On the heels of its recently announced ties with supermarket giant The Kroger Co., Cincinnati, Shell subsequently revealed similar loyalty partnerships with Quincy, Mass.-based Ahold USA and its Giant Food, Landover, Md., and Stop & Shop, Quincy, Mass., chains, as well as BI-LO, Mauldin, S.C., and [image-nocss] Winn-Dixie, Jacksonville, Fla. (Click here for previous CSP Daily News coverage.)
In an interview with CSP Daily News, Dan Little, manager of fuels marketing for North America, Shell Oil Products US, spoke of the critical importance of securing exclusive agreements with grocers. "Anyone who makes the investment in hardware and software can create alliances with other retailers," he said. "But the value is getting the premier grocer in the market. Our strategy is to have a direct, exclusive relationship with that premiere [chain]."
Shell's moves are running in tandem to other major oil companies, most notably, London-based BP, which announced its partnership with the suppliers of "fuelperks!" network, Excentus, Irving, Texas. (Patent issues have swirled between Kroger and Excentus in recent months.Click here for previous coverage.)
"Clearly, [retailers] are figuring out how to co-exist with other coalition, loyalty programs," Steve Babick, president, MetroSplash, Highland Village, Texas, told CSP Daily News. When asked to comment on the majors' loyalty projects, he said, "You don't want to go up against it, but with c-stores you're typically flying multiple brands, and you're not tied to one [grocery chain's] ecosystem. So okay, they'll take all the gallons [that come] from Kroger, but let's figure out how we can optimize our own brand."
The level of marketing commitment for Shell's rollout will be significant, Little said. Without giving specifics, he compared the budget to last year's global launch of its new fuel products, which was the "biggest" marketing push they've executed in a long time. "The launch of the grocer rewards is bigger than that," he said. "It's the biggest we've ever had, and for every dollar we put in, our grocers have put in that and much more. Our marketing teams have been locked at the hip for the past year."
Shell had been looking at loyalty programs in the field for several years, deciding about three years ago on its competitive direction. The major then spent the past two years developing the program and creating the exclusive arrangements necessary, leading up to its go-live phase with Kroger last fall.
The partnering effort started by targeting Kroger, being possibly the single largest grocery chain in the country. Once that tie firmed up, the next step was to review Shell's own network to identify gaps. They began looking at what Little called "super-regionals," having then focused on the Ahold companies in the Northeast.
"We were looking for markets where Shell had a strategic and dominant market share that didn't conflict with Kroger," Little said. "We're able to provide these marketing alliances for over half of the Shell network with between five and six relationships, but for the rest, we'll need maybe 20 relationships because [the channel] starts to get fragmented."
While guarded about specific results from rolled-out markets, Little said the numbers have exceeded expectations, without significant "cannibalization" of existing business. "The customers who come onto our site and slide a Kroger card largely are new customers we've never seen in our Shell network; or for returning customers, [they] are increasing purchases significantly," he said. "For every existing gallon, we're seeing four or five new gallons."
The program works similarly in all markets. Taking Stop & Shop as an example, customers from those select Massachusetts stores can use their Stop & Shop card to save on fuel at participating Shell stations. For every 100 "gas rewards" points earned when shopping at Stop & Shop, customers can save 10-cents per gallon instantly on their next fuel purchase, redeemable at more than 100 participating Shell stations, up to 35 gallons per purchase. The savings can add up to 30-cents or more per gallon. Customers can also redeem points at Stop & Shop gas stations.
"Transportation costs are an important item in our customers' budgets," said Mark McGowan, president of Stop & Shop's New England division, in a press release. "We know customers appreciate our current gas program and we are so pleased to join with Shell to make this great new savings opportunity possible for them."
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