Haynes, vice president of operations of PCF Saleco, a chain of 145 Circle K-branded stores, told CSP Daily News that the company wanted [image-nocss] a platform that used fuel to drive merchandise sales. It's a formula many say the grocery channel wants in on.
But rather than partner with a grocery chain, Haynes said PCF wanted to go solo. "When you get multiple entities together, our vision may not be exactly theirs," he said. "Our vision would be to make our company successful."
With oil companies in the past six months announcing branded loyalty programsamong them, London-based BP through an agreement with a loyalty provider and Houston-based Shell with a partnership with a large grocery chainretailers are pressured to react, said Anton Bakker, president and CEO ofOutsite Networks Inc., Norfolk, Va.
Today, about 10,000 fuel retailers have links to loyalty programs, Bakker told retailersduring a webinar last month. He said that BP and Shell could add 16,000 more locations this year alone.
Cincinnati-based Kroger, the major grocer that has partnered with Shell, has placed a Kroger card in 40% of U.S. households, he added, noting that Kroger hasmore than24,000 locations and 80% of the U.S. population lives less than five miles from a Shell station.
Bakker pointed to Australia, where loyalty programs, many involving grocery and fuel ties, went from about a dozen to 450 in just a few years. "Overnight, when the grocery [program] kicks in, fuel-volume changes take effect quickly," he said. "Those who didn't have a partnership, mostly independent stations, lost 15% to 30% of their base volume. That's enormous."
Offering several comments on the evolving situation, Bakker made the following predictions: Market changes will be disruptive and in some cases, devastating. Time to market will be critical. The first-to-market advantage is just about gone and for everyone else, it's getting late in the game. Major oil loyalty programs may lock in use of loyalty ports in retailer's point-of-sale (POS) devices, effectively icing out programs that already are up and running. Litigation involving patents are moving through the courts, Bakker says, advising retailers to be aware of the loyalty processes that are under dispute. Be aware of cannibalization where customers may purchase c-store goods at grocery stores. Being the "redemption center of choice" (typically the closest station to the grocer) can offset the cannibalization by garnering the necessary traffic. Make certain the program can up-sell and move customers from the pump to the store. When Haynes of PCF spoke with CSP Daily News earlier this year, it had rolled out the program to 37 stores and was experimenting with a merchandise-and-fuel discount program that would meet their goals.
For retailers who have yet to make a decision about loyalty, Bakker says it will take about a year for the majors to fully mobilize, offering smaller players a window of opportunity. But he cautions, "the race will really take off in the summer and by the end of year will be in full rage."
[In preparation for NACStech 2010, Angel Abcede, CSP's veteran technology reporter, has also opened a discussion group onMyCStoreWorld.com called C-TechGroup and will post messages on Twitter under the screen name CSPAngelABC. All topics will be up for discussion.]
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