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Kroger's loyalty plan is fuel for thought
- Lisa Biank Fasig
The Kroger Co., the largest traditional supermarket chain in the country, is preparing to release its fourth-quarter and annual earnings March 1, and the results will have as much to do with filled carts as filled gas tanks.
The Cincinnati-based chain, which operates about 2,500 stores under the brands Kroger, Ralphs and Fred Meyer, is expected to post its 33rd consecutive quarter of sales gains. In the third quarter, same-store sales rose 5 percent. Kroger expects similar gains in the fourth quarter.
That figure excludes gas sales, but that doesn't mean Kroger's fuel stations aren't contributing to its banana and toilet paper sales. In actuality, Kroger's fuel is driving store sales, because purchases in the store translate to pennies off the pump, thanks to Kroger's loyalty program. Buy $100 worth of groceries, gets 10 cents off a gallon.
And with a gallon approaching $4, more and more people are willing to shop where their cereal fortifies their gas tank, as well as their kids.
Indeed, news outlets from Indiana to Alabama have reported this week that long lines of cars have clogged Kroger fuel locations, waiting to fill up on lower-priced gas, the cost of which is offset by their in-store purchases.
It will be an ongoing, tricky balancing act for Kroger. Consumers living too close to the bone will have to pass up on Mallomars and other supermarket treats in favor of gas. Or they'll trade down to lower-cost brands. But Kroger can at least vie for those fuel dollars.
On March 1 we'll see just how well its food for fuel strategy is working. Analysts expect total fourth-quarter sales of $21.4 billion, up 7.6%.
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