Yeah, sure. So the, the Fuels Leaders Report that Keith wrote for the Fuels Market News newsletter or Magazine was based off of the OPIS Retail Brand Power Report, which is a report that we put out every year that goes through a bunch of different metrics for all of the different c-store chains on how they did on fuel. So things like margin market share, how they did head-to-head against their immediate competition. All of those metrics go together and what we do is we compile a report to come up with rankings on the c-store brands that ranked the highest and we do about the top 250 brands every year that we rank and the reason that we put this together is because we’re asked all the time by all of our customers which retailer is the strongest, or which retailers are most profitable and it’s a loaded question because there’s a lot of different ways to kind of grade a fuel retailer, a c-store chain, on their performance. So we wanted to come at it at an objective…in an objective way to really determine looking at the data itself which ones come out on top and so that’s what we did here,

Jeff Lenard:
And that’s going to be particularly challenging when so few are publicly traded. So you’re, you’re looking at defining benchmarks and metrics that are not necessarily readily available in stockholder reports or anything like that. So do you want to walk us through some of the characteristics that you’re able to share in looking at defining the fuels leaders?

Brian Norris:
Sure. Yeah, so, I mean, it’s all based off of OPIS data. So OPIS – in retail space – OPIS is known for the spots and the racks reports but we’re focusing on retail here today, which is my area, and I’m in the retail space. We’re really tracking four types of data at OPIS. So the first is our, obviously, our real-time fuel prices. So every day we get between 4 and 5 million prices reported to us for stations all across the U.S. And Canada. And, a lot of the retail chains, in fact, most of the top retail chains, utilize our data as a supplement or a replacement for the store manager surveys. So rather than having their store managers drive around once a day or twice a day to find out what their competitors are charging, they utilize the OPIS real-time data to stay on top of that in a much more real-time manner allows them to be a little bit more nimble and react to market changes more quickly rather than kind of being in the dark for a whole day while they’re waiting for tomorrow’s store manager surveys to come out. The next data piece that we have because OPIS is the benchmark for rack prices in the United States is we’re able to tie every fuel station to a wholesale rack terminal. And then once you factor out taxes and freight, we’re able to come up with an implied wholesale margin for every retail station in the U.S., so we take it for example, if it’s a Shell branded site in Maryland, where I am sitting today, we’ll map that to the closest rack, which is likely going to be either Baltimore or Fairfax, Virginia. We’ll take the product they’re required to sell, and we’ll map it to the Shell branded price at that closest rack to come up with that implied fuel margin. So we do that for every station in the U.S. to determine what we think the implied margin they’re making on every gallon they sell is. The next piece of data we have is our market share information.

Brian Norris:
And so we get market share data in two different ways. The first is through fleet transactions. So we partner with major fleet cards in the United States and every time one of those cards is swiped. We get the price that they bought at, the product they bought, and the number of gallons. So we’re able to determine market share based off fleet transactions in a given market. So brand A sold X percentage of fuel in the Baltimore MSA, or however you want to slice and dice it. Our customers can do that however they like. Our second source of market share information is actually a newer one. So we’ve partnered with a company called Orbital Insight and their geospatial intelligence company and they track cell phone pings. So what OPIS has done is we’ve actually geo-fenced every property for every gas station in the country.

Brian Norris:
And when a cell phone that orbital insight is tracking, I believe their latest numbers are somewhere around between 115 to 130 million phones that they’re tracking, anytime one of those phones pings within the property bounds that we’ve, geo-fenced around a station we that as a visit. And so we use visit counts as another metric for market share information and then the last piece of data that we have is our OPIS demand data. And so about 27,000 stations across the U.S. Are reporting their weekly sales gallons to OPIS every week. And we use that to come up with regional benchmarks for the the change in volumes on a week to week basis. It’s been really important during COVID because different regions have had much different volume performances when it comes to fuel volumes during the pandemic. So a lot of retailers are using it to track where our volumes for the market as a whole, on a state-by-state basis. How have we bounced back from COVID in some areas? They’re close to pre-COVID levels and others, they’re still 10 to 15% behind. So those four kinds of pieces of data, we’re able to take all of that information to come up with these rankings you know, we’re able to use, for example, market share how does a Brand A compare to Brand B in a given market on a head-to-head basis when it comes to market share and so all of that information goes into the report.

