PRINT THIS STORY:

CHANGE TEXT SIZE:

SUPERMARKETS, WAREHOUSE CLUBS GAS UP

Retailers can no more control gas prices than they can hurricanes in the Gulf of Mexico, right? Think again.

Grocery stores and warehouse clubs in Europe have long used below-market gas prices at outparcel stations to lure customers into their stores, and in recent years the trend has been picking up speed in the United States.

As prices go up, so does the drawing power of retailers that offer the cheapest fuel, says Brad Proctor, founder of Gaspricewatch.com, a Web site that employs “spotters” to post the lowest gas prices in local markets nationwide. This summer Proctor’s site posted the gas prices and promotions of a number of retailers, including Albertsons, BJ’s, Costco, Kroger, Safeway and Sam’s Club. Consumers have responded: The site’s visits grew from 1 million for the entire month of July to 1 million per day in the aftermath of Hurricane Katrina.

Because shoppers are more likely to consolidate their trips when gas prices are high, the strategy makes particularly good sense for retailers that offer one-stop shopping, says Proctor. Tailored promotions, such as store coupons printed on gas receipts, can be used to entice consumers into stores. “We’re seeing things like Kroger saying, ‘Buy $100 worth of groceries and get 10 cents [per gallon] off of your next gasoline purchase,” Proctor said.

Not every retailer can engage in below-market gasoline pricing, however. “We’re starting to see [petroleum industry] lobbyists get very aggressive in various states to try to say that you cannot do that,” Proctor said. “There are 13 states right now that set some kind of minimum pricing standard so that retailers cannot sell [gas] at a loss. Some states, like New Jersey, will not allow warehouse clubs to have a member price.”

— JG