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Several retailers in the Cincinnati area are using fuel promotions to draw traffic and build incremental grocery sales, according to a report in the Cincinnati Enquirer.
Locally-based supercenter operator, Bigg's, is offering $5 off a minimum purchase of $25 in groceries for shoppers who have a receipt for at least 8 gallons of gas bought at a United Dairy Farmers (UDF) station within the past two weeks.
Cincinnati-based supermarket chain Kroger and Grand Rapids, Mich.-based Meijer are also using gasoline promos to draw customers, the paper reported. Gasoline prices in the area are almost $3 per gallon.
Consumers are facing the double whammy of rising food prices (up 1.5 percent for food consumed at home over the year ended June 2006) and skyrocketing energy prices (up 4.2 percent from a year ago), according to ClearView Economics.
"Energy is mostly a non-discretionary item," said Ken Mayland, president of the Pepper Pike, Ohio-based economic consulting firm. "You have to heat your home. You have to put fuel in the car. This sets up the possibility of tremendous gimmick appeal. When you get 30 cents off each gallon of gas [from a grocer], you wonder if the can of peas went up a penny or two."
The paper reports that Kroger and Meijer are offering money off gas at their own pumps for shoppers who buy a certain amount of groceries or merchandise from them, while Bigg's and UDF have teamed up in a "Fuel Your Family" promotion that will last through August.
Bigg's entered into the pact with UDF because it is the only major supermarket chain in the region that doesn't have fuel stations, Bigg's president Steve P. Kaczynski told the Enquirer.
"We don't have a loyalty card, so we can't be specific, but we believe it has drawn some customers to stores and helps maintain loyal customers from migrating," Kaczynski said.
The promos vary, but all offer consumers savings when they buy gasoline or, in some cases, buy groceries and then gasoline. Kroger said the cost of the program is being funded from its normal promotional budget.
Bigg's and UDF are reaping the benefits of their program, according to the report. The volume of gasoline sold has risen each week since the program began, Frank Cogliano, senior vice president for Retail Stores Inc., parent of United Dairy Farmers, told the Enquirer.
Greater Cincinnati and Northern Kentucky has about 100 UDF stores.