Loyalty Expansion to Boost Murphy’s Tobacco Growth

Category potential rises as Murphy Drive program rolls out nationally, company says
Photograph courtesy of Murphy USA

EL DORADO, Ark. -- Strong merchandise sales, including a solid showing from tobacco, helped improve Murphy USA’s bottom line, with optimism for the category only growing as executives announced plans to roll out its Murphy Drive loyalty program beginning this March.

“Merchandise capped off an outstanding year, contributing over $400 million of margin in 2018, with line of sight to further improvement in 2019,” said Andrew Clyde, president and CEO of El Dorado, Ark.-based Murphy USA, during its Jan. 30 investor call.

Tobacco same-store sales growth was consistent through the last half of the year, at 0.3% in the third and fourth quarters. The opening of new-build and remodeled stores in strategic locations, as well as increased involvement in manufacturers’ promotional programs, helped build the category during the period, Clyde said.

Stoking Clyde’s optimism is the expansion nationwide of the chain’s Murphy Drive loyalty program, currently boasting 1 million people signed on in its northern Texas and Tennessee pilot markets. The program encourages customers to make extra trips, buy more gallons per month and increase their market-basket sizes inside the stores, he said.

The loyalty program also helps target customers for products needing age verification, he said. Employee enthusiasm added to the program’s success, he said, with Murphy’s store-level staff being the main promotional thrust behind the loyalty effort.

The chain is also looking to expand its e-cigarette business, he said, citing San Francisco-based Juul in particular, going into 2019. “At least in the near term,” Clyde said, Murphy does not see any “significant material impact” from the U.S. Food and Drug Administration, despite the agency’s recent comments about restricting sales of flavored e-cigarettes at c-stores.

Murphy USA operates more than 1,400 stores under the Murphy USA and Murphy Express banners. Its stations are typically located near Walmart stores as part of a now-defunct partnership, while Murphy Express stores are stand-alone stations. Murphy USA stations tend to be smaller, kiosk-format stores, while Murphy Express stations are larger convenience stores.

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