Safeway, the nation’s second-largest grocery chain, opened its first gas station on Oahu on March 20, undercutting the price of competitors by as much as 30 cents per gallon.
The Safeway-branded station near its grocery store at the Laulani Village shopping center in Ewa Beach offered a cash or debit price of $2.85 on Friday for regular unleaded gas compared with a $3.15 cash or credit price at the nearby Chevron station. The Safeway station was also 8 cents lower than the Tesoro and Aloha gas outlets on the same street.
The grocery chain is offering the lowest price in the state except for military stations (which were charging $2.75 on Friday) and big-box membership stores such as Sam’s Club and Costco (at $2.71 on Friday), according to Los Angeles-based GasBuddy, which operates a website where consumers can compare retail gas prices.
"It is a great thing," said Ewa Beach resident Jolyn Victorino, 37, who was at the Safeway station Thursday. "If you’re not a military member and not a part of a big-box store membership, you can’t get cheap gas. It’s an exciting thing for middle-income families."
The Ewa Beach station is Safeway’s second in Hawaii. It opened a gas station in Hilo last year.
Safeway’s recent breakthrough into Hawaii’s fuel market could drive down prices in a state with typically the highest gasoline costs in the nation, said Allison Mac, petroleum analyst at GasBuddy.
"Hawaii’s isolated, so every time you have a new player in the market, obviously it’ll bring down the prices," Mac said, adding that 90 percent of the nation’s gas stations are independently owned, which is why prices can vary dramatically from station to station. "They’re probably thinking, ‘We don’t have to make huge profits. We could probably break even with gas.’ You just have to get foot traffic in the door, then you can make other profits (from consumers) buying groceries."
Often gas stations make more profits from attracting customers to their convenience store or grocery store than from selling fuel, according to GasBuddy.
"Costco always makes their gas really cheap," Mac said. "They’re a big company. It’s not like a mom-and-pop shop where they need to be very competitive because they can always make up the money. People will then go into the stores and purchase stuff from Costco. This could be a very similar strategy we’re seeing with Safeway."
Robbie Weaver, manager of the Safeway station in Ewa Beach, said the company is considering opening other stations on the neighbor islands, including Maui or Kauai.
Keith Turner, Safeway’s spokesman at the company’s headquarters in Pleasanton, Calif., said there are no plans for additional fuel locations at this time, but the company is "always on the lookout for additional ways to serve our customers in Hawaii."
Safeway also has a stand-alone convenience store offering frozen food, fountain drinks, coffee, snacks and even poke, all with the same club member discounts available in the supermarket.
Safeway shoppers can get additional gas savings through the grocer’s gas reward program. For every $100 spent at the grocery store, club members get one gas reward worth 10 cents off the price of a gallon. Customers can use up to 10 gas rewards at a time, or up to $1 off per gallon.
The Ewa Beach Safeway is offering a double-point promotion until April 17, giving customers a gas reward when they spend $50.
"I have a family of eight, and I shop a lot, then my rewards build up. It’s a great strategy," said Victorino, who paid $35 to fill up her Toyota Sienna van after using her Safeway rewards. She said she usually pays as much as $55 at Chevron down the road. "It’s a way to give back. We’re already spending on our groceries. This is more money in my pocket."
Chevron also has an agreement with Safeway to accept gas rewards, but customers can only use up to two rewards at a time, equal to 20 cents off per gallon.
Albert Chee, Chevron’s spokesman in Hawaii, said he couldn’t comment on the difference in pricing because prices are set by the station’s franchisee, not Chevron. He said he didn’t have information on whether Chevron’s rewards program with Safeway would continue now that the grocer has its own gas station here.
"We just got 50 cents off (a) gallon, so that’s a really great deal," said Ewa Beach resident Aubrae Hokom, who filled up at Safeway for the first time Thursday. "I like the convenience of it, honestly. It feels like there’s not enough gas stations down here in Ewa. Nobody wants to pay more than anybody else. Competition’s always good for prices."
Safeway has 21 stores statewide: 14 on Oahu, four on Maui, two on Hawaii island and one on Kauai.
The grocery chain recently merged with Albertsons as part of a $9 billion deal and has 346 gas stations in the United States.
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