April 25, 2008

GREETINGS AND SAL-UTATIONS!

Dear NJGCA Member:

MARKET VOLATILITY: WHAT YOU NEED TO CONSIDER

I understand the difficulty you are having coping with such a volatile gas and diesel market.  Margins are as tight as ever and may get tighter.  Why?  Because demand for gasoline is down.  You are all fighting for a smaller piece of the pie.  When your volume drops you automatically and psychologically react as if a competitor has taken your customer.  This is just not the case.  Consumption is down nationwide and as the price goes higher demand may fall further.
 
I do not know how to stress this enough....you must analyze your business on an overall basis and maintain a profit margin that keeps you in business.  You must pay attention and anticipate upward or downward trends in your delivered price.
 
With the market in such a volatile state you can get caught on the wrong side of a trend.  Prices are rising 10-15 cents in one day only to drop the same amount the following day.  Unbranded stations are paying more for product than branded locations.  Spot market is higher than rack.  Prices between major brands are greatly varied. These are all unusual trends that have rarely if ever been experienced.
 
What has remained constant is this: Oil Companies are making huge profits, Credit Card Companies are making huge profits, and you are not!
 
Motorists are angry and the easiest one to blame is you. Yes this is unfair but the only way to change this is for you to educate your customers as often as possible.
 
I have been reading a few blogs in response to some of the news articles that have storied the rising prices.  I am shocked at some of the comments that readers have made pointing fingers at local retailers for raising their price more that one in a 24 hour period, or for charging 10 cents more than a competitor.  They are watching and trying to catch you.  It feels good to them if they catch a "villain".  We all know these people are ignorant of the facts or they are stupid.
 
I know you have all heard this before but here are my strongest recommendations:
 
1) Adopt cash-discount/credit pricing - NOW!  Pass the cost of credit card fees to motorists that choose to use plastic. Do Not wait for your competitor to make the first move.  Your competitor is waiting for you.  So while you are both waiting for each other to make the first move Visa and MasterCard are laughing hysterical.  Save your customers that pay cash a few cents and maintain your profit margin at the same time.  DO IT!
 
2) When you do adopt cash/credit pricing please display your signs properly.  NJGCA sent out a bulletin last May with the proper way to sign your location for cash/credit.  Weights and Measures has been very cooperative and understanding regarding the dilemma you may face trying to re-sign your location.  However, they will not tolerate signs that are deceptive.  Neither will I since any dealer that uses deceptive signing taints everyone else.
 
Click HERE for a previous Road Warrior outlining the benefits of cash-discount/credit pricing
 
3) Seize the opportunity to raise your price when the market is going up.  Anticipate price changes.  Some of you are looking down the street and seeing prices go up and running out side to change your signs.  Then later in the day you receive news of a price hike or another competitor raising his price and make another trip to the sign.   This is the wrong strategy, because of current 24 hour price laws.  We believe you should change your prices as often as the marketplace permits, but the law allows for only one price change in a 24 hour period.
 
4) Make decisions based on your overall profitability.  I know how hard it is to raise your price because of concerns about the competition.  Believe me, the competition is struggling to have cash in the checking account to pay for the next load of gas just as you are.  We are fielding calls from members every day who do not have $30,000 to pay for the next load.
 
Fortunately some of our members have cooperative suppliers who help when possible.  Suppliers are struggling too.  However, there are a few creepy suppliers that are preying on your inability to perform and are ready to pounce on you.  These suppliers need a good beating and I would like to be the one who gives it to them.  More on this subject in future issues.

Thanks for reading.  See you next week!

Regards,

Sal Risalvato
Executive Director

IN THIS WEEK’S NJGCA ROAD WARRIOR:

HOUSEKEEPING ITEMS - FAXES & E-MAILS

•Are you getting both faxes and emails from NJGCA?  Let us know what you read!

AASP/NJ “ALERT” UPDATE

•An arrest has been made after a recent near-fatal hit & run.

Have you been getting our fax communications?  Are you reading your emails?  Are you getting both?

We have stated time and again the importance of keeping our members well informed.  NJGCA strives to get you timely news and information on events around the state, how it will affect your business, and what we are doing to defend small businesses.

Our efforts on your behalf are only effective if members are up-to-date on proceedings in Trenton and in the business community. 

We recently started to send out faxes in addition to our weekly Road Warrior eNewsletters when we became aware that only one-quarter to one-third of our members were consistently reading their emails.  These statistics were very troubling and extremely disappointing. 

In response, we began to send out faxes to make sure members were kept in the loop on weekly events, despite their email reading habits.  However, our goal is to not bombard you with duplicate information. 

Now that both systems are up and running, we’d like to know your personal preference. 

If you do not read your emails weekly, we will continue to send you faxed communications and reminder you to check your email. 

If you consistently read your emails and would like to stop receiving weekly faxes, please email us with your complete contact information and we’ll take you off our fax list.

Remember, our goal is to keep you well well-versed and educated on the industry and government – Let us help you get that information!

AASP/NJ “ALERT” UPDATE

In the March 28, 2008 edition of the Road Warrior, NJGCA passed along an important message from our friends at AASP/NJ regarding an accident on Route 1.  The incident involved a hit and run driver that left a pedestrian to die on the street.

You can read that edition of the Road Warrior by clicking HERE

We are pleased to say that an arrest has been made in relation to this horrific incident and now in custody of the Woodbridge Police.

Click HERE for a recent article on the arrest with further information.

Our thanks to AASP/NJ and NJGCA members for their cooperation and keeping an eye out for the suspect vehicle involved.

NEWS AROUND THE STATE

4/23/2008:
As gasoline prices climb, motorists’ budgets getting crimped
Motorists are feeling the pain as gasoline prices continue to rise, with many having to budget more and more for fuel costs.  The ripple affect is having an impact on the larger economy as companies are now taking in slimmer margins due to higher fuel costs.

4/21/2008:
Gas Buyers Pick Brand Over Price
Despite the high cost of motor fuel, a recent study shows that most consumers select branded fuels over unbranded fuels when making a gasoline purchase.

4/18/2008:
Water-tainted gasoline leaves 100 motorists by the roadside
Customers who frequented select Wawa and Lukoil branded gasoline stations in Bergen, Essex, and Passaic County received tainted fuel and causing thousands of dollars in damages.  The gas stations received the tainted fuel from the same Linden terminal. 

4/15/2008:
State Treasurer faces tough questions
With the State’s economic condition worsening, and revenue projections for next year down, State Treasurer David Rousseau faces difficult questions before both Legislative Budget Committees.