ALEXANDRIA, Va., 2014-6-10 — /EPR Retail News/ — Fifty years ago an innovation forever changed fueling — and even retail as a whole — when convenience store operator John Roscoe flipped the switch at a convenience store in Westminster, Colorado, to activate the first U.S. remote access self-service gasoline pumps. On June 10, 1964, the store sold a little more than $36 of gas — 124 gallons to be exact — but selling fuel would never be the same.
It also supercharged the nascent convenience store industry, allowing stores to add fueling operations without adding attendants. Today, convenience stores sell 80% of the fuel purchased in the United States.
“What made self-serve so important to the convenience store industry was that we already had the facility,” said Roscoe, who now lives in Fairfield, California. “By spending $10,000, we effectively got the gasoline business from full-serve gas stations without their labor expenses. If you could sell 1,000 gallons of gasoline with a 10-cents-a-gallon margin, you could double your margin without adding much to your expenses.”
In the 1960s, gas margins were much like other retail margins, and it was common to have 10-cent margins with gas priced between 20 to 30 cents per gallon. Today, gross margins on gasoline are approximately 18 cents per gallon — but expenses are much greater. After expenses, including credit card fees, pre-tax net margins are approximately 3 cents per gallon.
Roscoe’s wasn’t the first self-serve gas station — as far back as the 1930s, some stores allowed customers to pump their fuel with a nearby attendant resetting the pump and collecting money — but this station was the first that allowed true self-serve as we’ve come to know it-.
“This innovation not only changed fueling, but the concept of self-serve that we know today,” said Jeff Lenard, vice president of strategic industry initiatives for the National Association of Convenience Stores (NACS). “Because it was so unique, it took a good decade to truly catch on, but once it did, convenience stores quickly became the country’s dominant fueling stations, and other modern conveniences like to-go coffee, self-serve fountain soda and ATMs soon followed.”
Changing Attitudes
When Roscoe opened his pump in 1964, state fire codes prohibited self-serve fueling in most of the country, but restrictions were gradually removed to allow for self-service dispensers. Today self-service is still prohibited in New Jersey and Oregon, as well as in a few scattered municipalities across the country.
Despite the change in state laws, acceptance within the convenience store industry was slow. To encourage others to jump on the self-serve bandwagon, Roscoe offered to speak about his success on a panel called “New Concepts of Merchandising for Profit” at the 1964 NACS Annual Meeting.
“I was with a person on the panel who operated a meat market in Oregon. After the presentations, all of the questions from the floor were directed to the meat market operator. Gasoline sparked no one’s interest,” recalled Roscoe.
While the panel presentation did not grab store operators’ attention, Roscoe’s fuel sales did. He quickly added self-serve fueling to additional sites and saw sales grow.
Consumers, on the other hand, loved the idea from the start. Because convenience stores could sell unbranded gasoline from self-service pumps cheaper than the branded, full-service stations, customers flocked to convenience stores for their fill-ups.
“The public is always interested in lower prices, and immediately went for self-service gasoline,” said Roscoe. With gasoline typically selling for 20 cents per gallon, a discount of 2 cents per gallon translated into a 10% savings. “That was significant enough to bring people in.”
Transforming the Industry
There’s no doubt that remote self-service dispensers have transformed the fueling industry. “It changed the convenience store industry forever,” said Roscoe. “It allowed convenience store operators to locate on better sites and increase their overall attractiveness.”
Self-service also continues to alter the retail experience around the world. Today, consumers can order groceries by scanning QR codes located on digital signs in train terminals. They can order groceries online and schedule at-home delivery. Deposits are made into checking accounts by scanning checks via mobile banking apps. And even drones may soon play a role as an immediate delivery option.
The continuing redefinition of convenience all began with that first small step in Westminster, Colorado. “Appropriately,” joked Roscoe, “that first sale was for just one gallon.”
“Self-service speeds up transaction times, increases ordering options and helps take costs out of the system. But most of all it has redefined convenience — and the convenience store industry,” said Lenard.
Note to editors: NACS has developed several backgrounders, including a detailed history of self-serve, a video interview with Roscoe and the history of fueling in pictures. Contact Jeff Lenard (703/518-4272 or jlenard@nacsonline.com) to arrange interviews with NACS or Roscoe.
-###-
Founded in 1961 as the National Association of Convenience Stores, NACS (nacsonline.com) is the international association for convenience and fuel retailing. The U.S. convenience store industry, with more than 151,000 stores across the country, posted $696 billion in total sales in 2013, of which $491 billion were motor fuels sales. NACS has 2,100 retail and 1,600 supplier member companies, which do business in nearly 50 countries.