PUMPING UP THE PROMO

John Karolefski

Food retailers who build gas stations next to their supermarkets realize that, unlike the conventional gas outlet, they have a fully stocked food store with which to promote gasoline sales.

And, with growing technological sophistication, they are doing just that.

The promotions generally take the form of rewarding product purchases in the supermarket with discounts on gasoline. More elaborate programs involve linking the store's loyalty card program to the fuel point-of-sale system. But technology is opening new doors.

"New petroleum equipment technology is enabling improved customer communication, data capture, data mining and loyalty program development," said Patrick McGraw, senior business development manager for Dresser Wayne, an Austin, Texas, maker of fuel dispensers. He made these comments last fall at a technology conference sponsored by the National Grocers Association in Tampa, Fla.

"Many supermarkets are still in the developmental phase," McGraw told SN in a recent interview. "But others are ready to take the next step and begin to do more advanced programs that can help drive in-store business. They use cross-marketing techniques with fuel and inside sales to support each other."

Hillel Dor, a product manager at Retalix, a POS software vendor with U.S. headquarters on Dallas, explained that retailers ideally want to lure fuel customers into the supermarket by printing coupons at the pump to take into the store. Technology to accomplish that is in the early stages, though Dresser Wayne has improved the printer technology in its state-of-the-art dispenser so there are enough dots per square inch to generate a UPC bar code on the receipt coming out of the dispenser.

The alternative is getting coupons in the store that shoppers "scan" at the pump for a gas discount. Executing promotions in that manner is not typically possible -- coupons and vouchers are generally handed over to an attendant at the fuel island who scans them. However, software and hardware developers say such advances in this and other areas are on tap for late 2003.

Giant Eagle's New Platform

Giant Eagle is one example of a chain taking the next step in the development of its fuel marketing program. The Pittsburgh-based retailer is currently rolling out a new technology platform to its 15 fuel locations.

"We had some significant issues from an operational standpoint with the fuel platform we had before," explained Russ Ross, senior vice president of strategic planning at Giant Eagle. "Another issue was that we were not able to get consumer-level point-of-sale data, meaning we couldn't pull in which customers were using our fuel station."

The new platform, from CCIS Tech, Irving, Texas, is connected to the store point of sale and passes fuel purchase data along "just as if someone buys a can of corn in the store and you track that movement," Ross said.

The platform retains the ability to give price discounts at the pump to certain customers, according to Ross. For example, when shoppers identify themselves with their Advantage loyalty card, they get a discount that varies by location. It could be 2 to 7 cents per gallon, based on local competition and other marketing issues. Card holders redeem the discount by inserting their card into the pump like a credit card.

Giant Eagle is testing a six-week promotion with Catalina Marketing at its five fuel locations in the Columbus, Ohio, marketplace. When shoppers spend $50 or more in the supermarket, they get 25 cents off per gallon -- up to 20 gallons with a maximum savings of $5. A purchase of $100 earns 50 cents off each gallon -- up to 20 gallons with a maximum savings of $10.

"Today, that coupon has to be redeemed manually at the fuel kiosk," said Ross. "But eventually, we'd like that to be automated so that when shoppers use their Advantage card, it automatically reduces the price. We're not there yet. Some integration work still needs to be done." That integration, which will be the key to more sophisticated marketing, will be provided by CCIS Tech.

"They've got one controller in the fuel station and one controller in the grocery store," said Dickson Perry, president and chief executive officer of CCIS Tech. "The one inside the grocery store is always hooked up to the enterprise system. The key is making sure that they are integrated so they are able to cross market between the fuel island and the grocery store," said Perry, whose grocery customers include Safeway and Publix Super Markets, among others.

For now, CCSI Tech works closely with vendors of loyalty and incentive programs such as Catalina Marketing, St. Petersburg, Fla., and Centego Marketing, Dallas, to provide simple rewards for fuel purchases.

Catalina offers its well-known Checkout Coupons when shoppers buy certain products. Centego Marketing operates Fuel Rewards, which generates free gas vouchers at checkout when specific purchase minimums are met. They are redeemable at any of the participating grocers' on-site or fuel partner gas stations.

Fuel Rewards is offered by nearly 700 grocery stores, including Stop & Shop, H.E. Butt Grocery Co. and Meijer. Last week, Randalls/Tom Thumb, the Texas division of Safeway, announced that 45 of its Tom Thumb and Simon David supermarkets in the Dallas-Fort Worth area will implement the Fuel Rewards program. One example: purchasing two three-roll packs of Brawny paper towels yields a $1 voucher for free gas.

AutoGas Systems, an Abilene, Texas-based software developer of customer loyalty solutions for fuel marketing, works with Catalina Marketing and several major Southwest grocery chains it declined to name. AutoGas' solution is one of the few that can scan coupons at the gas pump.

"There's an application that we put with the generic point of sale within the fuel control system. It basically allows retailers to send data feeds from the Catalina system to our system," said Erik Presley, marketing manager for AutoGas. "We are able to validate and verify the incentive that Catalina produced inside the store and redeem it at the dispenser. We would accept the data feed from the dispenser and, if it's a valid bar code from the Catalina system, we would then redeem it."

Handling more sophisticated promotions is considered more difficult than handling a fixed-value discount. For example, a variable-value coupon presents some unique challenges.

"You don't know until the transaction is complete how much that coupon is worth," said Lyle Walker, spokesman for Retalix. "Then somebody has to be responsible - from a clearinghouse standpoint - to bill, say, P&G a random amount. That's a challenge. For a variable-value coupon, that's tough technology. A lot of these guys don't want to be in the coupon-clearing business," said Walker, whose company has Albertsons and Costco as customers.

K-VA-T Food Stores, the most recent Retalix grocery customer, is installing the StoreLine POS in all of its 86 Food City stores in the tristate regions of southeast Kentucky, southwest Virginia and northeast Tennessee.

The system "will allow us to better serve our consumers through systems integration in various areas, including our fuel stations," said Steve Smith, president and CEO of the chain based in Abingdon, Va. K-VA-T will be able to cross promote products, analyze sales and reduce its overall cost of operations, he said.