As gas prices are hitting new highs, mainly during the holiday season, consumers are choosing to pump gas at large warehouse club stores instead. Retail chains such as Walmart offer the convenience of getting gas while shopping and have the ability to offer lower gas prices with their club memberships.
Retailers such as Walmart, BJ’s, and Costco offer gas at lower rates. Retail analysts and fuel experts say this is the reason why they are seeing so many customers buying gas.
Independent gas stations are generally individual franchises and they cannot afford to lower prices as they don’t have the turnover of a giant chain.
On Friday, gas prices soared to $3.41 per gallon. According to the AAA. This represents a 61 percent increase when compared with the average price last year. The Biden administration has asked for a probe to check whether oil and gas companies might have acted illegally to push up prices.
Although gas is a hot selling product, it is not seasonal or an impulse buying item and has low profit margins. Retail chains make money due to the huge turnover and can lower the prices, yet make money. CNN reported that gas accounts for about 10 percent of Costco’s overall sales and about 9 percent of BJ’s overall sales.
Walmart said they are trying to keep gas prices down to attract customers concerned about how much they’re paying at the pump, especially as federal stimulus benefits wane. Walmart CEO Doug McMillon spoke on an earnings call, and said “Gas prices are a concern. They’re up dramatically versus a year ago,” “The customers had money then. And at some point, that’s going to come to an end.”
Gas sales at BJ’s Wholesale Club, owned by Walmart increased 20% during this recent quarter ending October 30 compared with the same time a year ago.
BJ’s Wholesale Club is growing market share in gasoline “in leaps and bounds,” CEO Robert Eddy said on a call with analysts Thursday. When gas prices hit over $3 a gallon, “members love us” and shift their gas spending to the club.
Big Box warehouse club stores like Walmart offer 10 to 20 percent off a gallon of gas and usually will shop inside the stores, a convenience other gas stations do not offer.
Kloza also said that a Costco location could sell up to a million gallons of gas a month. Comparatively, a typical gas station could average 80,000 gallons a month.
