Grocers Drive Gas Sales with Innovative Marketing

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Grocers Drive Gas Sales with Innovative Marketing

DAYTON, Ohio -- After trying circular advertising, coupons and shopper reward cards, supermarket retailers are now using gasoline vouchers to hook shoppers.

This latest strategy of promising 25 cents to $5 off on gasoline with the purchase of selected grocery items boasts a higher redemption rate than standard coupons, reports the Dayton (Ohio) Daily News.

While some grocery retailing experts brush off this fuel-reward program as just one of many loyalty marketing programs, which have had shaky success during the past decade, the report found the Meijer stores in the Dayton area had a 17.34 percent redemption rate, which is impressive when compared to the typical Sunday newspaper coupon redemption rate of 3 percent, according to Peter Jacoves, vice president of Dallas-based Centego Marketing Inc. and founder of the fuel reward program.

Roughly 800 grocery stores across the country, most of which have an adjoining gas station, have some form of the five-year-old fuel reward program, including Grand Rapids, Mich.-based Meijer Inc. and Cincinnati-based Kroger Co., although Kroger has yet to start the program in Dayton. "This is one of the few programs grocery stores can do that affects 98 percent of their shoppers," Jacoves said, "because nearly everybody uses gasoline."

The challenge is convincing manufacturers the program makes sense and educating consumers on how the program works. Some of the national brands offering discounts in the fuel reward program include Tropicana, Keebler, Colgate-Palmolive, Dole, Kellogg's, Coca-Cola, Kraft, Frito-Lay, Northern, Gerber, Nabisco, Lipton, Quaker, Pillsbury, Arm & Hammer, Dannon, Kimberly-Clark and General Mills.

This is how the plan works: Consumers purchase specific products and receive from 25 cents to $5 off on a fill-up. These savings are reflected on a redemption voucher they receive with their grocery receipt. The consumers then have approximately 30 days to redeem these vouchers at the pumps outside the store or at other participating stations. During the past few years, more than 76,000 vouchers were issued in Dayton-area Meijer stores, which represents more than $69,000 in free gas. As of July 9, 13,179 vouchers were redeemed for $16,156.39 worth of gas. That's a total redemption rate of 17.34 percent for the area.

Steve VanWagner, Meijer spokesman, said the Meijer fuel reward program has been successful given the surges in gas price. VanWagner said Meijer runs the fuel rewards promotion for four weeks at a time, with one or two months between each new promotion. In comparison, Austin, Texas, has a 3.42 percent redemption rate with the fuel rewards program; Grand Rapids, Mich., 26.13 percent; Indianapolis, 11.97 percent; and Boston has a 9.58 percent redemption rate of the gas vouchers.

But Michael Diegel, communications director for Washington, D.C.-based Grocery Manufacturers of America Inc., said his organization has conducted extensive research in grocery marketing strategies and "this is just another form of loyalty marketing, which has been around for a while," Diegel said. "In a lot of cases it's been a struggle for the store to get a handle on what it is they're trying to do with these (loyalty marketing) programs."

Diegel said before fuel rewards, grocery stores were heavily pushing discount cards, which have recently generated backlash from consumers. "They say, 'Why should I give you all of my personal information to carry this card, just to save 20 cents on a can of peas?'" Diegel said.

Loyalty marketing programs can be data intensive, since they attempt to track customer buying habits to know when and how much of a discount to give, Diegel said. "The fuel rewards program in itself is obviously a loyalty program designed to attract and keep people coming to the store," he said. "It's an interesting program. We'll see how it pans out."