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Customer approached Guttman Energy with concerns that branded stations in its market had a price advantage over unbranded stations and that the margins for the independent retailer were being squeezed. The retailer had relied mostly on a “low rack” type of purchasing strategy for its gasoline supply but found that in addition to the issues of price, it also had been left scrambling to get physical product for its stations during times when the markets were tight on product.
Guttman met with the retailer to review the different supply options and the retailer decided to commit a percentage of its volume to Guttman on a program contract.
Guttman would maintain dedicated supply at the terminals to ensure that the retailer would always have product available. The pricing was set using formulas that allowed Guttman to lock in favorable economics for the retailer by waiting until the market got “weak” and then buying product for an extended period of time.
Guttman’s purchase economics were passed through to the retailer and the result has been that the retailer realized several cents per gallon of savings over an extended period of time.
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