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Feeling the heat
December 1, 2008 By: LP Gas Magazine Staff LPGasIs your business heating up or are your profits going up in flames? Our report reveals alarming trends for propane retailers
Yep, things are a mess. Looking back, retailing sure was easy before overwhelming regulation and sky-high insurance took the fun out of the business. Sure, you worried about what weather Mother Nature would be throwing at you any given year. Sure, you spent a sleepless night or two, wondering whether you'd made the right decision about adding a bobtail despite a new retailer invading your territory. But global economic crisis? Where did this come from? Yep, things are a mess.
Even beyond the great data that retailers provide us for the State of the Industry study each year, the comments they take time to write comprise the best indicator of "how it's going out there." And this year, unfortunately, it's obvious that things are a mess in the retailing business. "Going up in flames" is how many see it.
 ©PHOTODISC/DON FARRALL |
If an economic meltdown can be a surprise happening to professional forecasters, you probably wonder how we can expect propane retailers to know the future. But every year we ask retailers to do a bit of prognosticating about what their businesses will look like a year from now. Customers? Volumes? Revenues? Margins? Threats? Opportunities?
Of course, how retailers envision the future is colored by their current situation. And in 2008, a rosy outlook is hard to find among them.
 Retailers expecting more customers or higher profits in coming year |
Nonetheless, in addition to revealing their feelings about it all, the annual data they have once again provided allows you to put your retail business situation in perspective.
So ... when combining retailers' comments with their prognostications, what's the big, bad revelation? For the first time in the last six years, less than 50 percent of retailers expect to have more customers, and less than 30 percent see higher profits for the year ahead!
So what happened?
It is nearly impossible to sum up the entire year of 2008 in propane retailing in one concise statement, because the business landscape at the end of 2008 has become far bleaker than it was at the beginning of the year.
On one hand, regardless of the ongoing volatility of propane prices, some consistencies remain, as retailers made little change to the structure and operation of their businesses during the year. On the other hand, the financial environment in which propane retailing does business has changed dramatically, and it's far too soon to even guess when conditions may stabilize.
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