Retailers are attracting additional traffic, growing basket size and building consumer loyalty with fuel rewards
Pain at the pump is giving way to joy as food retailers sponsor cents off per gallon, discounted gas cards and even free fuel events.
At a time when one-third of Americans are compensating for expensive gas with fewer shopping trips, programs that tie fuel incentives to grocery purchases are helping consumers spend more freely and retailers stand out from the competition.
A brand new program at Save Mart Supermarkets and S-Mart Foods, Modesto, Calif., aims to woo shoppers in the Sacramento, Stockton and Modesto markets. It's the third such program available in the area.
“Two competitors in our markets have fuel savings programs but they're limited by their own grocery chain fuel stations,” spokeswoman Alicia Rockwell told SN.
What sets Save Mart apart is its affiliation with an outside partner. By teaming up with Houston-based Shell, Save Mart drives traffic to 100 of its stations, which in turn send additional business to the retailer. The program is part of Dallas-based Excentus Corp.'s Fuel Rewards Network. Shell is the No. 1 selling gas brand in the U.S.
Save Mart's fuel rewards are cumulative — the more shoppers spend, the more they earn, with each increment of $50 earning an additional 5 cents off per gallon (up to 20 gallons). Discounts are stored on a new loyalty card, which is inserted at the pump to initiate savings.
Currently available in 52 stores, the program will roll out to the remainder of its locations in the coming months. The timing of the program is not accidental, said Rockwell.
“It has great potential for building store traffic and sales,” she said.
Also offering more choice is Stop & Shop, Quincy, Mass., with its expanded Gas Rewards program.
Originally launched in 2008 with Stop & Shop branded gas stations, it grew to include 100 Shell stations local to 50 Stop & Shop stores in Massachusetts last year.
Participants can save up to $2.20 per gallon of gas by shopping at Stop & Shop with their loyalty card. Every $100 spent earns 10 cents off per gallon.
On April 29 Gas Rewards were further expanded to 500 more Shell stations in Massachusetts, Rhode Island, Connecticut, New Hampshire and Long Island and Westchester County in New York.
“Customers have more ability to use their points now that participating Shell stations are an option,” said Arlene Putterman, spokeswoman for the chain.
Since the latest expansion, traffic to stores has improved.
“The response from customers is excellent. We are not only attracting new customers but we're seeing the return of old customers,” said Putterman.
Stop & Shop is likely benefiting from the increased exposure Shell stations bring. During the launch event, Shell distributed coupons for double Gas Rewards at Stop & Shop, Lori Van Ryan, manager of marketing alliances for Shell North America, told SN.
Though Shell doesn't distribute supermarket coupons on a regular basis, “there is a lot of opportunity there,” noted Van Ryan.
As the national average gas price flirts with $4 per gallon, supermarkets are upping the ante in other ways.
In late April, Spartan Stores ran a two-day deal offering 50 cents off a gallon of gas, up to 20 gallons, for every $100 spent in its stores. Usually a shopper would have to spend $500 to earn these savings at 97 D&W Fresh Market, Family Fare Supermarkets, Glen's Markets and VG's Grocery stores.
This month, in Grand Rapids, Spartan is doubling its regular fuel rewards to 10 cents off per gallon for every $50 spent.
“We made a pretty big marketing splash with that,” said Dennis Eidson, president of Spartan Stores, during a recent earnings call. “We are absolutely convinced that fuel drives volume when you tie it into incentives for the consumer at the supermarket.”
Indeed, gas prices aren't all that's rising in Michigan — one of 10 states where fuel cost more than $4 per gallon last week. “The percentage of the gallons we sell on promotion goes up as the price of fuel goes up,” Eidson said.
New beneficiaries of the increased traffic are Speedway stations that serve as redemption centers as part of a VG's Grocery pilot.
“The comments we're getting from consumers early on have been very, very significant,” noted Eidson.
Gas prices in Florida are more reasonable, but that's not stopped shoppers from taking advantage of 20% discounts on fuel.
