Fuel Save: is Tesco on to a winner with innovative new mechanic?

While the travails of The Co-op and Morrisons dominated headlines last week, it was Tesco’s Fuel Save scheme that captured consumer attention - indeed our story on its launch was the most read on thegrocer.co.uk (12 March).

ClubCard holders will get 2p off a litre of fuel for every £50 they spend at Tesco in the course of a month. The discount is cumulative, so a shopper spending £500 a month could earn the maximum of 20p off a litre (on a calculation of 10 x 2p). The mechanics may seem complicated but the deal is simple: the more a shopper spends at Tesco, the more they’ll save on fuel.

But how attractive is Tesco’s scheme compared with what has gone before - and will it help stem the flow of shoppers deserting its big out-of-town stores because of travel costs?

Fuel Save’s national rollout follows successful trials in Wales and Norwich, where 71% of shoppers said it would make a big difference to their family budget. “It is built around a clear need and it goes with the grain of how customers want to shop,” says UK MD Chris Bush. “It is a straightforward reward for people who shop with us whether it’s a lot or a little, every day, every week, or a few times a month.”

The AA agrees, pointing out that, unlike vouchers demanding a hefty weekly minimum spend and thus skewed towards helping families, Fuel Save is for everyone. “In recent years we’ve seen the focus on the family,” says AA spokesman Luke Bosdet.

“The problem was that single people or pensioners were missing out because they weren’t spending £50 in one go.”

Tesco’s research showed 51% of shoppers struggled to spend the £50 minimum on their weekly shop. “It’s much fairer than in the past,” adds Bosdet.

Kantar Retail analyst Bryan Roberts also likes its ease of use. Fuel Save is “low effort from a shopper perspective”, he says, as spend is tracked entirely through ClubCard. “Fuel prices are still a lot higher than they used to be, so any relief Tesco can offer should land quite well.”

Fuel Save may be enough to capture “floating voters” who are willing to “go the literal and metaphorical extra mile,” Roberts adds.

However, some are not convinced: comments on Tesco’s Facebook page suggest some consumers are struggling to understand the cumulative size of the saving they stand to make due. “On TV, the small print says 2p a litre but the announcer says it’s 20p a litre - so which is it?” asks one. Tesco has set up a lengthy FAQ page to answer such questions.

Bosdet concedes the scheme is complicated, but with the offer running until 30 September, “there is time for people to get their heads around it.

“If you are a reward card junky, this is absolutely ideal,” he adds.

With high fuel costs a barrier to the reinvigoration of its big-box stores - 50,000+ sq ft stores saw sales down 3.1% over Christmas alone - it remains to be seen whether Fuel Save will be a sufficient attraction. “It will reinforce the loyalty of existing customers, but is it enough to get people back from Aldi? We’ll see,” says Roberts.

Shore Capital’s Clive Black believes cheaper prices in-store are more likely to woo shoppers than savings at the pumps. “Petrol vouchers and price-matching have been dished out for a long time now,” he says. “Shelf pricing is where it’s at. We don’t expect Fuel Save to bring about a volte face in Tesco’s fortunes.”

And even though he likes the scheme, Bosdet concedes Fuel Save isn’t going to stop motorists from shopping around. “Drivers are fixated with the price printed on the billboards. It’s almost Pavlovian in how they respond,” he says.

As one commenter on The Grocer’s story remarks: “All you have to do to get 3p or more off the Tesco fuel price where I live is use a different garage. Pointless.”