Jeff Lenard:
The things that we talk about at NACS is, why do we exist, who do we serve, et cetera. And one of the areas we look at is reason to believe. And I think I’ve just heard the reason to believe explained as well as anyone from any company. That was incredibly comprehensive in defining how OPIS pulls this all together and the credibility related to that. I wanna pivot to Keith on this one. I know Keith you’ve been in this business decades starting first with National Petroleum News and now your role here at Fuels Market News. You wrote this article, what were one of the, or a couple of the things, that you took away from that, that you really think is important for retailers or anybody in the fuels business to pay attention to?

Keith Reid:
You know, it’s interesting because there there were surprises in there, and then there were things that were expected, but I would say the one thing to keep in mind is that you don’t have to be the biggest players in the industry to be one of the more successful players. If you look at the top five and we’re not going to go into detail, you would see some names that you really expect to see there, of course, but they would be considered very successful mid-sized operations. But if you look at the top 50 in total, you see some of the companies that are the very largest in the industry and you see some that are…maybe have a couple of dozen sites at the most. And I think it speaks to OPIS’s efforts at ,developing an algorithm, so to speak for how they bring the data together, that you really see companies. And I know a number of the smaller I’ve seen they’re they’re excellent operators as well. So it’s really interesting to see that you really captured some of the the top operators in the industry. And I think achieved, in my estimation, what your goals were in those things…

Brian Norris:
And we, we really wanted to take a look at the local level. So, you know we didn’t want this to be, oh, you’re the biggest, so you sell the most fuel so you’re the top fuel operator, cause that’s not true. You know, you could be a really small operator in a really local area and you could totally dominate that area. You could be the number one fuel operator in that area, but your gallons are never going to compare to one of the big guys. So we really wanted to look at this locally and make sure that our rankings accounted for that. You know, obviously the bigger you are, you’re going to have advantages the more volumes you do, you’re going to be able to negotiate better prices. You’re going to be able to negotiate better scale and have better networks for delivering your products. But the reality is, is that you don’t have to be big to be a really strong fuels operator. And this report really illustrates that.

Keith Reid:
And that’s interesting. You say that if you look at the head-to-head in markets category, you had Buc-ee’s was ranked 15th out of the 50 in there and it’s definitely one of the smaller operations to make the top 50. And if you look down the row, they’re right there next to a Wawa and Sheetz and QuikTrip and other names that you’re very obviously…everybody’s well aware of so that’s fascinating.

Brian Norris:
That might be the only time anybody’s used the term small to describe Buc-ee’s. If you’ve ever been to a Buc-ee’s site, small is the last thing that comes to mind, they’re massive. Yeah. I mean, it’s no surprise that they tend to win head-to-head, essentially, a hundred percent of the time with who they’re competing with when you have a hundred fuel pumps out front and a c-store the size of a Walmart.

Keith Reid:
But that gets back to the whole argument that number of sites, obviously they made decisions with their models when they went out there and they’ve built a very successful model with it that competes with people that have a larger scale and numbers.

Brian Norris:
And they’re expanding all across the Southeast now. So, it’ll be interesting to see how they do when they enter some markets where there may be more established competition there in Buc-ee’s as a new brand. So that’s something to keep an eye on.

Jeff Lenard:
And that ties into something that I also saw in the article online that Keith wrote that there’s different strategies for everyone. And certainly Buc-ee’s, let’s have 110 dispensers that’s, that’s one strategy, but there’s a lot of winning strategies out there. And in some, you see these names that have fuels in the name, there are others that have food in the name so, were there anything, Keith, that you, in looking at these a couple strategies, that came to mind. And, Brian, same question for you.

