2003 State of the Industry

December 1, 2003 By    

The numbers don’t lie; neither do the voices of frightened and frustrated propane marketers everywhere who say the mounting cost of doing business is smothering them.

With virtually 100 percent of survey respondents experiencing a blistering 22 percent average increase in employee benefits cost and another 65 percent bemoaning demands for more training, more procedures, more testing, more paperwork and more regulatory compliance, propane retailing clearly is an industry in cost crisis.

According to our research, the average retailer selling less than 500,000 gallons per year has just $117,178 left after buying product. From that must come all the costs of doing business before the first dollar goes home.

Marketers say they are worried about price spikes driving customers away from propane. They’re also concerned about the competitive advantages of the larger players and the destructive impact of desperate marketers chopping prices in order to compete.

It’s no surprise, then, to hear that many retailers – especially the smaller ones – are questioning the future viability of their businesses.

We believe our 2003 State of the Industry Report fairly represents the entire U.S. retailer population in most respects, including size, geographic location and operational characteristics.

Surveys were sent to 2,000 retailers; 424 (21.2 percent) responded. From the total, we retained 297 surveys in the database, representing those that were timely and complete enough to be useful and consistent enough to demonstrate honest, knowledgeable answers that fairly represented the industry’s characteristics.

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