GRAND RAPIDS, Mich. — With gas prices fluctuating in the early days of 2009, retailers are honing their fuel incentive programs.
While Spartan Stores here held a short-term promotion last week offering gas at 99 cents a gallon with a $100 purchase in the supermarket, other chains showed signs that they were decreasing the incentives in line with the drop in gas prices.
For example, Ukrop's Super Markets, Richmond, Va., extended its fuelperks! program through March 28, but it cut the incentive from 10 cents for $50 spent in the store to 5 cents. Bigg's, an 11-store hypermarket division of Supervalu, Eden Prairie, Minn., in the Cincinnati area, last week launched a fuel incentive program offering 1 cent off per gallon for every $10 spent in the store, or 5 cents with $50 spent, like Ukrop's new offer. Many other retailers, including Spartan, offer 10 cents with a $50 purchase.
The trend to lower the incentive thresholds “is going to have to continue as long as gas prices continue the way they are,” said Neil Stern, partner, McMillan Doolittle, Chicago. Going from $4 a gallon to under $2 reduces the margins retailers can work with, he said.
That doesn't diminish the value of fuel promotions. “The importance of fuel is it is still a very visible signal to consumers about savings and value, and I think retailers are using it that way. It is certainly more powerful than discounting milk or bread or eggs. Consumers are still acutely aware of what they pay for gasoline,” Stern said.
In Spartan's 99-cent program, which ended a four-day run last Tuesday, shoppers were given a coupon that could be scanned at D&W or Family Fare banner gas pumps.
Spartan is handling the program in-house, said spokeswoman Jeanne Norcross. “The additional feature that is very pleasing to our customers is the ability to utilize the bar code at the pump, without needing to redeem it inside the convenience center. Our state-of-the-art technology gives us a competitive edge in the marketplace and immediate reward for our customers,” she said.
Spartan issues its own coupons with bar codes on its sales receipts. “We now have 19 fuel centers, so we are able to offer gas promotions to a greater number of customers, and it is well utilized and popular,” Norcross said.
The change in the Ukrop's program was communicated last week to customers in a letter from Robert S. Ukrop, president and chief executive officer, the Richmond Times-Dispatch reported. “This adjustment coincides with the over 50% reduction in the cost of fuel since we began the program and still allows fuelperks! to remain the best program in the market to save on gas,” Ukrop wrote.
At Bigg's, the introduction of the Pump Perks program was promoted with an offer of saving 15 cents per gallon of gas with the purchase of one gallon of Bigg's brand milk, according to the company's circular. Bigg's fuel discounts can be redeemed at participating Sunoco stations.