By Brian Norris
Advances in mobile technology are speeding up the world and creating a new breed of consumers thirsty for on-demand content. That thirst is immediately quenched by instant access to fuel prices, traffic updates, movie times, restaurant reservations â€" almost anything they want.
And thereâ€™s no denying that todayâ€™s consumers want to make more informed purchasing decisions. Everyone wants a deal and any retailer resistant or tardy in adapting to this new buying culture may be left behind.
Smartphones, tablets and the Internet have created smarter, more tech-savvy shoppers who fuel up their cars. According to the 2012 NACS Retail Fuels Report, a full 5% of consumers are shopping for their fuel using mobile technology and online site aggregators before they purchase â€" trying to find the best deals available. While 5% seems trivial, this small percentage can be the difference between surviving or prospering in an American landscape where total gasoline demand remains under siege. And thereâ€™s no question that the 5% number will rise dramatically as time passes.
As an aggregator of real-time station price data, OPIS currently provides fuel location and price information to a multitude of websites and mobile app developers for smartphones and tablets, satisfying this growing consumer demand. Also asking for the data are a mix of gas price-hungry companies, firms that provide onboard systems for vehicle manufacturers and even car manufacturers themselves.
Itâ€™s this last group that demonstrates the newest and perhaps most dramatic introduction of this technology: factory installation in cars. Whether through onboard navigation systems or diagnostic services, thereâ€™s a groundswell of interest in dynamic pricing.
Imagine driving down a highway with your gas tank hovering just below a quarter tank. As you approach an exit, the dashboard illuminates and subtly informs you not only of the nearest gas stations, but of the branded and unbranded sites that offer the best choice of pricing â€" integrating price, convenience, brand, location and even loyalty offers in a menu of options for the driver.
To a great extent, this is already happening, and these systems reward companies that proactively share their offerings â€" and yes, penalize operators who arenâ€™t part of the data discovery universe. Ford was one of the first manufacturers to display OPIS retail prices on its dashboard screens, and others are quickly following suit. Audi launched its "Audi Connect" service last summer and Toyota launched its "Entune" service in the Camry, Tundra and Prius models to rave reviews. Gas prices can be found in certain BMW and Hyundai models through the Agero Connected Vehicle platform, while Lexus just launched its "Enform" service in February.
Websites such as AAA, Microsoftâ€™s MSN Autos, MapQuest and Yahoo! Currently display real-time gas price data that they receive from OPIS. On many of these sites, if OPIS is not collecting location or price data from certain stations, that information will not be displayed, costing those locations valuable business.
"Consumers are increasingly using mobile technology to make purchasing decisions," said Norman Turiano, senior manager of fuel business development at Wawa. We provide "real-time fuel prices to ensure our stores show up in all of the apps and onboard car systems that utilize OPIS. This transparency ensures that weâ€™re a viable option when [consumers] fill up."
Fuel prices can also be found in Garmin and TomTom personal navigation devices along with other real-time content such as weather, traffic and movie times. Smartphone apps that help consumers with trip planning, fuel prices and other on-demand data are popping up left and right, including Poynt, Where, SuperPages, Yellow-Pages and Telenav, among hundreds of others.
The wild start to 2012 â€" and memories of previously crazy years â€" has embedded a fuel price consciousness and sensitivity in many American consumers.
Expendable income promises to be a front and center political issue, and the price of gas resonates loudly with both young and old. Sifting through income and oil price data, OPIS delivered an estimate earlier this year that noted an average American household expense of $4,127 on fuel in 2011 â€" a staggering 8.3% of annual income. No single data point has garnered more attention with the press, academics and political think tanks than that tally. In contrast, the 2002 household expense was $1,687 for fuel, or just 4% of income. This escalation in price has been exceeded only by the escalation in price awareness.
On the retail side, gasoline marketers face moving targets on price and volume. In years past, most marketers could count on a slow 1% pace of demand growth across the country. Not anymore; demand is now erratic, with decreases potentially wiping out retailers who use traditional sales offers â€" nationwide data from MasterCard for the first two months of 2012 showed demand destruction of 5% to 7%, with some regions approaching double-digit declines. Anyone in the fuel space in 2012 has to wonder whether the valleys in demand may overshadow the peaks, or if the "driving season" may be rendered obsolete.
Gasoline prices should remain wild and volatile and unpredictable, warns OPIS Chief Oil Analyst Tom Kloza. A national price peak above the $4.11 gallon record high of 2008 is possible, but 2012 may be the year that brings incredible diversity to fuel prices, not just across state lines, but within individual counties and towns as well.
Volatility is also running rampant. Just 10 years ago, 1 to 2 cent per gallon price changes at the pump were the norm, but todayâ€™s consumer is unfazed by 10 to 15 cents per gallon changes from one day to another (wholesale prices regularly move by 10 to 20 cents per gallon in some weeks!). The last week of February, for example, saw the national average price move by more than 13 cents per gallon, and some individual markets saw variability of 25 cents per gallon or more.
While price and location will always be the most important factors in attracting business to gasoline retailers, todayâ€™s economic environment and technological advancements are creating other new opportunities for smart retailers to grow their businesses. Early-adapting retailers that attract tech-savvy consumers can help offset the down demand they might be experiencing â€" and maybe even drive in-store sales.
While each type of website, mobile app and in-car service offers on-demand fuel prices differently, the prevalent theme is that the data is available to consumers in ways never-before considered by gasoline and diesel retailers.
If your business is not adapting to the changing buying culture, you are leaving money on the table.
Brian Norris is associate director of retail pricing. For more information about OPIS and its offerings, call (888) 301-2645 or email firstname.lastname@example.org.