Tapping Grocery Loyalty Points

With Mon Valley buy, Superior aims to become program redemption center

PITTSBURGH -- On the surface, an agreement by Milo Ritton, owner of Pittsburgh-based Superior Petroleum Co., to purchase the assets of neighbor oil company Mon Valley Petroleum Inc. sounds like a simple case of one distributor and retailer finding a convenient opportunity to grow as another distributor and retailer looks to exit the industry.

But a little deeper searching reveals Ritton sees the Mon Valley purchase as a first step toward bringing new vitality and a competitive edge to his company. What we're trying to do is create an independent convenience [image-nocss] store company that [provides a] loyalty network for other retailers, Ritton told CSP Daily News.

Ritton's purchase of McKeesport, Pa.-based Mon Valley, as reported Friday in a CSP Daily News flash, includes 21 c-stores under the Buy n Fly Food Stores banner, gasoline supply agreements with about 35 independent dealers, a home-heating business and a fleet of trucks. Ritton is buying the 77-year-old company from Hartley King, who also owns the King Family Restaurant chain in western Pennsylvania and a golf course in Frederick, Md.

[King, 72,] just got to a place where he thinks the oil company needs to go some place younger, and Milo Ritton is younger, Donald Bowers, general manager of Mon Valley, told CSP Daily News. We've been talking to Milo for about a year or more, and from where I sit, I just see that Milo was the one that fit so well together. The two companies didn't step on each other's feet. We're not in the same area. And now we cover all of western Pennsylvania from Interstate 80 down.

Bowers also is optimistic about Ritton's goal of becoming the loyalty-program payoff spot for independently owned grocery retailers in the market. I'm extremely excited about that, he said. It takes a company that's been around forever [Mon Valley] and really hasn't taken the challenge or the change that we need to do to keep up with other marketers [in this market]. I have no doubt that it's going to take off like crazy.

An initial test of the program will begin in April at two stores to be rebranded Fueland Food Stores in West Kittanning and Ford City, Pa. Essentially, the grocerin the test it will be Foodlandwill award loyalty points to consumers that can be redeemed for gasoline at Fueland gas stations.

What our plan is, said Ritton, is just to be an independent redemption center so if there is an [independent grocer] with 10 stores, we can approach [that grocer] and allow their customers to redeem their loyalty points through the manufacturers in our locations. We provide that service to them in our stores. We provide the vehicle so they don't have to be in the gasoline business. This is something that currently they pass along in price, and now they'll pass along in gas perks.

Ritton is hedging his bets in the test with Foodland and hoping to add more stores in other markets the 43-store grocery chain serves. He expects to close on the purchase of nine more stores in the second quarter of this year, and more growth may be in the wings. Depending on how our testing goes in April with Fueland, Ritton said, it gives us an opportunity in probably 30 other municipalities in the [Pittsburgh] metro area, with some in West Virginia and some in Maryland.

Once the Mon Valley deal closes, Ritton's companies will distribute and deal directly with petroleum products for BP, CITGO, ExxonMobil, Marathon and Sunoco. Together, the companies will distribute more than 100 million gallons of petroleum products a year through its network, which includes the Buy 'n Fly and Glassmart Food Store chains, a total of 44 stores. Depending on the test results, all the stores may be rebranded Fueland by the end of the year.

The combined companies will have nearly 600 employees in the metropolitan Pittsburgh and surrounding areas, and produce sale approaching $500 million.