Keith Reid:
You know, I think it gets back to the idea that it’s up to individual operators knowing their market. Another, a smaller operation from number of sites, Delta Sonic, we have one in my market down the street and it’s an exceptional location, but they’re they’re heavily carwash focused and car focused. It’s the c-store is an excellent c-store, but it’s really kind of a destination location if you love your car. So it’s …and you can look at it too, that there were metrics on higher price in market, lower price in market. And again, you see a nice distribution of companies that are successful with both of those models are going to be the price leader or I’m not going to worry about price. I’m going to worry about my other offers and you know, other issues in the marketplace. So yeah, that that’s really, it. The fascinating thing is that there doesn’t seem as Jeff, as you touched on there, doesn’t seem to be one answer to any of that.

Brian Norris:
I mean, definitely not. There’s a…I mean I could talk about this all day, but I know we’re limited to a 20-25 minute podcast here, so just a couple of points I want to make is one: It does seem that there does seem to be a correlation between really good food service and really high rankings with fuel. And I think that speaks a lot to the different operators and knowing their customers. If you have a great made to order food…Wawa,Sheetz those guys are right towards the top of the rankings, and that’s kind of what they’re known for. Obviously there’s going to be some correlation between fuel sales, because a lot of consumers just want to go one place to take care of their business, whether if they need gas, but they also need to pick up lunch. But a lot of it it really depends on the area and where you are.Your Delta Sonic example is great. Being in upstate New York, being focused on the car and the car washes, you get a lot of bad weather up there so you’d think car washes are probably higher demand there than maybe somewhere it’s sunny all year round. But you know, I think it really comes down to knowing your customer and that is a challenge that I think a lot of the larger retailers have is that your customers are gonna…if you’re all the way across the country customers in one part are going to want something different than customers in another part. And it’s really important for them to understand their different markets and what their customers are looking for and being flexible in what they offer. And I think, I think some brands are significantly better at doing that than others. When it comes to fuel, one, one example that I like to give is that this is the first time that Casey’s, who’s clearly one of the largest retailers in the U.S. – Probably top five in terms of number of stores – this is the first time that they’ve shown up in our top 50 in our report. And anybody that pays attention to the industry news knows that Casey’s has made a very concerted effort on modernizing and revamping their fuel program. They’ve brought in a team of people that have had success at other chains. They’ve invested heavily in data and software products and it’s starting to show out in the rankings that type of analysis for a company that spans many, many states is paying off for them when it comes to how well they’re doing with their fuel.

Jeff Lenard:
So that’s interesting thinking about fuel. Almost the way a lot of people have thought, or perceived if we build it, they will come with food service. And it takes a lot more than that. It’s not that we have a gas pump and doesn’t even necessarily mean that we have to be the price leader. But what it seemed to me is going through that list, you had to be known for something on a quality level. It had to either be the carwash, it had to be the food, it had to be customer service, or it just had to be incredible, as we mentioned with Buc-ee’s where it’s a spectacle. So there can be a role to be famous for something and draw traffic that way, but it’s not enough to just open a bunch of pumps and expect to compete with all the sophisticated retailers today. That’s one of the big takeaways I’m getting out of this, Brian.

Brian Norris:
For sure. You know, you mentioned price there as well. If you look at the price differential, for example, Sheetz, they don’t tend to be a discount pricer. They tend to price on average with the average price in their areas but they have very high volumes and they have a lot of loyal customers. So they’ve found that recipe that works. One of the things that we always say at OPIS is, what is your brand, what message are you giving to your customers? What are you known for? If you’re, Buc-ee’s, you’re known for massive sites, cheap prices and really clean bathrooms as well, along with beaver nuggets and beef jerky bar. If you’re Sheetz, or you’re Wawa, you’re known for your made-to-order food and clean well lit sites that are safe. There’s a lot of different things that an operator can claim as their brand and making sure that Brand A matches the markets that you’re in and that can change depending on where you are. If it’s a blue-collar area, you have a lot of construction workers or, or whatnot, maybe they’re having that food that quick bite made to order something they can get. So they can get something different for lunch every day while getting their Gatorades or whatever or water or whatever they need is your focus. But if you’re in an urban area where it’s maybe you need healthier food options for the office workers or a charging bank for people to sit and charge their phone while they’re on their lunch break. There’s different things, I’m just making up examples off the top of my head now. But you know, knowing your customers, your market, and we did include that. We included a lot of demographic information in these rankings to make sure that we did try to account for that in some way. What are the percentage of commuters in your market? How many of them are driving, those types of things we did try to account for when we do these rankings,

