Retailers Accelerate Fuel-Based Marketing

DAN ALAIMO

SCHENECTADY, N.Y. — As gasoline prices went up last month, retailers were putting the pedal to the metal on gasoline marketing programs.

The latest news came out of Price Chopper Supermarkets here late last month when it said it was expanding its fuel promotion partnership from two outlying test markets — Watertown, N.Y., and Hartford, Conn. — into one of its core upstate New York regions in and around Syracuse.

This follows news last month that Shop 'n Save, a Pittsburgh-area chain owned by Supervalu, Eden Prairie, Minn., had completed a rollout of a fuel program, and in advance of an expected opening of a large fuel, convenience and pharmacy location by Giant Eagle, also in Pittsburgh.

All three chains use technology from Excentus, Irving, Texas, to run the fuel-based marketing programs. The promotions typically allow customers to cumulatively earn cents-off per gallon with purchases in the supermarket using a loyalty card, usually 10 cents per gallon for every $50 spent, although some products may be excluded by law.

Giant Eagle fulfills its offer with its own GetGo pumps, while Price Chopper and Shop 'n Save have formed partnerships with Sunoco, Philadelphia.

Meanwhile, also last month, Colorado Gov. Bill Ritter, a Democrat, signed a bill overturning an old law that made such fuel promotions illegal. Shortly afterward, stores of Safeway, Pleasanton, Calif., and King Soopers, a division of Kroger Co., Cincinnati, reinstated fuel discount programs.

“The higher the gas prices go, the more compelling discounts are on that particular item, which is obviously very budget sensitive for the consumer,” said consultant Neil Stern, senior partner, McMillan/Doolittle, Chicago.

The 115-store Price Chopper chain now has a total of 13 supermarkets in its Fuel AdvantEdge program, linked with 38 Sunoco stations. These include the initial test store in Watertown, where there are four Sunoco stations; five stores in the Hartford area along with 12 Sunocos; and the just-added seven supermarkets in the Syracuse area, linked to 22 Sunoco outlets. Price Chopper offers 10 cents off per gallon for $50 spent in the supermarket.

Since initiating pilots of the program last year, “the consumer response has been outstanding,” Price Chopper spokeswoman Mona Golub said. AdvantEdge is the name of Price Chopper's loyalty card, she added.

‘OFFERING INCREASED VALUE’

“In creating Fuel AdvantEdge, we recognized that two major commodities of great value to consumers today are food and gasoline. By connecting the two, we are offering increased value to consumers and build loyalty incrementally on our Price Chopper AdvantEdge card. The program has been very successful for us in terms of growing sales and building loyalty to our brand,” Golub said.

As with similar programs, consumers have 90 days to use the accumulated fuel discounts, which is not a problem because “most fill up weekly or every other week,” she noted.

In terms of future expansion of the program, “at this point in time, we are going to take it one area at a time,” Golub said.

The chain is committed to further rollouts of the program, said Brandon Logsdon, executive vice president and general manager of Excentus. “There are definitely other markets on the near-term horizon. We are going through a market-by-market approach with their network, and Syracuse is just the most recent market to be announced. We are working on multiple future markets right now that I'm sure will be announced soon,” he said.

The Shop 'n Save chain is now fully rolled out with 40 supermarkets and 70 Sunoco stations in its Pump Perks program, Logsdon said. The rollout started 16 months ago, and the supermarket retailer continues to add Sunoco stations to the partnership, he said. “That number will be going to about 100 Sunocos.”

Shop 'n Save takes a slightly different approach to the rewards in its Pennsylvania and West Virginia stores, according to the retailer's website. In Pennsylvania, where it competes directly with Giant Eagle, Shop 'n Save offers the same 10 cents for $50 spent in the supermarket. In West Virginia, Shop 'n Save offers 20 cents off per gallon for $100 in purchases.

As a result of these programs, gas competition in Pittsburgh and surrounding markets has become very intense, Logsdon said. “There have been several closings of major oil company fuel sites that are not Sunoco or GetGo in that area, and anybody who looks at that market would say it's mostly attributable to the success of fuelperks! and Pump Perks,” he said.

MORE RETAILERS LINED UP

Meanwhile, other supermarket chains across the country “as big or bigger than Price Chopper” have agreements with Excentus to launch fuel marketing programs, Logsdon said. “We are moving as fast as we can into new geographies with new retailers based on the partnership concept,” he said.

While King Soopers and Safeway in Colorado are not using the Excentus program, “we are having discussions with most entities in the industry,” Logsdon said “We think those who have fuel sites will, in the coming months and years, look to round out their network of redemption coverage through a partnership. We also believe strongly that we will continue to see new entry points, like Price Chopper, and other grocers who have no fuel sites start offering fuel discounts through the partnership opportunities,” he said.

In the future, he added, this will not be limited to supermarkets. “We see a lot of opportunity with other retail verticals simply because of the breadth and depth and reach of fuel — 98% of consumers over the age of 16 regularly purchase gasoline,” Logsdon said.