Supermarkets snipe away in own version of oil war

By John Drinnan

Friday 16th May 2003

The petrol station forecourt is emerging as an important battleground between supermarket operators Progressive Enterprises and Foodstuffs.

Progressive is committed to its joint initiative with Gull, which takes the Woolworths branded stores on to Gull petrol forecourts.

Two years after startup in July 2001, there are 18 "Quickstops" and eight of the "micro" stores that offer a smaller choice of goods.

The marketing strategy is based on many consumers wanting the convenience of being able to pop in and get their provisions without having a full supermarket experience.

Meanwhile, Foodstuffs is embarking on an ambitious programme with BP to establish Pak 'N Save gas stations at the majority of its 35 supermarket sites.

Two are already up and running in Hamilton and one in Tamatea, Hawke's Bay.

Rotorua is next on Foodstuffs' shopping list and Foodstuffs managing director Tony Carter said most sites were capable of incorporating the new service stations. "Obviously it does not work if you are inside a mall."

Subject to planning consents Mr Carter expected significant progress this year, though the details remain confidential.

He said experience so far had shown most of the custom for Pak 'N Save was through the supermarket rather than passing trade.

Partly this was because the petrol stations were built within the supermarket precincts but it also fitted the purpose of the scheme, he said.

Under this, Pak 'N Save loyalty scheme customers receive a rebate on petrol or fuel at their branded stations.

For instance a grocery spend of $200 would give a 6c-a-litre discount off Pak 'N Save fuel. The bigger the spend the cheaper the gas.

The supermarket-branded petrol station is well established in the UK and the US as well as in Australia where a joint Woolworths venture, similar to Pak 'N Save BP, has been successful.

Across the Tasman an announcement is imminent that the Coles chain is to enter a venture to close the gap with Woolworths.

In this country there was some small fanfare last week when Progressive launched its onecard, an expanded and streamlined version of the old Foodtown loyalty card with rewards and which incorporates the Woolworths supermarkets bought last year.

The initiative replaces Kachingo! which Progressive canned two months ago.

Foodtown and Woolworths shoppers earn one point for every $10 spent, with a reward issued three times a year for each 200 points.

The Foodtown card and now onecard are Progressive's answer to Fly Buys available at Foodstuffs' Super Value chain.

But the task of taking on Pak 'N Save petrol falls to the Woolworths Gull stores where onecard does not apply.

The petrol wars are already being played out in Hawke's Bay where Progressive is offering Gull petrol discounts for purchases from its Woolworths-Gull service station joint venture stores.

The onecard programme is not available at the Woolworths-Gull stores and there are no indications from Progressive that onecard will offer petrol discounts.

But Progressive managing director Ted van Arkel acknowledged the Hawke's Bay petrol discounts were a response to competition in the region where Pak 'N Save had a petrol outlet.

Mr van Arkel said that Progressive approach where the Woolworths store sets up next to the service station had worked.

But he could also look at the experience across the Tasman where supermarket-branded petrol has been a success.

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