Safeway and Chevron announced a partnership Wednesday to offer Northern California customers discounts on gasoline, delivering some much-needed relief at the pump as Bay Area gas prices stay above $4.
The program will be available at more than 650 gas stations in Northern California. Fuel rewards programs, already offered by most large supermarket chains and big-box retailers, aim to boost sales and increase customer loyalty by appealing to shoppers' emotions around rising gas prices.
"For a lot of customers, gas is another form of currency," said Jeff Leonard, spokesman for the National Association of Convenience Stores. "There's an emotional cachet tied to gas. They'll step over a quarter at the gas station but drive five miles to save a nickel."
Safeway shoppers can earn gas discounts by shopping with their Club Card and earning points for most grocery, pharmacy and gift-card purchases. Customers can get up to 20 cents off per gallon at Texaco, which San Ramon-based Chevron owns, and Chevron stations.
"The rollback happens at the pump, right there in front of their face," said Mike Vomund, Chevron's general manager for retail west operations.
Pleasanton-based Safeway has a reward program at Chevron stations in Southern California and Las Vegas, and partnered with Exxon Mobile in Chicago and cities on the East Coast. Safeway also has it own brand of gas stations, but experts say the profit at these stations is so minimal that supermarkets are better off partnering with national oil companies.
Fuel reward programs have taken off in almost every market in recent years. Safeway, in fact, is one of the later arrivals. Save Mart Supermarkets, which operates Lucky Supermarkets and FoodMaxx stores, launched a fuel reward program with Shell in 2011. Sam's Club, Walmart and Giant, a grocery chain on the East Coast, also offer gas discounts in exchange for shopping at their stores.
"When fuel prices are starting to go up, they tend to roll these things out," said supermarket research analyst David Livingston.
Gas prices hit an all-time high in the Bay Area last fall, with pumps showing an average $4.61 per gallon. The average price in San Jose and Oakland on Tuesday was $4.07, according to GasBuddy.com.
Livingston said fuel reward programs are more of a marketing gimmick than a real money-saver, particularly at Safeway, where prices can be on the high end for larger grocers.
"In reality, consumers are generally better off going to Walmart and paying less on groceries and paying full price for gas," he said.
But for the most part, the programs have worked. Consumers get stressed about climbing gas prices, experts say, and the promise of a fuel discount will pull them into almost any store. Giving customers more reasons to shop at Safeway will help the supermarket, which has posted strong gains for the past three quarters, keep its edge in an increasingly competitive market.
"We're just trying to make a good deal," said Keith Turner, director of public and government affairs for Safeway's Northern California division. "Loyalty is everything these days."
Contact Heather Somerville at 925-977-8418. Follow her at Twitter.com/heathersomervil.