Wal-Mart’s One Dime Gasoline Discount

By Douglas A. McIntyre Updated Jun 29, 9:33AM EDT · Published Jun 29, 6:26AM EDT

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It may not seem like much when gasoline costs $3.70 per gallon of regular, but Wal-Mart will cut gas prices by a dime for the next 90 days. While it may not do much to help drivers financially, it is an extremely clever way to generate positive publicity for the world’s largest retailer. The chain said it would offer “a 90-day Rollback at the pump to give customers a savings of 10 cents a gallon on all fuel, gas and diesel, at participating Murphy USA and Walmart gas stations. The discount applies to gas purchases made when using a reloadable Walmart gift card, reloadable Walmart MoneyCard or Walmart credit card from June 29 through September 30, 2011.”

The program may, in the minds of some people, be a kind of cheating. Drivers who have not bothered to get a Wal-Mart card can’t get the discount. They would have to first actually go into a Wal-Mart and sign-up, or perhaps people can do it on the internet. Either way, Wal-Mart gets a lot of personal data from people and may make some sales as people pass merchandise in its stores on the way to sign-up for the privilege of saving that dime.

The trade is an excellent one for Wal-Mart. It obviously marks up the gasoline, but it still loses that dime. The value of a person’s name, address, and other personal information must be worth more than ten cents. And, the offer will probably drive more traffic into Wal-Mart stations.

Wal-Mart’s domestic store sales are in deep trouble. Monthly same-store sales have dropped for two years. CEO Micheal Duke has not had any success as he has tried to reverse the trend. He can claim that domestic sales are offset by growth overseas, but that obscures the fact that Wal-Mart is being beaten in its home market where it has been the dominant player for years. Rivals such as Costco (NASDAQ: COST), Target (NYSE TGT), and even Amazon (NASDAQ: AMZN) have taken share from Wal-Mart. Duke’s “everyday low pricing” and dozens of other promotions have largely failed.

Dime-off gas will get Wal-Mart a lot of press coverage, and the company will appear to be generous at a time when consumers are pressed by gasoline prices. But, when the offer is examined more closely, Wal-Mart gets much more than it gives.

Douglas A. McIntyre

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About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.