Rewards Programs Help Fuel Grocery Store Sales

As fuel prices rise, Washington, D.C.-area grocery stores with fuel rewards program are flourishing.

February 26, 2013

WASHINGTON - The Washington Post declared one clear winner as gasoline prices pass the $4 a gallon threshold in the Washington area: grocery stores with fuel-rewards programs. Among area retailers offering fuel discounts tied to in-store purchases are Safeway, Sam€™s Club, Walmart and Giant.

"Higher gas prices are almost like free advertising for these types of programs," said David J. Livingston, a supermarket analyst for DJL Research. "Loyalty programs have been going on for years, but when gas prices go up, they tend to become more important."

John Townsend, a spokesperson for AAA Mid-Atlantic, said as fuel prices climb, his association recommends that consumers consider a fuel rewards program.

"We€™ve never seen gas prices rise this high, this early in the year," Townsend said, referencing the 14% spike in gas prices over the past month. "In a time of extremely high gas prices, one of the tips we give people is: Use a rewards program."

Safeway, which launched a partnership with ExxonMobil in January, said rising prices have definitely created interest in its program.

"The program has been very popular," said Greg Ten Eyck, a spokesman for the chain of supermarkets. "With rising gas prices, it€™s become even more popular."

Giant has a partnership with Shell gas stations and recently began offering "5x gas rewards" on select products. And at Walmart and Sam€™s Club, a new program offers 3-cent discounts per gallon of gas for customers who pay with a prepaid Walmart money card.

"We know gas prices are putting a strain on our customers€™ budgets," said Molly Philhours, a spokeswoman for Walmart. "They€™re really appreciative of the discounts. As fuel prices increase, it€™s much more meaningful to them."

While grocery chains say it€™s difficult to pinpoint the bottom-line effect that a fuel-rewards program has on operations, analysts agreed that the promotions are effective.

"You can just see that at gas stations with rewards programs, the lines are much longer," Townsend said.

Not every grocery is jumping on the fuel rewards bandwagon, though. Wegmans said it has no plans to start a fuel rewards program, according to spokesperson Jo Natale. "In place of awarding rewards or other kinds of gimmicks, we just offer low prices," she said.

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