Listening to experts, one could be forgiven for assuming the traditional automobile and the lifestyle that comes with it are fast approaching expiration. Nary a day passes when a prognosticator of some sort doesn’t try to convince us that the internal combustion engine and the petroleum products that feed it are officially passé.
The only problem? Somebody forgot to tell the American consumer.
If trends hold, 2017 will clinch the record for annual vehicle-miles traveled in the U.S. In doing so, it will mark the third consecutive year of record road travel, reversing declines stemming from the 2008 financial crisis and the historically high petroleum prices that followed.
Regardless of what the pundits might say, 99.9% of this year's road miles will occur in vehicles powered by gasoline and diesel engines. And the vast and exceedingly efficient network of fuel retailers that dot the nation’s roads and highways help make it all possible.
Results from EnergyPoint Research's latest Gasoline Retailers Customer Satisfaction Survey suggest motor-fuel retailers enjoy some of the highest customer satisfaction ratings in the energy chain. Moreover, we’d wager that the ratings of the top-rated companies in the survey rival those of the best retailers in the nation.
The segment’s higher standing with customers is in part due to the variety of available formats. Customers can choose from branded gas stations (i.e., those affiliated with a large oil company and/or refiner), independent convenience-store chains, or grocery and big-box retailers.
To be sure, the top-ranked names in each of these formats are highly regarded. Among convenience stores, the highest rated company, QuikTrip (Private), enjoys especially high marks from customers in the Southwest and Southeast regions of the country. The company also garners strong scores for ease of transactions and the quality and condition of its stores.
Among branded stations, BP (NYSE:BP) rates first overall. Scores for its commercial and fleet programs, as well as for highway travel, lead the way. Other higher-rated competitors in this segment include Phillips 66 (NYSE:PSX), Marathon (NYSE:MPC) and Speedway, Shell (NYSE:RDS.A) (NYSE:RDS.B), and Exxon Mobil (NYSE:XOM).
Mega retailer Costco (NASDAQ:COST) holds the top honors in the fast-growing grocery and big-box segment. The company garnered healthy across-the-board ratings in several regions with special accolades in the West. Its pricing and value stood out nationally.
Of course, strong overall customer satisfaction doesn’t mean all aspects of consumers' refueling experiences are positive. Some regions of the country enjoy higher satisfaction than others while certain formats are more attractive depending on needs. As a general rule, customers also remain more satisfied with fuel quality than fuel prices.
From a regional standpoint, retailer performance stands out in the West and Southeast. Especially high levels of satisfaction for fuel quality exist in the West, notwithstanding the fact consumers pay more for special formulations in the large market of California. Both regions rated high for service quality.
One of the more interesting findings from the survey is the difference in satisfaction across store formats. To wit, grocery and big-box retailers record particularly high levels of customer satisfaction. Lower prices played a major role, as did the quality of facilities. Overall, Costco and Kroger (NYSE:KR) lead the group. Wal-Mart (NYSE:WMT) Murphy USA (NYSE:MUSA), Sam’s Club and Meijer (Private) follow.
Traditional branded gas stations came in with relatively low scores in all attributes with the exception of fuel quality. Lacking the service culture of convenience store chains and the emphasis on value of grocery stores and big-box competitors, branded stations seem caught in the middle.
Despite the strength demonstrated by top performers, overall scores for the 34 retailers included in the survey declined modestly from 2016. The largest dip was in food and merchandise, followed by service quality. Store facilities is the only category to show improvement.
Of the 18 sub-attributes measured in the survey, the friendliness and courtesy of store employees rated highest with customers, while pricing for food and merchandise rated lowest. Pricing for gasoline also rated relatively low overall.
Like for any segment of the economy, gasoline retailer customer satisfaction levels can and do vary by competitor. Still, as a whole, the group's success at fueling America's mobile lifestyle is nothing short of remarkable.
The upshot? Given the acknowledged ties between customer satisfaction and shareholder performance, investors would be wise to consider how the most highly rated retailers can benefit from a consumer who determined to keep gas in the tank and their foot on the pedal.
Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
Business relationship disclosure: My firm, EnergyPoint Research, does and/or seeks to provide for-fee data subscriptions to oil and gas industry participants, investors and other stakeholders, including companies covered in its posts, reports, articles and surveys.