FINANCE

Report: Ukrop’s Cuts Back on Gas Discounts

BY CSA STAFF

Richmond, Va. To compensate for dropping fuel prices, Ukrop’s Super Markets cut the savings offered in its gasoline discount program by 50%, according to an article in the Richmond Times-Dispatch.

The grocer launched its “fuelperks!” loyalty program in June when gas prices were exceeding $3 per gallon. As shoppers hit a $50 spending threshold, which could be reached during multiple store visits, they would earn a 10-cent discount.

On Tuesday, Ukrop’s Web site reported that customers can “save 5 cents per gallon with every $50 spent at Ukrop’s.” Shoppers have three months to redeem their fuelperks!, after they have been earned.

“This adjustment coincides with the more than 50% reduction in the cost of fuel since we began the program. With this change, fuelperks! remains the best program in the market to save on gas,” Robert S. Ukrop, the chain’s president and CEO, said in a letter to customers.

It is uncertain if Ukrop’s will extend the program beyond March 28 , the article reported.

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iPhone coming to Target?

BY CSA STAFF

The increasing tendency on the part of Apple to sell its products through mass market retailers suggests that its popular iPhone could eventually be available at Target stores.

The iPhone was initially sold at Best Buy, and then last week distribution was extended to Walmart, where a major launch involved the use of special in-store fixtures and prominent positioning in advertising including the front cover of the retailer’s most recent circular.

From Apple’s standpoint, the move increases consumer access to the popular product, whereas for Walmart, the iPhone brings added brand cache to an electronics department that has undergone a significant makeover the past few years. Apparently, the brand halo of Apple was worth a considerable amount to Walmart as the company agreed to sell the iPhone for only $2 less than the price at which it is offered in Apple’s stores. However, as a company keen on protecting the image and equity of its brand, an Apple distribution agreement with Target would appear to have made more sense since the brand identities of Target and Apple are more closely aligned, even if the short-term sales potential with Walmart is greater.

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Prediction: Target sells credit

BY CSA STAFF

A deteriorating credit environment could make it more likely that Target will sell the remainder of its credit card receivables, according to Citigroup investment analyst Deb Weinswig. That possibility and nine others were listed in a report highlighting 2009 predictions. According to Weinswig, the weak performance of the credit segment in 2008 and continued headwinds in 2009 may lead Target to sell its remaining receivables, possible at fire-sale prices. JP Morgan Chase would be a likely buyer in our view given its significant current investment in the portfolio as well as its strong consumer credit business.

On May 19, 2008, Target sold a 47% undivided interest in its credit receivables to JP Morgan Chase for an initial investment of $3.6 billion.

As for some of Weinswig’s other notable predictions, look for falling membership income at warehouse clubs, increased private brand penetration at Walmart and deteriorating drug store profitability due to prescription drug pressures.

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