Keith Reid:
Brian, I had a quick question for you, and it’s because we’ve received some reader feedback in this area. There’s a lot of objective data crunching that went into this, but there are a few subjective areas as well. And there are people wondering, well, why didn’t my chain make the list? Or how could I increase my position on the list and how did it come about when you had to make those decisions so it wouldn’t just be the largest chains in the country that are in the same place every year, practically. How did you make those decisions as to which factors to look at, to really break chains out?

Brian Norris:
Yeah, so, I mean, there’s a few things. So first and foremost, we wanted to keep this just to see c-store chains. We wanted…we didn’t include grocery. We didn’t include big box. We wanted to make sure that it was a fair apples to apples comparison across the board. And we weren’t comparing a Costco to a small local regional chain-it’s not apples to apples. So we did limit it just to c-store chains and conveniently, that’s your audience.

Jeff Lenard:
Works out well for us.

Brian Norris:
But secondly, because of our relationship with c-store chains as OPIS, whether they’re getting our rack data or our retail data or whatever they received from us, we’ve built really good relationships with a lot of the companies. And we’ve had some candid conversations over the last few years about if you were to try to grade a chain’s fuel operations, what are the factors that are most important to you? So we do great things like head-to-head performance, how do they do when they go head-to-head against certain competitors. Margins, profits average volumes per site, all of those different metrics that we’ve come up with to include in this report, we weighted them all a little bit differently and we came up with those weightings based on the feedback that we got from the industry to make sure that it kind of reflected what the industry thinks of when it comes to fuel brand power -I’m using air quotes that you can’t see – but you know, fuel brand power performance. So we did make some subjective decisions, but they were always educated and guided by the industry. If that makes sense.

Jeff Lenard:
Yea, and Brian, you made me think that we need audio emojis. Maybe we need to patent something like that. They’ll just be like a certain sound when you hear air quotes or when like “dismissive smirk” or something like that. So, maybe there’s…somebody get to the Patent Office before us because I want to come up with the air quotes sound. So we’ll do that for the next time we have you on Brian. But Keith, I just wanted to turn to you in we’ve been in this business as Brian has for an awful long time. And I remember back in the nineties when I first started at NACS, there were two things that you needed to be a fuels leader. You need to have a convenient location and you need to have a competitive price. And my, how has everything changed.When you were going through this, Keith and you were looking for aha’s for our industry that have shown how much things have changed, what were a couple of the topline things that you think are really important takeaways for people to think about before they find this article?

Keith Reid:
You know, it’s interesting because you watch the industry change. There’s been a lot of change since the nineties. I started in 1999 and you know, you’ve seen, of course, by that point in time, the service bay had already been replaced by the either the small convenience store, the small in-bay carwash and then you’ve seen since that time, the center island marketer be displaced by the larger full-format as we were talking about with Buc-ee’s as an extreme example, but definitely a trend line towards that fewer sites, more offers more gallons. So the topline, I think, takeaway on this, that came away was just the quality of the operations. Again, in the top five, there are names that you really expect to see there. You’ve…we’ve heard…I’ve heard about them since I was in the industry, like Wawa for their food service program. And that I think it’s it’s just fascinating again, to see how many, how many companies find a way to do it, right. And I’m going to hit on it again, but it really is solid that especially when you look…there are certain areas such as fleet tracking ,fleet performance, where you expect it to be the largest operations in there, because they’re going to want to have as many opportunities in the region as possible for their drivers to fuel up. And, but again, when you get into areas like head-to-head performance, there’s any number of smaller footprint chains that were just dominating 100%, 90%, 96% of the time in their marketplace. And you see some big names in there, but you see some not so big names in there as well. So it’s …to make a short story long, it was fascinating the trends that you’ve been observing over decades actually put into hard numbers to illustrate the fact that they’ve they’ve really been happening in the way that you’ve assumed.

