Fuel Price Lock Program Boosts Sales for North American 7-Eleven Stores — OPIS

A 7-Eleven Inc. program that allows members of the company's fuel rewards program to lock in a lower price for their next fuel purchase has almost doubled store visits by participating customers, according to parent Seven & I Holdings Co.

The retailer and convenience store operator introduced the "Fuel Price Lock" earlier this year to members of its 7Rewards loyalty club. Under the promotion, 7Rewards members use the 7-Eleven app to lock in a price that can be redeemed at participating 7-Elevens in the user's area. The offer expires within four days. If the customer visits a 7-Eleven with a gas price lower than the locked price, then the lower price will be honored.

The program has also boosted in-store traffic, the company said, with 57% of participants in the Fuel Price Lock purchasing items and visiting stores at a frequency rate 90% above that of regular 7Rewards members.

"We have been able to observe positive aspects associated with this program," Ryuichi Isaka, president and representative director of Seven & I Holdings Co., told analysts in a call earlier this month to discuss the Japan-based company's financial results for the fiscal second-quarter ended Aug. 31.

In addition to locking in their fuel price, customers in the program receive digital coupons for fresh food and beverages to promote in-store sales, Isaka said.

The price lock program was developed in response to high inflation, which has caused declines in U.S. consumption, Isaka added.

He said inflation remains high and its impact on consumer spending "is a cause for concern."

"We are seeing changes in consumer behavior, such as, for example, strong demand for affordable, high-quality food and beverage and for competitively priced private brands. Also on the rise is the desire on the part of consumers to purchase competitively priced merchandise in a convenient way using their smartphones against the backdrop of a shift in focus toward value."

7-Eleven's fuel business suffered a "significant" drop in fuel gross profit, following "historic" conditions in the gasoline business last year, he said. "Last year, Russia's invasion of Ukraine impacted the crude oil market. This, coupled with inflation, led to historic record highs in cents per gallon. It was against this backdrop that cents per gallon decreased significantly in Q1 of FY2023," Isaka said.

He added that retail fuel prices improved significantly in fiscal Q2, up 4 cents year to year, weaker Q1 prices led the company to post a negative $255 million gross fuel profit in the first six months of its fiscal year.

7-Eleven's retail fuel prices in the second quarter were "in line" with the year-ago results, Isaka added. And while Q2 fuel volumes were down 3.5% year to year, retail gross profits "exceeded last year's level," he said.

This content was created by Oil Price Information Service, which is operated by Dow Jones & Co. OPIS is run independently from Dow Jones Newswires and The Wall Street Journal.

--Reporting by Donna Harris, dharris@opisnet.com; Editing by Jeff Barber, jbarber@opisnet.com

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October 25, 2023 11:06 ET (15:06 GMT)

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