Fuel Price and Mitigating the Cost of Human Error

For many convenience store operators, updating fuel prices remains a very manual process which can be prone to errors.  Headquarters determines the new price. Then they call the store so an employee can change the fuel price on the sign and at the pumps.  Employees can be slow to make updates out of fear that traffic will fall.  Alternatively, employees simply make occasional errors as they make changes.  These discrepancies have traditionally been tough for many operators to detect before it becomes quite costly.  This happened recently at one of our customers.

Fuel Price Mistake Leads to High Traffic at the Pump

In this recent situation, one of the operator’s employees mistakenly applied the wrong price to the fuel at one of his stores.  The price per gallon was $.25 lower than the operator had intended.  This unintended discount led to sales at the pump increasing 144%.  A typical Thursday afternoon during the same period typically has around 40 fuel customers. These customers typically purchase around 400 gallons of fuel.  During the period when the fuel price was mistakenly discounted, the operator had 95 fuel customers for a total volume of 963 gallons sold.  

Access to Real-Time Data Empowers the Operator

Fortunately this operator had Taiga’s Front Office Platform with our fuel pricing module installed across all of his stores.  Our Front Office Platform sent alerts to the management team that the fuel price at the store was out of line with competitors.  The issue was detected immediately and corrected within three hours.  This early detection reduced the losses on fuel due to pricing. The alerts also avoided a potentially more costly issue of empty tanks as inground inventory was reduced substantially due to the inordinate increase in volume sold.  Our fuel inventory systems allow you to monitor inground inventory levels remotely to avoid this problem.

Customers Shop in Store but Long Lines Formed

Our system tracks conversion rates of how many fuel customers also shop in the stores. While there was a modest increase in instore sales, most of these customers were opportunistic fuel buyers who were simply taking advantage of cheap gas.   Store traffic and sales increased about 20% but that was not enough to offset the losses at the pump. We could tell that only one register was open during the incident. That register was processing over 60 transactions per hour. So a long line must have formed for over 3 hours. 

Traditional Accounting Systems Missed this Issue Previously

Another client faced a similar problem before installing our systems.  He discovered in his monthly accounting reports that sales declined dramatically compared to normal.  As he investigated the reason for the decline, he found out that his diesel fuel price was $.25 higher than nearby competitors.  Unfortunately, the store was far from headquarters.  As such, this store did not quite get the same level of oversight as those that were closer and easier for managers to keep an eye on.  So it was a month later when this issue was detected.  By that time, the problem had a much larger impact on the bottom line.  

The contrast in these two scenarios demonstrates the power that access to the data from your business in real time can provide.