Gas-reward discount programs are growing

  • Article by: STEVE ALEXANDER , Star Tribune
  • Updated: February 12, 2010 - 11:08 PM

After a local test with Rainbow, BP is rolling out its program nationwide. Shell and Kroger are launching their own version.

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If you're looking for redemption in these troubled times, BP gas stations have a deal for you.

After a year of testing in the Twin Cities and Wisconsin, BP is beginning a nationwide rollout of fancy gas pumps that automatically redeem grocery store gas-reward cards, sometimes for hefty discounts on fuel.

Under a program called Fuelperks, Minnesota Rainbow Foods stores offer a 10-cent-a-gallon discount for every $50 spent at Rainbow and give consumers a plastic discount card containing a computerized ID number.

BP and Rainbow aren't the only ones offering fuel for food. Shell Oil stations announced Friday they were partnering with Kroger Co., the largest traditional grocery chain in the country, to offer fuel discounts. That program rolls out Monday in five markets in three states but could eventually expand to all of Kroger's markets.

"To Americans, saving money on gasoline is like finding dollar bills on the street," said Tom Kloza, who tracks loyalty programs for Oil Price Information Service. "It has incredible allure."

Ryan Short, 21, of Minneapolis, said he saved 70 cents a gallon last week by using his Rainbow card at BP, or about 25 percent of the price of gas that day.

"It was really nice. I usually spent about $40 to fill up my car, and I ended up paying about $9 less," Short said. "Of course, I had to buy $350 in groceries to get that 70 cents a gallon off. But you've got to eat, and it's a nice little bonus."

It takes a smart gas pump

At about 80 Twin Cities BP stations, new smart gas pumps read the card ID numbers and send the information electronically to a Rainbow computer database. The database confirms the size of the gas discount and the pump automatically reduces the price per gallon by that amount.

Roundy's Supermarkets of Milwaukee, which owns Rainbow Foods, didn't return a call about the program.

Over the past decade, many grocery stores, including Kroger, have added their own fuel pumps, following the success of Costco and Sam's Club, which offer discounted fuel to members.

In the Twin Cities, Cub Foods shut down an alliance with Holiday stations in November. The deal had begun two years earlier, when gas prices were soaring. But the gas discount was only half of what Rainbow is offering and required a paper coupon that had to be taken inside.

Supervalu, of Eden Prairie, which owns Cub Foods, could not be reached to explain why it dropped its program.

But BP said it's confident enough in Fuelperks to make a big national investment in it over the next year, working with Rainbow and some other grocery chains not found in the Twin Cities.

'Stacking' gasoline discounts

David VanWiggeren, BP's card marketing manager in Chicago, said the company will spend an average of $20,000 per gas station to install the pumps that accept the discount cards. Multiply that by 10,000 BP stations across the country, and it's a $200 million investment.

VanWiggeren believes consumers like the Fuelperks program because they can "stack" discounts on the card, meaning they add discounts from several grocery store visits. If a consumer gets 10 cents off by spending $50 a week, at the end of three weeks he or she can get a 30-cents-a-gallon discount.

"It allows consumers to take control and use the discount when they want to in order to get relatively high rewards," VanWiggeren said. "If they get $1.50 off, they can tell their friends they only paid 98 cents a gallon for gas. It creates a buzz."

Ashley Guttuso, 21, of Lauderdale, a regular customer at a Rainbow store near her home, said the discount card is "an added perk, one of Rainbow's better reward programs. Being able to use the card at the gas pump is really nice because it's more convenient."

BP hopes that redeeming consumer grocery store cards will "create feelings of goodwill toward us," VanWiggeren said. And BP hopes it will work with more than just grocery store cards.

For more than just fuel

"We think this is potentially a much bigger opportunity than just redeeming fuel cards for grocers," VanWiggeren said. Other businesses that might be interested in partnering with BP include home supply stores and fast-food restaurants, he said.

He also thinks the appeal of redeeming discount cards will last well beyond the recession, a time when consumers are naturally focused on saving money.

"Gas is something people want to save money on. Gas prices are lower when the economy is down, but people are trying to save money. But when the economy goes up, gas prices go higher and people again want to save."

The Associated Press contributed to this report. Steve Alexander • 612-673-4553

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