Comments on: Gas and Groceries

Question: Gas and Groceries

Crackerbelly — Thu, 15 Dec 2005 08:07:51 -0800

Over the past few years, grocery supermarkets on the West Coast of the U.S. have been getting into the business of selling gasoline. Is this happening other places? Does anyone know why this is happening? Why gasoline? Why not fast food drive throughs or some other revenue producer in that section of their parking lot?

By: Mayor Curley

Mayor Curley — Thu, 15 Dec 2005 08:18:46 -0800

It brings people to the store. Supermarket gas is usually pretty cheap and it's convenient. So you may be more likely to go a store with gas. You're probably not going to avoid them because they sell gas.

It's pretty commonplace in the UK, and the Stop N' Shop on Harvard Street in Brookline, MA has (had?) a gas station.

By: Pollomacho

Pollomacho — Thu, 15 Dec 2005 08:21:21 -0800

Why not gasoline? It is a product that they can sell in their massive parking lots without a huge change in the ways they do business. With the way gas prices are going, I don't see it as a bad investment for these guys either. Oh and yes, it's going on elsewhere.

A fast food place would take up more space and require its own parking. Gas pumps don't require additional parking. and take up comparably little space.

By: 517

517 — Thu, 15 Dec 2005 08:22:53 -0800

It's common in the mid-west.

By: crosten

crosten — Thu, 15 Dec 2005 08:30:12 -0800

Giant Eagle supermarkets in central Ohio (and probably elsewhere in their market areas) discount their gas 10 cents a gallon for every $50 you spend in the store and use their loyalty card. Works out to be a pretty nice perk if you shop there often (and don't mind giving up your privacy to a loyalty program).

By: Makebusy7

Makebusy7 — Thu, 15 Dec 2005 08:31:35 -0800

Stop and Shop supermarkets sell gasoline here in CT.

By: jerryg99

jerryg99 — Thu, 15 Dec 2005 08:32:09 -0800

And gasoline can be a loss-leader that brings in more customers:

Grocery Store X sells gasoline at cost (or at least cheaper than a regular gas station).

Grocery Store Y doesn't sell gasoline.

By selling gasoline at cost or very competitively, Grocery Store X is going to get more people in the parking lot, hence, more likely to shop for groceries inside. Consumer gets a deal on gas and added convenience, Grocery Store X gets more customers.

By: octothorpe

octothorpe — Thu, 15 Dec 2005 08:35:22 -0800

The Giant Eagle chain in western PA sells gas but not at their supermarkets, they've opened separate gas station/quicky mart type places. They have this deal where you get a $.10/Gallon discount for gas for every $50 you spend on groceries. Since there is nowhere else to buy resonable groceries anyway, I've been buying gas there and getting $0.8 to $1.00 off per gallon.

On preview, what crosten said. Although I didn't know that the big bird was in Ohio too. (lived in Pittsburgh for 16 years and have never driven over the border to ohio!)

By: djgh

djgh — Thu, 15 Dec 2005 08:36:30 -0800

As has been said, it's common in the UK. Supermarkets can leverage their buying power (e.g bulk discount) and sell it profitably. They can also use it as an incentive to get people to shop - spend $50 in our store, get a $0.10 per gallon or something. People are always on the look out for cheap fuel, so it's just another way of shifting their goods.

It's good for supermarkets because traditionally they have large parking lots - therefore, they can easily build a gas station. Drive-thru, because it discourages impulse buying. If you drive-thru, you know what you want, and generally it's not a lot. No one will make a big shop, and it ties up members of staff who would be more valuable (i.e selling goods of higher value) from the normal registers.

By: Sfving

Sfving — Thu, 15 Dec 2005 08:37:37 -0800

I've seen a lot of supermarket gas stations popping up in suburban Omaha, Nebraska. Mostly our Hy-Vee chain is the culprit - they're digging up a patch of parking lot at each location and building a gas station and smaller convenience store. Sam's Club seems to be doing this as well.

By: smackfu

smackfu — Thu, 15 Dec 2005 08:42:51 -0800

Stop and Shop supermarkets sell gasoline here in CT.

