Wal-Mart's One Dime Gasoline Discount

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