Australian Convenience Store News & C-Store Exhibitions

Fuel and oil additives have been around for a long time but the market has been changing significantly over the past couple of years. The service station operator who isn't up to date with these changes will miss out on a share of the profits.

Service Station and Convenience Store News addressed the issue of 'The New Aftermarket Customer' back in the January/February issue this year. In this piece, Grant Duffy from Wynns Australia pointed out that a new breed of customer, usually male and under 25, is not averse to spending well over $10 on a bottle of octane booster.

New fuel additives have been introduced that retail for up to $20 a bottle. With a 40 percent mark up that's a profit of $8 on every sale.

Identify Your Customer
Obviously, it's important to identify the customer who will be attracted to such products and to have sales staff take a pro-active role in selling the appropriate additive. Fortunately, the potential customer is usually easy to pick and, having spent serious money to make his car look and go faster, he won't think much of buying a fuel additive every time he fills up.

Wynns has introduced a $20 product called Race Formula Octane Booster, aimed squarely at this new market.

According to Rob Marshman from Nulon Products Australia, the best way to present fuel additives is to have them displayed in the auto section with other auto accessories. He cautions that driveway displays invite theft and more often than not weather-damaged driveway stock leads to a less than inviting display.

"Specials, such as our Nulon Petrol Injector Cleaner 500ml value pack, can create important impulse sales using eye-catching counter display units," says Rob Marshman. "Larger stand-alone displays can also generate a huge increase in sales - especially when combined with a national TV campaign."

By displaying fuel additives in the auto section, it's possible to generate extra impulse sales of other products such as oil additives. There's a wide range of products available - from stop-smoke and stop-leak additives to upper-cylinder lubricants. Like fuel additives, you can expect to achieve a 40 percent gross profit on these items.

Nulon has also introduced more expensive products such as Pro Strength Octane Booster and Total Fuel System Cleaner. Retailing for over $20 these lines sell very well and create good margins.

"On the point of returns, retailers should expect a 40 percent gross profit from our range - based on recommended retail pricing," says Mr Marshman.

One of the problems facing the service station and convenience store retailer is how to create demand for fuel treatments that are selling in discount stores such as K-Mart for $6.99, when the same product is on the shelf for $13.95 at a convenience store. "We have heard this issue raised time and again and as a result, we strive to maintain healthy retail prices and margins for our Nulon range in all retail sites," says Mr Marshman.

Mr Marshman also points out that the auto market is changing continuously and retailers in convenience stores are not keeping up with changes to purchasing patterns. "The age demographic that mostly visits convenience stores (22-35 year olds represent 37.5 percent - AACS industry survey 2000) often buy different brands than those on display. Auto plan-o-grams seem to stick with old favourites at the expense of the new "hot ticket" items. For example, you don't see a lot of Nulon fuel treatments or Meguiars wash and polish products in convenience stores and yet these are the top-selling quality brands in retail auto-parts stores throughout Australia."

Mr Marshman advises that 33 percent of Nulon customers rate Australian made as the prime reason for choosing the product. He sees this sentiment growing and warns that convenience stores that stick to the old US brands are missing the boat with the Australian public.

Lead Replacement Offers Opportunities
The introduction of lead replacement petrol (LRP) has opened up more opportunities in the fuel additive market. Products such as Flash Lube Valve Saver Fluid use a lead-free substitute that protects engines from valve-seat recession. Many customers will be on the look-out for such products as some older cars (pre-1986) don't run cleanly on LRP. Flash Lube is sold in 50ml packages and comes in a highly-visible counter-top display. Wholesale price is around $1.50 (plus tax) per 50ml bottle; it retails for $2.50.

John Routledge from Flash Lube suggests that retailers should be educating their customers on the benefits of using such a product. "When they understand how Flash Lube protects their engine, and how it offers significant fuel savings, they'd be mad not to use it at just $2.50 per serve," he said.

Varying quality of diesel fuel has also created a new segment in the fuel additive market.

"Since the introduction of low sulphur fuel, diesel vehicle owners have been complaining about engine wear and tear as these components are being less lubricated by the new low sulphur fuels. With the added upper cylinder lubricant in Chemtech Diesel Power, a diesel engines life can now be maintained," says David Hill at Applied Chemicals. "Chemtech Diesel Power now contains an upper cylinder lubricant to assist diesel engines with low sulphur fuel."

Available in 250mL, 1.0-litre and 5.0-litre packages, Chemtech Diesel Power offers retailers a return of around 35 percent, according to Mr Hill. Obviously, a product such as this would be well suited to the site that has a lot of heavy-vehicle traffic.

With continuous changes to the additive market, it's important to keep up-to-date with public demand. Remember, there aren't too many products in store that offer a 40 percent return.

(One additive supplier, Dipetane Australia, was originally featured extensively in this article. However, a Dipetane representative called as ASS&CSN was going to press to request that any reference to the company or its product be removed from the article. Ed.)