Bundling: Helping you get what you want and much more

Bundling products is a tried and true method of getting consumers to purchase certain goods, and it is no different for grocery stores. Recently, retailers have started bundling gas with their weekly grocery purchases. This has not always been an acceptable method to gain business. According to an Antitrust Law Blog article by Sheppard Mullin, grocery stores came under fire for the “practice of offering below cost discounts on gasoline conditioned on the purchase of a qualifying amount of groceries purchased in the store.” Concerns about this promotion centered upon loss-leader pricing, but this was ultimately thrown out as, “the court noted that the customer attracted to City Market's gasoline pumps was unlikely to be lured to buy other items in the store on the assumption that they were similarly low-priced. On the contrary, the structure of the program was such that the ability to buy discounted gas was expressly dependent on the prior purchase of a qualifying amount of groceries.” Since proven an acceptable practice, we have seen a surge in the gas and grocery bundling practices across the nation. It has become a method by which grocery chains are gaining brand loyalty. In the rough economic environment, pennies matter and if one retailer can offer gasoline for two or three cents less- consumers will flock and continue to frequent the retailer that can lessen the burden of filling up the tank.

Tops Markets is a perfect case in point: by bundling their grocery business with their gas business by means of their gas bonus points, they are securing consumer demand that otherwise may have been lost to the competition. They run promotions with their gas bonus points, which allow consumers to earn extra bonus points based on their expenditures during the specified time frame. The time frames encourage consumer foot traffic in the store, which help to sell goods around key events and holidays. Examine the Tops promotion above; it is no coincidence that they are running their gas bonus points special during the week immediately following Fat Tuesday. Typically, consumers hit the store midweek to prepare for their Mardi Gras celebration and they stock up on goods to get them through both their party and the remainder of the week. Tops gives their consumers a reason to make another trip by offering incentives that may convince those shoppers who are decently stocked with goods, to venture out to the store anyway so as to capitalize on the gas promotion.

- Courtney Hayward, Laura Heslop, and Katie Tretter