Under attack from taxes, credit card fees and even some of our branded partners, retailers must continue to fight on.
by Jim Callahan, Convenience Store Solutions
In the days of old before crude was “liquid gold” and drive-offs were unheard of, we had low taxes and no faxes and just two blends to deal with.
We had clean air, grocery stores played fair, and few credit cards plagued us. We sold gas for 29.9 cents and made in the neighborhood of 8 cents per gallon. We were looked up to as pillars of the community and were considered good and fair businessmen and women by most all who came in contact with us.
Just as important, we enjoyed a better than 20% gross profit margin, in this case 26.8%. Fast forward to today and in many markets throughout the country, diesel is retailing for $4.259. The average price of gasoline topped the $3.559 mark and is closing fast on $4 per gallon–and I must add that we are now grossing somewhere in the neighborhood of 1-3% BEFORE credit card charges. To add insult to injury, there are more than a few who feel we are part of the group that is making the obscene profits. Ouch!
While I’m at it let me not fail to take a swipe at state, federal, city and county governments for their role in this mess. Right now, in Georgia, one of the lesser taxed states in the nation, the state and municipalities are enjoying a margin of almost 30 cents on each gallon of diesel retailed in the state for an average of $4.15 cents per gallon. The feds aren’t helping the cause. They are being forced to get by on a hair less than 25 cents per gallon. Is there not something critically wrong with this scenario?
Back in the day, as the saying goes, there was no sales tax, precious little state or federal tax and absolutely no county tax on petroleum. Credit cards, and the high credit cards fees associated with them, were few and far between and guess what? The major oil companies owned and controlled their own credit card deck. The cost to us was negligible. Less I make it all sound too good, in fairness, I must also declare that it was also a time of environmental ignorance.
You are correct in thinking we did not come close to rivaling today’s volumes. The convenience store industry was in its infancy and we admittedly had nowhere near the degree of retail sophistication that today’s marketers possess. However, the old Virginia Slims line of “You’ve come a long way baby” would not cross one’s mind when you consider where we were and where we are today.
History will record that during our watch we allowed things to get away from us–indeed lost any semblance of control that we enjoyed. We can make all the excuses we want, and perhaps even take comfort in the fact that big box and independents are also in part responsible for Big Oil getting out of retail. The handwriting is indelibly marked on the wall, unless we get serious about changing it
The difference, however, between our situation and Big Oil is that selling their locations allows them to better play both sides of the street by supplying both branded and unbranded on a far grander scale than they have previously, with a lot less to lose. Something we just can’t afford to do.
Jim Callahan, Consultant
Convenience Store Solutions
1 Quail Run Dr.
Newnan, Ga. 30265
Phone: (678) 485-4773