william wrote:A gas station expects inventory to last days at most. I remember during the 2 oil crises of the 1970's many stations sold out in a matter of hours. Dealers in this industry have to plan their purchases based on a weeks / months time frame.
Critically, you fail to note that gasoline has relatively low price elasticity of demand; and prices tend to be downwardly sticky.
Sitting on stock waiting for the wholesale price (or exchange rate to change) to drop so you can match your competitors, all the while hoping that the local market doesn't dry-up or your stock becomes outdated is a bad business plan. There's also loss of customers to other sources to consider. Matching prices and providing service brings back repeat business for items that might have a higher markup potential.
Whether that stock has a long average shelf time or a short one. A business needs the fastest turn over possible to create cash flow and ROI. This specific situation should be an opportunity for a store to maintain stock levels, reduce inventory costs, and have some cash on hand.
Average gas price might not change demand much, but differences between stations will move customers. So you're misapplying elasticity of demand.
The specific situation of currency exchanges makes the whole thing a little more opaque and difficult to evaluate. But if a business can't match the prices their customers can get elsewhere, they're doomed. In this day and age of internet stores and easy communication, more so.
Another recent observation about poor business practices: A local store used to have a decent selection of pellets. I went back with a friend who needed pellets and found all they have now is some left over R10 match pellets, less than a half dozen air pistols (Umarex handgun replica types), and a Drozd Blackbird which is poorly displayed.
With no decent selection of pellets, we won't be going back. Without a selection of pellets and air gun supplies, why would anyone interested in air guns and rifles be in the store to discover the pistols and rifles they are trying to sell? With a poor selection of pistols and rifles, why would anyone go there looking for them? With poorly displayed goods, how is any customer in the store for any other reason going to stumble across and be drawn into buy what they do have?
Another poor business practice at a local store: They're an Umarex distributor. Their website lists only the 5 pistols they have in stock and RWS Diabolo Basic pellets. WTH don't they list the entire Umarex catalogue on their website? Just have to be clear with customers about what is in stock and what needs to be ordered and the expected delivery times.
The art of success is balancing the cost of carrying inventory with keeping customers and taking advantage of sales opportunities.
That all said, I'm sure that if I started a store I'd probably end up out of business in short fashion. I don't have the financial security or desire for risk to ever take the jump and find out.