Grocers Give It the Gas (Discount)
By George Anderson
The U.S. is a nation addicted to cheap energy and, when the cost of gasoline goes up, there is nothing better for attracting consumers than prices lower than the competition.
Rewarding customers with discounts on gas has become a favorite vehicle for many grocers and other bigger box stores looking to keep shoppers coming back to buy.
Bill Bishop, president of Willard Bishop Consulting and a member of the RetailWire BrainTrust, told the Toledo Blade, “With the heightened sensitively about the price of gas, and people willing to look around for gas even at just 7 cents cheaper, these are very meaningful incentives for people.”
“Sometime in the future,” said Mr. Bishop, “retailers that can’t offer discounts on gasoline are going to find themselves at a disadvantage to those who do.”
Kroger, which operates gas stations at some of its stores, has announced it is changing its fuel-rewards program in the Toledo area. The company says the revisions answer customer requests for a program that is less complicated. On the face of it, however, it appears as though the grocer may be giving some advantage to Giant Eagle, a competitor with its own fuel-rewards program.
Kroger’s new plan, which begins May 1, will offer customers 10 cents off a gallon of gas on fill-ups for every $100 spent in its stores. Customers with Kroger Plus cards do not get their automatic 3 cents per gallon discount on top of the 10 cents off offer.
The current program offered by Kroger is tiered with consumer purchases. A customer who spent at least $150 in a given month on groceries was then entitled to four fill-ups the following month at a discount of 10 cents per gallon. Consumers could earn bigger discounts based on more purchases.
The Giant Eagle program offers 20 cents off per gallon on fill-ups for every $50 spent in its stores. Customers with Giant Eagle’s Advantage Card receive an additional 3 cents off per gallon on top of the 20 cents discount.
Moderator’s Comment: Will retailers that can’t or won’t offer discounts on gasoline find themselves at a competitive disadvantage in the future? Is there
a downside to offering discounts on gasoline tied to store purchases or holding a company’s loyalty card? –
George Anderson – Moderator