Jeff Lenard:
Brian, I guess the good summary from your standpoint is this is about loyalty. This is about getting that repeat customer and being known for something and just getting that customer back and back and back, because it’s a quality offer and because they want to be there and they will drive past the competition to go to you. That seems to be the big takeaway in terms of looking at these rankings.

Brian Norris:
Yep. And like I said, the best performing chains on here are the customers of ours that we kind of know they do a really, really good job of understanding who their customers are and that kind of loyalty, not so much in the sense of having a great loyalty program, although I’m sure that helps in some regards. So I don’t really, that’s not my area to specialize in, but loyalty in terms of the customer knows what they’re going to get when they go there and they know they’re going to get what they need for their day to day. And it’s a reliable choice for them always. It may not be the cheapest fuel, but they always know they’re going to get a fair price or maybe I am a customer that wants the cheap fuel. So my preferred chain is the lowest price chain. There’s customers, their whole reason – and we always look at the NACS survey, the customer surveys – to see how those are changing over time. You’ll see that price when prices go down, it tends to be less of a driver and then it’s more convenience or it’s more it’s located on my drive home or they have a good loyalty program or something. You know when prices go up, price tends to be more forefront of the mind so that also requires a bit of flexibility in your operations and the ability to change. But again, it comes back to customers knowing what they’re going to get, having a well-established well-defined brand in your customer’s eyes and understanding how that changes from market to market. This report is really just a roll up on a national look at the top top brands, but if I’m a retailer that operates in a lot of different markets I would be focused on looking at the differences in those markets and how my stores in certain markets could be adjusted or changed to better serve customers there rather than trying to have that one size fits all model across the board.

Jeff Lenard:
And the list is not secret. It’s available, it’s at Fuels Market News. It’s the latest issue. And there’s no paywall or anything like that. The reason we didn’t go through the top 20, top 40, I should say, or top even more than that, Casey Kasum did it, well, I’m not going to do long distance sindications. I’m not going to do that stuff. It’s good to look at at your leisure. What we want to do is we want to get the insights behind them and just look at why these companies are on the leaderboard. But like I said, you go to FuelsMarketNews.com and you can take a look at the article and we’ll also see what we can do to link to it on our podcast page. And Brian, how can they find out more about OPIS and some of the products and services that are offered by OPIS?

Brian Norris:
Sure. Yeah. I mean the same place you know, in the fuel Fuels Market News article, there are links to or at least the URLs that somebody can find the OPIS Retail Brand Power Report if they’re interested in purchasing that. We also have a full suite of web-based analytics products called the OPIS Retail Suite that goes anywhere from Price Pro, which is a a real-time fuel price monitoring tool that allows retailers to set up rules and alerts for how they want their stations priced so that they’re notified in real time when competitors prices are changing. All the way down to different analytics products for each of our different types of data that will allow them to really get more granular in what they’re looking at market by market, city by city type of analysis. So we have a Market Share Pro tool, our Demand Pro Tool, our Margin Pro tool are all tools that a lot of retailers are utilizing to do that kind of market level analysis to determine what works for us here. So that can be found on the OPIS website. If you just go to OPIS, net.com search for the OPIS Retail Suite, you’ll be able to find more information about free trials there.

Jeff Lenard:
And as I mentioned a little bit earlier having started the industry in the nineties when it used to be, “get the binoculars out, see what the competition’s pricing at and make decisions based on that.” Quite a bit more sophisticated since then. So thank you both for joining us today in talking about what goes into being a retail leader in this survey as defined by OPIS. So I hope it was interesting and take a look at that article and thank you both. And thank you all for listening to Convenience Matters.

Convenience Matters Outro:
[Music] Convenience Matters is brought to you by NACS and produced in partnership with Human Factor. For more information, visit convenience.org.