“Compared to established dealers, self-serves offered price discounts, high volume (self-serves were the first multi-pump stations), novelty, convenience (generally 24 hours), reduced wait (averaging 2 minutes per car), safety (automatic shut-off nozzles, enforced rules), attractive and spacious layout, and glamor (roving female cashiers).”
In 1930, as described in yesterday’s post, a new form of competition arose wherein the motorist got out of the vehicle to self-served and received a lower price for gasoline or diesel. Protest from established dealers, in alliance with local fire marshals, however, led to municipal ordinances to hamper self-serves.
A promising form of low-cost gasoline marketing, rivaling the discounts of tracksiders (stations selling discounted gasoline obtained directly from tank cars at railroad crossings) was postponed.
California … and the Nation
On May 1, 1947, a large self-service operation opened in California that received wide publicity and reawakened entrepreneurs to this particular form of discounting. [1] Amid music and attractive girls on roller skates making change, the multi-pump station was jammed with customers and sold 570,000 gallons in its first month. Its success would inspire several small self-service chains on the outskirts of cities with unfriendly ordinances.
The attractions of pump-yourself stations were many. Compared to established dealers, self-serves offered price discounts, high volume (self-serves were the first multi-pump stations), novelty, convenience (generally 24 hours), reduced wait (averaging 2 minutes per car), safety (automatic shut-off nozzles, enforced rules), attractive and spacious layout, and glamor (roving female cashiers).
In early 1948, dealer associations began to recognize self-service as a potential trend and sought new legal barriers to supplement those from the 1930s. A survey in August 1948 showed self-service to be illegal in nine states – Illinois, Indiana, Louisiana, Maine, Michigan, Ohio, Oregon, Pennsylvania, and Tennessee – and in many cities and towns in California, Idaho, North Dakota, and South Dakota. Four other states were poised to pass prohibitions should self-service appear.
By year end, self-service stations were operating across the country, predominantly in warm weather areas. An estimated 5 percent of gallonage sold in the Los Angeles basin was self-serve, flourishing from prices from $0.02-$0.05 per gallon lower than full service prices around $0.23 per gallon. Failing to win a state ban, organized full-serve dealers in California found success at the local level. In September, Los Angeles banned self-serves, and the city Attorney General questioned the legality of price discount signs under the Business and Professions Code of the State of California. Under seige was the familiar “Save 5¢/gal.” advertisement of many self-serves, which was a key merchandizing line to attract motorists. Citations followed, although disrespect and circumvention kept the discount claim before the public. One chain renamed itself “Save 5 Gasoline” to continue to advertise as before.
In 1949, conventional-station dealer groups lobbied for state and local bans – or at least as much “safety” regulation on self-serves as possible to nullify their cost advantages. But counter-forces began to challenge full-service protectionism – the pro-consumer American Automobile Association, the open-minded National Petroleum News, opportunistic state and local politicians, [2] the self-serve association, Self-Service Gasoline Stations Association, insurance companies, several major city fire marshals, and several major company executives.
But this was not necessarily enough against well organized veteran dealer groups. Labor unions such as the Teamsters’ Union were also opposed to any reduction in “retail clerks.” State bans were enacted in New Jersey and Minnesota; city bans were enacted in Nashville, Tennessee, Baltimore, Maryland, Norfolk, Virginia, and five Washington State cities, among others; and strict regulations were placed on Wisconsin self-serves. An API resolution against self-serves in March 1949 added impetus to these measures, although dissent within the trade group led to a recommendation of approval later in the year.
Fighting Back ….
In California, sentiment turned toward a free market in gasoline dispensing. Localities rejected bans, mandatory night closing, and pump maximums per station. (Self-serves were typically 24-hour and multi-pump, explaining the legislative intent.) One successful harassment in the state was a sign law, effective September 24, 1949, that prohibited words such as “discount,” “save,” “off,” “less,” and “below” unless the full price and its components for each gasoline grade were in equally large lettering.
Literally thousands of citations were given by enforcement personnel. But recalcitrant self-serve operators vowed to go to jail if necessary to advertise as before. [4]
The spread of self-serve prohibitions continued to slow in 1950. Protectionist attempts were blocked in New York State, Washington, D.C., and other cities and towns. Bans, however, were enacted in Massachusetts and several scattered towns.
In free market areas, self-serves multiplied. On the West Coast alone, over 400 stations were in operation. [5] With this growth came internal competition – head-to-head rivalry between self-serves – and external competition – conventional marketers reducing margins, adding pumps to achieve scale economies, and opening self-serves themselves. The competitive challenge from streamlined full service was most felt. Fill-up time was reduced with more bays, and the price gap was narrowed to $0.01-.02 cents per gallon.
To many, particularly women, full-serve was worth it. Self-serves also began to stock oil and other TBA items, offering premiums, and experimenting with partial service. [6] Decreased gallonage and price wars strained self-serves and caused attrition, and complaints were made by these dealers to the Justice Department about a major company conspiracy. No party, no matter how victimized by regulation, was above politics if a business emergency was encountered.
Conclusion
In 1951, the number of self-serves declined, and many survivors were forced to experiment to expand their niche. Conversions to full service were common, and many self-serves offered partial service to maintain gallonage. The success of self-serves increasingly depended on location and management. Political barriers to entry in most of the country and regulatory-induced costs remained the most important problems, but market factors also limited self-service.
For the time being, self-serve would be a specialty, not mass, form of gasoline marketing.
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[1] The station, the concept of Frank Urich, was highlighted by the sign: “Save 5¢, Serve Yourself, Why Pay More?” Reminisced the National Petroleum News 37 years later: “It was the beginning of the biggest revolution in gasoline marketing history – self-service. No other single innovation in 75 years has created as much controversy or change in marketing strategies. NPN, February 1984, p. 92. Also see NPN, August 1979, pp. 68-70. For an overview of the California self-service market and local regulation against it, see Ralph Cassady and Wylie Jones, The Nature of Competition in Gasoline Distribution at the Retail Level (Los Angeles: University of California Press, 1951), pp. 122-33.
[2] A ban in Seattle was challenged by several politicians, which led to a referendum that overwhelmingly passed to allow self service. NPN, July 6, 1949, p. 20; March 22, 1950, p. 50.
[3] Concluded a report by the Employers Mutual Liability Insurance Company: “The workmen’s compensation exposure [at self-serve’s] should be no more and possibly even less than with regular gasoline stations.” A 50 percent premium hike for self-serves as a precautionary measure, despite the absence of claims, was rescinded by major insurers several months later. High insurance premiums would curtail one self-serve institution – female cashiers on rolling skates – because of the medical costs from frequent falls.
[4] Alternations to comply with the law were estimated between $400 and $700 per sign for the self-serves and other discount stations.
[5] By mid-1950, between 160 and 175 self-serves were in Los Angeles county alone.
[6] Signs at many self-serves advertised service for ladies, TBA’s, contests, and premiums.
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Source: Robert Bradley, Jr., Oil, Gas, and Government: The U.S. Experience (1996), pp. 1327, 1440–1443.
Interesting history Rob. I wonder if folks realize that the automobile is the self-serve version of the train?
Good point Tom — the flexibility of the car is ‘self service’ versus mass transit today also.