The Green Hills Kroger fuel center, which opened in late January.
-- Michelle Morrow | The LedgerWhy be content with low gas prices when you can get discounted low gas prices?
Consumers are filling up at fuel centers associated with a business where shopping for products offers discounts at the pump.
The Cincinnati-based grocery giant Kroger says that its fuel points program allows Kroger Plus Card customers to accumulate savings of up to $1 off a single trip to the pump.
And since the beginning of the year, customers have been able to fill up a car, boat, ATV and anything else that has been running on fumes for, in some cases, less than $1 a gallon.
Melissa Eads, spokeswoman with the Kroger Nashville Division, says the popular reward program that began in Nashville in February 2010 continues to gain more fans as people have become accustomed to getting the discount over the years – no matter what state gas prices are.
“At the very beginning it was just every day three cents off, probably even prior to 2010,” Eads adds.
“That is how the whole thing started, and then in 2010, we started tying it to your shopping, and for every $100 you spent on groceries in the store you would get 10 cents off per gallon.”
After that, Kroger made it possible for people to save up their points in order to get a full dollar off at the pump. And Eads says savvy shoppers find even more ways to rack up points with in-store purchases like gift cards or at the pharmacy.
“More and more people are starting to take advantage of it, and gift cards really drive that,” Eads adds.
“People are stopping and thinking, ‘You know what? I need to go to Lowes and buy blinds, so I am going to go to Kroger first to buy all these gift cards, save a fortune on fuel, and then go to Lowes and buy my blinds with those gift cards.’ A lot of people really understand that now and are taking the time to do that and are saving.”
The program has been a deliberate way to drive area consumers to Kroger’s growing number of fuel centers in Middle Tennessee, building brand loyalty as their customers build up fuel points credit.
Kroger isn’t alone in this business plan. Retail and warehouse grocers Costco, Meijer and Sam’s Club are all consistently adding fuel centers to the mix.
In Tennessee, Costco has fuel centers at the West Nashville location on Charlotte Pike, one in Brentwood on Seaboard Lane, and one in Knoxville on Kingston Pike. Sam’s Club has even more, with 15 fuel centers linked to their warehouses across the state.
“This is an important part of our business, and I don’t see any change there,” Eads explains. “We are all about creating loyalty and wanting to bring our customers more value every day, and this is certainly, we think, one of those ways to do that.”
From food to fuel
For these retailers, fuel is also a big part of their growth and operating plan.
Kroger began selling gasoline at convenience store locations in 1983 when the company merged with the Kansas-based Dillons’ convenience store business that had been operating Kwik Shop convenience stores since 1960. Kwik Shop began selling fuel in 1972.
Today Kroger operates convenience store fuel locations in 19 states, including Tennessee, under five different names: Quik Stop, Kwik Shop, Loaf ‘N Jug, Tom Thumb and Turkey Hill Minit Markets.
It wasn’t until 1998 when Kroger began selling gasoline at fuel centers attached to their own supermarkets, but by 2004 the company was operating 500 supermarket fuel locations. By 2010 that number had grown to 1,000. Kroger operates 1,275 supermarket fuel centers nationwide and an additional 725 convenience stores with fuel.
Combined, the company sells fuel in 37 states and says they are now the third-largest owner-operator of fuel centers in the country.
Costco is also adding fuel centers as it makes sense – and as land becomes available. At the beginning of March Costco reported a 29 percent rise in earnings in February, thanks in part to low gas prices.
The Wall Street Journal reports that the recent decline in fuel costs was thought to help Costco’s numbers because the prices that the second-largest retailer in the country pays for gas were dropping faster than the prices Costco was charging consumers at the pump. Meanwhile, cheaper gas prices at the pump left people with more money to spend inside.
Eads says approximately 75 of Kroger’s fuel centers are in Middle and East Tennessee, Southern Kentucky and lower Alabama, the areas in the Nashville division. While there are not any specific plans for more to be added to the area in 2015, that could change as opportunities present themselves.
“We continue to try and put fuel everywhere we can,” Eads adds. “The last one that was announced is in Green Hills. And we just expanded the one at Highway 70 in Bellevue. It doesn’t look like there are any new fuel centers for 2015, but they are constantly working to see where to add, especially where we don’t have one.”
Eads says the fuel center in Green Hills was a big get for them, and something customers had wanted.
“That’s one we have needed for a while,” she says. “Our customers have wanted it for a while, and when that opportunity finally presented itself, we were glad to have that coming on board.”