Retail Fuel: Pricing and Strategy Performance

Author
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2024

Overview

Challenge

A global investment firm that helps build valuable businesses was looking to understand the UK fuel market and forecourt performance to inform a decision to sell a UK forecourt asset, as well as optimise performance and pricing.  

The UK retail fuel market is complex and has changed significantly pre and post pandemic.  Traditional methods of analysis were too simple to robustly validate market trends at a competitor, region and site level.  Without a better understanding of the relative pricing dynamics of the petrol and diesel markets, it was difficult to proceed with confidence – especially when working with patchy market data from a variety of sources.  In particular, validating margin opportunities through improved pricing strategy and execution required enhanced clean data and granular analysis at scale.

Solution

  • Created a significantly improved, accurate and enriched data asset in <1 month. Enabling on demand extraction of meaningful insights and value from the data.
  • Quickly developed new zonal pricing strategy clusters enhanced pricing precision and competitiveness in an industry where +1ppl translates to +£150m in yearly revenue across the portfolio*.
  • Modelling of 5+ scenarios per week and tested 20+ hypothesis to deliver answers on demand over 4 months, focusing on market dynamics, competitor strategies, areas for growth and missed pricing opportunities.
  • Utilized advanced models, together with a PowerBI dashboard to enable ‘What If’ scenario modelling in real time.

Impact

  • The client can now make fast and unbiased, data-driven investment decisions.
  • Identified missed yearly revenue of +£200million for portfolio of retailers post-COVID*.
  • Completion of a ~$3.1bn deal, demonstrating the power of high value insights in driving significant business outcomes.
  • Blend’s analysis directly influenced the post-deal pricing agreement between parties, ultimately enabling the deal to proceed.

Key Data Points