Don’t let gas price disrupt store trips

Articles
May 02, 2011

Don’t let gas price disrupt store trips

People drive less as gas prices rise. Here’s a new incentive that could lure shoppers across zip codes.

The steady rise of gasoline prices has consumers recalculating the importance of ‘convenient location’ when it comes to selecting a supermarket. Distance is important to store choice for 90% of consumers, although just 36% classify it as ‘very important,’ according to the National Grocers Association 2011 Consumer Survey Report.

To The Lempert Report, which conducted the survey for NGA, this means most people would willingly drive further to shop if (a) other factors allure enough, or (b) the cost of driving further is taken out of the equation.

Let’s look at option B, which could directly benefit trip counts despite a common desire to drive less and save on $4+ per gallon gas. Why not entice shoppers from other zip codes with incentives based on miles driven to the store?  We see this idea as a timely evolution of gas rewards programs, which have succeeded for so many chains. 

When shoppers check out with their frequent shopper card and zip code (verifiable with a driver’s license), supermarkets could reward them with the equivalent of a gallon of gas if they drove 5 miles or more one way and made a minimum purchase.  Supercenters or clubs could reward according to the same principle, but with different thresholds because their distance appeals are greater and their operating margins are smaller.

We offer this idea because an NPD Group study suggests 60% of consumers are driving less, and notes they’ve bought 1.2% fewer gallons than a year ago. With social unrest in oil-producing nations and warmer months and the U.S. driving season ahead, gas prices look to be climbing further. “If the current uptick in gas price is sustained, we can expect consumers to begin implementing some key changes like reducing or consolidating shopping trips...In the case of a prolonged spike above $4, we’d expect even more significant changes….” said David Portalatin, industry analyst for NPD’s automotive aftermarket business.

When gas prices were similarly high in 2008, half of the U.S. drivers (49%) reduced or consolidated shopping trips and implemented other savings behaviors. “It comes down to the simple economics of share of wallet,” he noted.