Lakeland, Fla.-based Publix Super Markets doesn't offer traditional gas rewards like Winn-Dixie Stores, Jacksonville, Fla., but it's gotten in on the fuel frenzy with a recurring offer. It involves a coupon for $10 off a $50 gift card to BP, Chevron, Hess or Shell, redeemable with a $25 purchase.
The promotion is so valuable that many consumers attempt to purchase multiple cards in a single transaction despite a limit of one per order, Publix spokesman Dwaine Stevens told SN.
The gas cards are more enticing to shoppers than cents off per gallon, said Stevens, since they offer more savings.
“We typically offer a 20% discount with $10 off a $50 gas card,” he said. “Other retailers are offering 5 to 10 cents off per gallon up to some limit like 20 gallons. Given the market price of gas at $3.87 per gallon, a 10-cent reduction is a 2.5% discount.”
Rather than limit themselves to one program or the other, enterprising shoppers have figured out that they can maximize benefits by combining the two. One way is by earning “fuelperks” at Winn-Dixie Stores and using discounted gift cards from Publix to pay the balance at the pump.
Winn-Dixie's fuelperks program is facilitated by Excentus, which acts as a clearinghouse, collecting funds from fuelperks retailers like Bi-Lo, Save Mart, Pick ‘n Save, Copps, Rainbow and Martin's to reimburse partnering fuel stations like Exxon, Shell, BP and Sunoco.
Winn-Dixie fuelperks expire at the end of the month following the month when the cents-off were earned. Fuelperks are cumulative so it's possible to pay for an entire tank of gas and even have savings left over to put toward a future fill-up.
Tying gas rewards to food purchases makes sense at a time when consumers are minding their food budgets more closely.
A consumer poll by America's Research Group finds that 42% of Americans have cut back spending in the grocery aisles to help offset the added expense of higher-priced fuel.
But gas deals tied to specific products, such as high-margin private labels, have driven sales by as much as 300%.
Shoppers like these offers because they earn their own rewards and then contribute to the overall basket ring on which more rewards are based.
“We're seeing more and more [retailers] layer in bonus promotions so in addition to a base basket reward they'll do product-based rewards that result in additional cents off per gallon,” said Scott Wetzel, vice president of marketing for Excentus.
Winn-Dixie, for instance, discounted its $50 gift cards by $5 for Mother's Day and offered 15 cents off per gallon in fuelperks with the purchase of each.
Members of its baby club are also eligible to rack up an additional 10 cents in fuelperks for every $25 spent on baby products.
Dozens of groceries like two Blue Bell novelty bars, two for $9, earn 10 cents in fuelperks rewards. Offers like these are usually paid for by temporary price reduction funds provided by the manufacturer, Wetzel explained.
Retailers are also attracting shoppers to these programs with giveaways designed to make a big splash.
Bi-Lo, Mauldin, S.C., drummed up excitement for its fuelperks program with two separate free gas giveaway events.
The latest included secret fuel redemption sites that consumers had to hunt down. Area radio stations revealed clues about each of the gas stations on the days of the promotions. Consumers got an advance on the clues on Bi-Lo's Facebook and Twitter pages.
The first 100 shoppers in line with their Bi-Lo Bonuscard — used to earn and redeem fuelperks — got a voucher for up to 20 gallons of free gas.
Fuel Promos Run Out of Gas in N.J.
WHEN IT COMES TO FUEL SALES in New Jersey, a restriction on self-serve isn't all that sets the Garden State apart. Also unique is a ban on grocery programs that let shoppers earn discounts on gas.
“Under our motor fuel statutes, which haven't been updated since the 1930s, you're not allowed to promote food with fuel,” explained Michael DeLoreto, director of government affairs for the New Jersey Food Council.
But a new state assembly bill could change that. If passed it would allow supermarkets in the state to host fuel reward programs, and let fuel dealers distribute coupons good for items at their supermarket partner's stores.
Stop & Shop is one regional player that would benefit from the change. Although its Gas Rewards program is driving additional traffic to stores in Massachusetts, Connecticut, Rhode Island and New York, consumers in New Jersey are unable to take part.