In the upcoming issue of COLLOQUY — soon to arrive, we promise! — you’ll find a cover story I wrote about today’s “squeezed” middle class that craves value from loyalty program memberships and retail relationships.
That value isn’t necessarily derived from lower prices — though, of course, price is a strong loyalty motivator for consumers. As a giant retail leader that can compete on price better than any company thanks in large part to its economies of scale, Walmart has enjoyed a serious advantage with its Every Day Low Prices.
Over the past couple of years, more and more grocers, drugstores and other retailers have looked to compete with Walmart through other types of discounts and incentives — particularly those related to fuel. With the economy still struggling and gas prices going sky high, consumers have been particularly responsive to cents-off-per-gallon offers when they do their grocery shopping or buy at the local convenience store.
The news, then, that Walmart itself is joining the fuel incentive craze through a summer-long 10-cents-per-gallon discount at participating stations nationwide comes as big news for businesses looking to compete for share of wallet.
The discounts are available over the summer at participating Murphy USA and Walmart gas stations, and applies to gas purchases made when using a reloadable Walmart gift card, reloadable Walmart MoneyCard® or Walmart credit card from June 29 through September 30, 2011.
“Our customers have told us that high gas prices are a top budget concern, nearly as large an expense to their households as food and groceries,” said Stephen Quinn, chief marketing officer. “We listen to our customers and because we know they are feeling squeezed by gas prices, we’re implementing this gas Rollback to help them save, especially during high travel summer months.”
What does this mean for retailers looking to compete with Walmart? After all, competitors have already struggled to compete with Walmart on price through these discounts. Now, Walmart is offering fuel incentives as well. How can these competitors stand out and differentiate themselves from the pack, now that nearly everyone — including Walmart — offers the same type of discount?
Clearly, the answer is that competing on price is not the answer, since it is a battle that can’t be won against a retail behemoth that can beat prices and offer additional discounts at every turn.
However, Walmart does *not* have a loyalty program and can’t tie the fuel rollbacks to long-term loyalty in the way a retailer with a well-run loyalty program can. That offers an opening for the forward-thinking loyalty marketer: Can you tie a fuel rollback, which is really a straight discount, to a long-term loyalty incentive based on return trips? Or, can you also take the straight fuel discount to the next level, through targeted, CPG-tied bonus promotions that can’t be found next door? For our upcoming cover story, we spoke to one 200-store grocery chain in the southern U.S., Bi-Lo, that is doing just that through its FuelPerks! program.
The bottom line is, as we’ve said before, that you can’t just lower prices in the age of Walmart — you have to raise your game. Fuel incentives have soared in popularity, but if you just follow the herd or you’ll risk being unable to differentiate yourself in the marketplace.
