FUEL PRICES PERK UP GIANT EAGLE PROGRAM

LIZA CASABONA

PITTSBURGH -- With fuel prices continuing near record highs, Giant Eagle here is fast expanding its loyalty card-based gas rewards program.

The retailer recently increased the number of Pittsburgh-area supermarkets to 55 where customers can get credit for fuelperks! discounts. It also is working to add the remaining 10 stores, said spokesman Brian Frey.

The program also is available in the chain's Youngstown, Cleveland, Akron-Canton, Columbus, Toledo, Ohio, and Erie, Pa., markets. "We continue to expand the program to additional stores," he said.

"With the [fuelperks!] program involving the routine purchases of food and fuel, participation and interest in the program [are] always high. However, we do experience an increase in participation during periods of rising gas prices," Frey said.

Recent gas prices in Pittsburgh were as high as $1.85, according to area media reports, prompting an increased interest in the retailer's discount program.

"Fuel reward programs are growing because they are effective in the face of high gasoline prices that don't seem to be going away anytime soon," said Carlene Thissen, president, Retail Systems Consulting, Naples, Fla.

Consumers have a more emotional response to the price increase of gas than to almost any other product, said Glenn Hausfater, managing director, Partners in Loyalty Marketing, Chicago. As prices have gone up, this has created two hot areas for loyalty programs tied to gas: supermarkets and convenience stores. One offers discounts on gas for food purchased, and the other often inverts that model, he noted.

"The bottom line across both retail sectors is there's no question that discounted gas is an enormous motivator," Hausfater said.

As supermarkets fight market forces to keep customers in their stores, gas rewards can be a very effective loyalty program because they resonate with consumers, sources said. "Fuel discounts are without question one of the most effective incentives for rewarding loyalty or changing customer behavior. There is a difference between seeing discounts taken off your grocery receipt tape and seeing the price per gallon drop when you're standing at the pump," Thissen said.

The fuelperks! program offers consumers 10 cents off per gallon at Giant Eagle's GetGo gas locations with every $50 spent using the retailer's loyalty card in participating supermarkets. So a shopper could save 40 cents per gallon after a $200 shopping trip -- a strong incentive for using the program in times of rising gas prices.

The fuelperks! program was established in the summer of 2003 after Giant Eagle set up GetGo. GetGo is a product of Crossroads Convenience, LLC, a joint venture between Giant Eagle and Guttman Enterprises, Belle Vernon, Pa., Frey said. The company operates 62 GetGo stations chainwide, and about 55 are in the Pittsburgh area.

GetGo locations include kiosks and convenience stores built in the parking lots of existing Giant Eagle supermarkets. They range in size from 200 to 2,500 square feet. The retailer also has stand-alone entities -- not located near one of the chain's supermarkets -- as large as 4,500 square feet, he said.

"The program was designed to accomplish two different goals, with one customer-focused and the other business-focused. With fuelperks!, we reward Giant Eagle supermarket customers for their shopping loyalty by offering a valuable program that pairs necessity items of food and fuel. At the same time, we developed a program that helps drive supermarket sales," Frey said.

Driving customers back into the store with a fuel program is something supermarkets could do more of, Hausfater said. Convenience stores have succeeded with this approach, but it holds potential for grocers as well. "The grocery stores are in a very strong position," he said.

Other retailers are also offering consumers discounted gas through different types of fuel reward programs. Some choose to tie to national or regional fuel providers, often offering consumers a free gas voucher earned through the purchase of specific products. Some retailers lease a space to a partner. Other stores form an alliance with a local fuel retailer. Retailers including Kroger, Meijer, H-E-B, Bashas', Raleys, Piggly Wiggly, Buehlers and Coborn's have explored gas-related marketing programs, sources said. Kroger, Cincinnati, gives two reward points on its MasterCard for every dollar spent in the company's own fuel centers, said Thissen. Bashas', Chandler, Ariz., offers customers the chance to earn Chevron gas discounts for certain products.

The benefit to keeping the gas reward in-house as Giant Eagle has done, Hausfater said, is that a retailer can keep the business instead of sending the consumer down the street. However, he cautioned, people can be surprisingly loyal to particular brands of gas.