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Automatic pumps and Pre-Payment to prevent drive offs?

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In Australia the police in several States believe that pre-payment is the only way to solve the drive-off issue. ACAPMA , the Automatic PumpsAustralian Convenience and Petroleum Marketing Association http://www.acapma.com.au/), is promoting a National Drive Off Register as an alternative which aims to identify problem vehicles rather than changing people’s buying habits.

Although pre-payment is one solution to the drive off problem it can present a barrier to a customer using a service station if only some sites operate the policy in the area. The acceptance of the practice is country dependent and my recent travels in France and the UK have highlighted this.

1. France

There has been a general acceptance of unmanned service stations for many years in France to provide 24 hour operation even if a service station is manned at certain times of the day. On two recent trips it was noticeable that many manned service stations now have notices (often hand written) asking for pre-payment during manned operation although when filling up the request is often not enforced and a simple nod to the cashier is enough for authorisation of the pump sale. In this case the pre-payment request is enforced with discretion and no doubt partly dependent on the appearance of the customer.

2. UK

Apart from one or two service stations I used in the Manchester area twenty years ago I cannot remember being asked to pre-pay. The pre-payment was normally during the night shift and the cashier served through a heavily protected “night window” for security reasons. Signs can still be seen at some sites asking users to pre-pay at night. Recently automatic pumps allowing credit card payment have started to appear on some forecourts although for many years legislation prevented fully unmanned operation and there seems to be little move.

Why the difference?

The main difference is due to the convenience offering in the two countries. Apart from motorways and main routes there is very little in the way of convenience sales at most rural French service stations. In many cases there is a traditional workshop which generates the main income for the site and fuel is sold as a service to the local community. The dominant model with the supermarkets is unmanned fuel sales providing an additional service at a large supermarket or hypermarket site. In all cases pre-payment will rarely be a barrier to making a sale and there are few (if any) add on purchases to be lost.

In the UK the trend over the years has been for traditional fuel and workshop sites to close and the remaining sites to have a significant convenience offering. In these sites the operator wants to interact with the customer and any barrier to the customer entering the shop is undesirable. With pre-payment the customer will typically go to the cashier, arrange the prepayment, fill up and leave. This is similar to buying from an automatic pump. The customers will be less likely to spend time looking for items to buy in the convenience store and there is almost no opportunity for an impulse sale. With this business model pre-payment is likely to reduce convenience sales and seriously affect the overall profit margin for the site.

So are pre-payments a viable solution to prevent drive-offs?

The answer mainly depends on the market. If it is similar to France, using pre-payment is unlikely to reduce sales. If it is like the UK with a convenience led offering then it would be likely to reduce sales if generally introduced. The exception being 24 hour operation where security concerns for the staff make it acceptable to the customers.

Going back to the Australian situation, convenience sales are likely to suffer if pre-payment is introduced and it will be interesting to see if the police’s recommendations are followed. The new ACAPMA promoted National Drive Off Register to identify problem vehicles may represent a better alternative to identify problem vehicles and still keep service stations open for business as usual.

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Author: retailaccounting

CounterBooks is an online retail accounting management suite which is used by retailers across the world.

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