More Independent Grocers Getting Into Fuel Business
LAS VEGAS – An increasing number of independent grocery retailers are installing gas pumps on their sites or partnering with local gas stations to offer customer incentives. This trend was the subject of a panel discussion at the recent 2014 NGA Show, hosted by the National Grocers Association (NGA).
According to Reed Kessler, executive vice president of Aberdeen, S.D.-based Kessler’s Inc., his family-owned company has seen substantial benefits from its fuel program, which saves customers 40 cents per gallon on average. These benefits include attracting shoppers who use Electronic Benefit Transfer (EBT), as well as the ability to better compete with mega-retailer Walmart.
Jay Lawrence, president of Texas-based Lawrence Bros., noted that his company’s fuel program has gained considerable traction due, in large part, to the popularity of fuel incentive programs overall. “Our competitors are Walmart and H-E-B, who are very competitive between themselves, and we’re along for the ride,” he said. Lawrence Bros. realized an overall supermarket sales lift since its fuel program was implemented.
Offering a fuel program is an effective tool to build strong relationships with customers and compete against the national retail chains, according to the panelists.
Kessler said forming a fuel partnership is the most cost-effective way for independent retailers to build a program, and also the most beneficial. “The ROI [return on investment] was quick,” he said. “Partnering is a quick and easy way to get into this, and driving grocery sales is how you make your money back.”
Kessler also pointed to the tie-in between grocery items on promotion and fuel incentives, specifically citing “10 for $10” deals on certain items and meat promotions as among the most popular tactics.
For Lawrence, promoting his program – particularly through social media – has enhanced the company’s ability to build relationships with customers, especially in the face of competition from Walmart and H-E-B. “We try to differentiate,” he said, adding that promotional efforts help to build long-term engagement and loyalty.
Regarding the benefits of integrating a loyalty card into their respective fuel programs, the panel members were split. Lawrence said he is happy with the operation of his company’s program and is not planning on implementing a loyalty card. Kessler, however, recommended doing a loyalty program as it allows the convenience and flexibility of linking one card to another, assuming groceries and gas are purchased during separate trips.
The National Grocers Association is the national trade association representing the retail and wholesale grocers that comprise the independent sector of the food distribution industry.