Yes, and they give a $0.05 discount if you use your Stop and Shop card. This:

a) Gets a lot of traffic, since they have the lowest prices.
b) Encourages people who don't shop their regularly to get the store card.
c) Adds gasoline purchase data to their tracking database.

By: Alt F4

Alt F4 — Thu, 15 Dec 2005 08:54:37 -0800

Are the gas stations manned? Or are they simply done by credit card? (Sorry if that sounds like a dumb question. There's more to it, but I'm just curious.)

By: Carbolic

Carbolic — Thu, 15 Dec 2005 08:54:52 -0800

It's very common in Memphis. At least one also has a convenience store in the parking lot.

By: beagle

beagle — Thu, 15 Dec 2005 08:57:00 -0800

supplemental to smackfu's list:

d) diverts business from the (now pretty much) standard convenience store/gas station, so customers will buy their cigs and gallon of milk at the supermarket instead of the 7-11. Or, as several have indicated, it tacks a fullscale convenience store onto the supermarket.

By: Crackerbelly

Crackerbelly — Thu, 15 Dec 2005 09:15:15 -0800

AltF4 - they are manned here in the Northwest. And some but not all feature a convenience store.

By: jmd82

jmd82 — Thu, 15 Dec 2005 09:25:20 -0800

In Geogia, ditto on the manned super-market gas pumps. Usually I see Murphy USA tied in with Super Wal-Marts around here and they tend have have a very small convenience section with just pop and maybe some chips.

By: smackfu

smackfu — Thu, 15 Dec 2005 12:18:36 -0800

They need to have a cashier. Way too many people buy gas with cash.

By: Alison

Alison — Thu, 15 Dec 2005 12:26:26 -0800

The Giant Eagle discounts might go away. Gas station owners have filed a complaint under the Unfair Sales Act.

By: t0astie

t0astie — Thu, 15 Dec 2005 15:48:02 -0800

It's common with both the big supermarket chains in Australia.

They also now own roadstops (petrol stations with diners) where trucks hauling their goods have to fill up.

So, p'raps there are some advantages for the supermarket with haulage costs too.

By: jsteward

jsteward — Thu, 15 Dec 2005 15:49:42 -0800

Common as dirt in South Central TX (San Antonio/Austin).

By: Opposite George

Opposite George — Thu, 15 Dec 2005 16:19:43 -0800

Yes, and they give a $0.05 discount if you use your Stop and Shop card.

And 10 cents/gallon on premium (yes!)

Why gas vs. fast food? The Stop-and-Shop gas stations typically only use one employee (compare to how many you need in your typical Mickey-D's.) Management costs are much lower (the existing store manager can easily handle scheduling gas deliveries whereas a restaurant would require a full-time manager.) Also, the station has a smaller footprint in the lot and lower setup costs than a restaurant would (In fact, the Orange, CT Stop-and-Shop gas station uses a facility that predates Stop-and-Shop gas so that station's setup costs probably consisted of changing the signs and the pumps.)

Both gas and fast-food are pretty thin-margin businesses that rely on a lot of business to turn over a good profit. If, as others have pointed out, the purpose is to get people to the store (it works for me,) the station might not even have to break even to raise the store's bottom line.

By: attercoppe

attercoppe — Thu, 15 Dec 2005 21:44:29 -0800

This is common with Wal-Mart and Sam's Clubs in Missouri. As Sfving mentioned, this is increasingly common with Hy-Vee (still a midwest-only chain, based in Des Moines). The town I'm from in NE Missouri seems to be a sort of testing ground for all sorts of trial things by chains both national and regional. The Hy-Vee there was (I believe) the first (it was at least one of the first) to get a gas station/convenience store out front. They also have a small nursery on one side of the parking lot, again a first for the chain. The Wal-Mart in the same town has a gas station as well, and as far as restaurants? There's a McDonald's in the other front corner of the WM lot - doesn't take up much more room than the gas station on the other side. And in fact, there was a McDonald's inside that Wal-Mart for a while, but since that was number three for a town with a population under 20,000 it didn't end up making it.