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Higher Gas Prices Fueling Revenue Divergence

With higher gas prices definitely a pain point for consumers, higher gas prices may fuel concern for retailers.  Higher gas prices usually reduce a retailer’s ability to collect margin on the purchase, in addition to limiting funds left in shopper wallets for discretionary purchases.  In today’s Insight Flash, we take advantage of Consumer Edge’s unique ability to separate out fuel purchases at gas pumps from other purchases inside the retailer’s store in both the US and UK in order to examine how much the recent price increases have affected the mix of fuel versus ex-fuel sales, whether there has been an increase in the top ticket buckets for fuel purchases, and how demographics differ between fuel purchasers and in-store purchasers.

Looking at six of the top fuel retailers in the US and UK, there is a noticeable spike in fuel pump percent of total sales in the last 35 days as prices have begun to rise.  In the UK, Asda, Sainsbury’s, and Tesco have all seen a delta of around 1.5% more sales coming from fuel in the 35 days ending 3/26/22 versus the 35 days prior.  In the US, the jump has been more dramatic.  Costco and Sam’s Club have both seen a delta of around 3%, while Kroger is seeing a delta of 4% more sales coming from fuel versus the prior 35 days.

Fuel vs. Ex-Fuel Sales

Note:  Spend directly at gasoline pumps at each retailer as a percentage of fuel + ex-fuel brand sales; Tesco numbers don’t include bank or mobile

Although average fuel prices per gallon have gone up, some consumers can no longer afford to fill their tanks each trip and are making the same-priced transactions for fewer gallons but filling up more often.  In the UK and the US, the top ticket bucket above £50 and $50 respectively has risen as a percentage of transactions nonetheless.  Again, the impact has been much more dramatic in the US.  In the UK, the top ticket bucket rose the most at Asda from only 25% of transactions in the 35 days ending 2/13/2022 to 29.1% of transactions in the 35 days ending 3/20/2022.  It only rose by a delta of 3.2% at Sainsbury’s and 2.6% at Tesco.  In the US, Kroger and Sam’s Club saw similar lifts from about 20% of transactions to just over 30% of fuel transactions above $50.  Costco saw that bucket rise from 28.1% of transactions to now having 39.3% of fuel transactions over $50.  

Ticket Buckets

Note:  Spend directly at gasoline pumps

For a given retailer, how different are those shoppers entering the store or shopping online versus those who only fill up their tanks?  At Costco, gas shoppers are more likely to be in the lowest income bucket than store/online shoppers.  They are about equally as likely to have children.  At Kroger and Sam’s Club, ex-fuel shoppers in stores and online are more likely to be lower income.  However, while Kroger fuel shoppers are more likely to have children in their households, Sam’s club ex-fuel shoppers are more likely to. 

Demographics

Note: Spend directly at gasoline pumps versus spend inside each retailer; 3/18/2021-3/17/2022