High Prices, But Low Margins

Iowa retailer explains that higher prices at the pump do not translate into soaring profits.

May 16, 2011

DES MOINES - During and interview on Radio Iowa??s The Exchange program last week, Adam Smith, manager of convenience retailer Guppy??s on the Go, explained to listeners that small profit margins keep retailers from reaping profits when gasoline prices increase.

He also used the opportunity to explain how credit card fees exacerbate the problem.

"Smith says just one station could run up $15,000 a month in credit card fees, 'and that??s a huge expense to us.?? Smith says the credit card fee is based on the amount of the bill. 'And as prices go up??that three percent that business is paying, obviously that number grows as well. So that??s correct to say that right now we are not experiencing any real margin in the gas,??" he commented.

He added that retailers make their money on in-store items such as merchandise and foodservice, so when prices increase at the pump, customers don??t frequent the store as often.

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