The nation's largest traditional grocery chain has nearly doubled its number of gas stations in the past five years, after having just over 100 a decade ago, according to the report. Kroger is also rapidly expanding a customer rewards tie-in with Shell Oil. In less than a year since their joint pilot launch in five markets, that program has [image-nocss] grown to nearly 5,000 Shell stations in 26 states.
Other grocery chains have also expanded fuel rewards in an industry that has seen sharpened competition, marked by price-cutting and promotions, in the rough economy.
Bryan Pearson, president of the loyalty marketing firm LoyaltyOne Inc., said fuel rewards are particularly popular because while few consumers like gassing up, they enjoy watching the pump prices fall before their eyes. At many Kroger stations, they can drop down by as much as $1 a gallon--10 cents a gallon for every $100 spent on groceries.
"There is a psyche about gas specifically," Pearson told AP. "It is a little bit of hassle, it doesn't go on sale very often, you don't get a lot of thrill about going to buy petroleum. What is brilliant about the program is the rollback at the pump, a feeling that you're beating the system."
Fuel sales, which tend to be volatile because of price fluctuations, now account for nearly 12% of Kroger grocery revenue. But Kroger officials say the major value is boosting the number of regular shoppers by offering shopping convenience and rewards for using their Kroger cards. Kroger officials say households that shop in their stores regularly though bad times and good are the key to long-term growth.
"It's about customers shopping our stores and being loyal Kroger customers," Chris Hjelm, a Kroger senior vice president, told AP. "More and more customers are engaging in the program."
The company in some locations faces zoning, real-estate or legal issues that prevent building gas stations. Also, some people prefer to use major-brand gasoline like Shell in their vehicles.
But Hjelm said Kroger plans to keep expanding; gas rewards are also being tried at some of its nearly 800 convenience stores. The Cincinnati-based company also has nearly 2,500 grocery stores in 31 states.
Competitors such as Safeway Inc. and Meijer Inc. also offer fuel discounts at their own gas stations, and more grocers are also linking up with Shell, BP and other national gasoline brands, often with the "Fuelperks" discount system developed by Irving, Texas-based Excentus.
Besides the nearly 5,000 stations offering Kroger reward discounts, Shell now has hundreds more stations with discounts for Bi-Lo, Winn-Dixie Stores Inc. and Royal Ahold NV (Stop & Shop, Giant stores) shoppers.
"Grocery really is the perfect combination," Dan Little, Shell's North America fuels manager, told AP. "It works so well because of the frequency of purchases and the size of the spend."
Little said the rewards programs aren't just a promotion, they're a key part of Shell strategy. He said Shell will continue to add markets and partners for rewards this year.
Most recently, Shell and Kroger announced they will extend the program for Mid-South customers with a fuel rewards and loyalty program.
Beginning this week, customers who use their Kroger Plus cards at the grocery store's registers began earning "Fuel Points." Kroger customers may redeem 100 points per visit to save 10 cents per gallon at Kroger Fuel Centers and at participating Shell stations for up to 35 gallons per purchase.
Mid-South cities participating in the program include Dyersburg, Jackson and Savannah in Tennessee; West Memphis and Blytheville in Arkansas; and Batesville, Clarksdale, Corinth and Oxford in Mississippi.
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