The spike has pushed more shoppers to rely on these chains to fill up their tanks, say the companies, retail analysts, and fuel experts. Gas prices at warehouse clubs can be as much as 30 cents lower than traditional gas stations, and the chains offer members coupons to use in their stores when they fill up. Gasoline sales at the warehouse clubs are an important part of their business and draw customers inside.
“People are seeking out the clubs because of the gas,” said Michael Baker, a retail analyst at D.A. Davidson. “It’s US consumers’ nature to go out of their way for lower gas prices.”
Costco, for example, is typically 20 cents a gallon below the market average, according to Tom Kloza, the global head of energy analysis at IHS Markit’s Oil Price Information Service. BJ’s says it’s 10 cents below average.
These companies are “winners when gasoline prices go skyward,” said Kloza.
Gas is a notoriously low-margin business, but retailers can make money from selling huge volumes of gas — even while charging much less than independent gas stations, said Kloza, adding that it’s not unusual for sales at a Costco location to reach up to 1 million gallons a month compared to an average of 80,000 gallons a month at typical gas stations.
Despite their big-brand names, the vast majority of Exxon, Chevron, BP and Shell gas statons are independently owned, so they aren’t able to make a volume play like wholesalers do. Although wholesalers are able to make a profit on gas, they’re not making much: Costco, for example, reported that gasoline has a lower profit margin than the rest of its business. Rising gas prices typically help Costco’s sales, but hurt its profits.
“When there are inflationary pressures and prices are going up, people look to save on gas,” said Richard Galanti, Costco’s chief financial officer. For every 100 people who come to Costco to fill up on gas, more than half go shop inside afterwards, he said.
Gas sales at BJ’s Wholesale Club jumped 20% during its most recent quarter ending October 30 compared with the same time a year ago.
BJ’s is growing market share in gasoline “in leaps and bounds,” CEO Robert Eddy said on a call with analysts Thursday. When gas prices…
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