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PORT WASHINGTON, N.Y. -- High-volume retailers continue to cut into the gasoline market dominance of traditional branded fuel stations.
For the first six months of the year, HVRs have increased its overall gasoline market share to 5.5 percent -- from less than 1 percent only a few years ago, reported NPD Automotive Products Group, a division of market information company The NPD Group.
As is well known without the convenience channel, big-box retailers -- mass merchandisers, grocers and clubs -- continue to use their bulk to bring down retail gasoline prices, reducing traditional margins as part of an everyday-low-price strategy.
According to the NPD study, which through its Motor Fuels Index surveys more than 200,000 fuel purchasers a year, 63 percent of all consumers identify price as the main reason for choosing a brand of gasoline. In comparison, 95 percent of HVR gasoline customers say price was the main reason for their brand choice.
"This shift in consumer behavior corresponds to the volatile retail gasoline pricing that began in February of 1999 when the average price was around $1.00 per gallon and peaked in May of 2001 when gasoline averaged $1.80 per gallon," the report said.
Interestingly, the study spotlights five states where big-box retailers have garnered a 10-percent market share or greater. Through June, HVRs accounted for 14.1 percent of gasoline sales in Texas, arguably the most competitive state clashing major oil companies and powerful big-box brands like Albertsons and Sam's Club. In Washington State, HVRs took home 13.9 percent of sales, Arkansas 11.4 percent, Tennessee 11.1 percent, and Kentucky 10.2 percent.
Among other findings, NPD said Costco is now the third largest gasoline retailer in San Diego, behind only ARCO and Chevron. Sam's Club has 7.7 percent of the market in Memphis and is the third largest gasoline retailer in that metropolitan area. HVRs hold 14 percent of the gasoline market in Houston. These are all areas with vehicle-dependent populations.
"Unlike the traditional gasoline service station whose profit margin is gasoline dependent, HVRs can operate at much lower retail prices," said David Portalatin, spokesman for NPD Automotive Products Group. "By taking advantage of consumer demands for lower-priced gasoline, HVRs can drive tremendous traffic volume to their sites"
He noted that it is not uncommon to find big-box retailers selling 500,000 to one million gallons a month, as opposed to a mainstream traditional gasoline operator who sells 75,000 to 100,000 gallons in the same period.
Wal-Mart's Mirastar brand, a joint venture with Tesoro Petroleum, has expanded to 64 stores in 7 states.