Hello there! I guess you all know about Safeway. This Albertsons subsidiary has been in the retail business for over a century. More precisely, it is a big grocery store that also sells gas at many of its locations. And people love to have convenient and affordable fuel options from this company. But the question is “Why is Safeway gas so cheap?”
Well, it’s all about how Safeway runs its business. It has a clever and smart plan of combining the grocery and gasoline businesses. Plus, they have a special card called the Safeway Club Card that gives people points. You can use these points to get discounts on gas.
But that’s not all. Safeway’s gas prices are also influenced by the bigger picture – things like global and national market conditions, and even local competition. Overall, it is a neat system that benefits Safeway and its customers—feeling interested? I suggest you read this blog to know more about these price-reducing factors.
The Gasoline Industry & Safeway’s Entry to This Market
Well, when I was 13-14 years old, I wondered how different companies set prices for their goods. I mean, precisely, how the exact product has different prices from dissimilar manufacturers. As I grew up, I found several factors influencing the price.
The Economics of Gasoline
Likewise, gasoline price influences the cost of crude oil, refining costs, distribution, and marketing expenses. Even the taxes are also essential to increase or lower the rate. From the discussion of MDM, I have found that the market value of these components fluctuates. Also, this value impacts the final price consumers pay at the pump.
The pricing strategy of gasoline retailers is also a reasonable concern. For instance, strategies like cost-based pricing, market-based pricing, and value-based pricing are commonly used in the industry.
Key Players in the Gasoline Industry
Let’s talk about something interesting. The gasoline industry comprises key players like oil producers, refineries, and retailers. Well, these players in the supply chain impact the final price of gasoline. Some companies operate in multiple stages of the supply chain. Again, others specialize in specific areas such as production or retail.
Safeway’s Entry to Gas Market
Safeway is primarily a major grocery store chain and a subsidiary of Albertsons. It started its business in 1915 (by M.B. Skaggs) and gradually gained popularity for the competitive prices of its grocery items. Later, it ventured into the gasoline market to provide an additional service to its customers. Thus, this company powered its existing infrastructure and customer base to establish a competitive presence.
Why is Safeway Gas So Cheap?
Strategy for Selling Gas
Safeway’s gasoline business is, in fact, an extension of its overall strategy to offer convenience and value to its customers. It operates on a business strategy of providing value to customers by maintaining a narrow profit margin (source).
In the definition of Britannica, I have found the same thing, “The store was…by taking low profit margins….” However, this approach extends to their gas stations. These pumps offer competitive prices to attract customers (source). And these prices are influenced by the factors that I have already mentioned in this blog.
In another blog, I found, “Safeway has a clear competitive strategy …enhancing the shopping experience.” This company follows this strategy by adopting “Lifestyle” store format. Whenever you visit any Safeway store, you can find “an earth-toned décor, subdued lighting, and custom flooring.” This ambiance attracts the customers strongly.
However, you can see notable differences in the prices of other goods to other companies or brands. This reduced price is a way to drive more sales. That is why Safeway offers various private-label items.
Safeway’s strategy also involves leveraging customer loyalty programs to attract and retain customers. These programs offer discounts on gasoline purchases. So, you can easily find it an attractive option, especially if you are one of the budget-conscious consumers.
Rewards Program & The Role of Safeway Club Card
Safeway offers a Club Card and a rewards program called “Just for U”. In this program, customers can earn points on their grocery purchases.
Customers gain a point for every $1 spent, and every 100 points equates to a $0.10 discount per gallon of gas (source). The discounts, up to $0.20 per gallon, can be even higher if they redeem at Chevron and Texaco fueling stations. So, the thing is, the more you spend, the more points you accumulate. Besides, the greater the discount you can receive on gasoline.
However, the points do expire! So, customers need to keep track of their points and expiration dates to maximize their savings (source).
Then, there is a mobile app called “Safeway for U.” It lets users view and clip digital coupons and personalized deals. They can also redeem free gas and grocery rewards and receive cash discounts (source). Additionally, Safeway occasionally runs promotions offering further discounts on gas (source).
These programs make Safeway’s gas prices even more attractive to customers. As a result, it can get increased sales. These programs are strengths for any brand or company like Safeway (source).
Supply Chain Efficiency
Supply chain optimization is essential for a thriving customer experience. It involves using technology and resources best to improve efficiency and performance (source).
In a gas supply chain context, it may refer to strategic and tactical planning, location allocation, and capacity expansion of facilities and pipeline routes (source). The storage process, which can be carried out underground, is a significant part of the supply chain.
Safeway is also committed to ethical practices in its supply chain. It is demonstrated by its adherence to the California Transparency in Supply Chains Act (source). However, its supply chain’s efficiency can also impact its gas prices.
Efficient supply chains can lead to cost savings. As a result, it can potentially be passed on to customers through lower prices (source). But future predictions for Safeway’s gas prices are uncertain. They will be influenced by changes in crude oil prices and supply and demand dynamics in the gas market (source).
Comparing Safeway Gas Prices to Other Retailers
According to EIA, factors like location, time of year, and current market conditions can affect gas prices. You can get the best deal if you regularly review and compare prices.
Gas prices at Safeway vary by location, though they are mostly more competitive than others. For instance, (at the time of writing this blog), I have found that Costco and Safeway are selling one-gallon gas at $4.65 in Bremerton, Washington. Alternatively, other popular brands sell the same gallon of gas at higher prices (source).
Prices of gasoline vary depending on the location and other factors. For example, the contemporary price of one gallon Safeway gas is $4.88 in Moses Lake (1), $4.61 in Ellensburg (2), $4.99 in Centralia (3), and $4.59 in Bellingham (4) in Washington. Despite the price differences, you can still save money by using apps like GasBuddy to find the cheapest gas stations near you (source).
How Can You Save on Safeway Gas Prices?
You can get 0.10 off per gallon for every 100 fuel points earned through Safeway’s gas rewards program. But you need to maintain the limit of 1,000 points on a single fill-up (source). The Safeway app helps track their progress and earn points for the next fill-up.
This company also offers discounts on multi-item packages. It can contribute to earning more points (source). Besides using loyalty programs, you can save money on gas by driving safely and efficiently. More precisely, I suggest you resist the urge to accelerate quickly and coast to a halt. It may boost fuel efficiency by up to 40% (source).
Is Safeway Gas Bad Quality?
Many of us think something cheaper than usual is of low quality. The same goes for Safeway gasoline. But you do not need to worry about its quality.
For sure, Safeway gas meets a variety of federal, state, and industry standards. So, you can be sure it is as safe as others to use in vehicles (source). However, it is not Top Tier certified, which may surprise some of us.
Top Tier gas has a certain level of detergent added to it. It lowers carbon deposits on fuel injectors (source). Despite not being Top Tier certified, Safeway gas still meets the Environmental Protection Agency (EPA) standards. Regarding pricing, Safeway gas is competitive with other gas stations, such as 76 and Costco.
Final Words
“Why is Safeway gas so cheap?” – are you still scratching your head? I guess you also thought that this gas is not so quality stuff. That’s why Safeway is offering affordable rates, right? But it is not valid.
This gas is as good as other brands or companies. Yet the strategy, rewards program, and supply chain efficiency are the main reasons for getting gas from Safeway cheaply. And those global, national, and local competition are also some factors that influence this price.
I hope you have understood the reasons. If you have any questions, I welcome you happily!
Thanks a lot!
