Buy Or Sell: Gas Stations Fueling Walmart’s Growth?

Walmart plans to aggressively open more gas stations over the next five years Chris According to Modern Retail, Walmart has begun a five year strategy to significantly grow the number of gas stations next to its new and existing stores.

The company plans to add 40 to 45 fuel stations next to Walmart stores this year, double the 20 it opened last year and rapidly accelerate that growth over the next five years.

Dave DeSario, Walmart's VP of fuel and convenience, told Modern Retail in an article.

The total count of Walmart operated stations is currently about 415.

Desario, a longtime C store executive, joined the company at the beginning of 2018 after having served in a COO position at Tennessee chain Mapco Express and Spinx in South Carolina.

I like that name, Spinx.

I've never heard of that convenience store before.

But before that he had been the director of store operations for Wawa and was with that company for almost two decades.

Chris, this happens to be the A and M put you on the spot question.

We're going to get to it right away.

Started off yes, love that when we.

Do that they fully expect Walmart to continue to take an aggressive low price market position on fuel.

Question is, with the size of their box in the backcourt, is Walmart trying to leverage their existing customer base to sell more fuel profitably or, or is it Walmart trying to use feel fuel to drive more households and traffic to the store more fuel, not feel more fuel.

Well, maybe this, this story gives me some feels and yes, yeah, I think it's, I think, I think it's decidedly the latter.

You know, I think this is about getting more people into Walmart that otherwise wouldn't be there.

And I say that because of really two words or, or maybe two words and, or maybe it's one word with a symbol but.

And it's Walmart.

That's what this is all about.

Because look, we already know that fuel works as a traffic driver for Costco.

It's what keeps people in the brand and keeps people coming back into the Costco stores too.

And now you have a significant feature of Walmart plus being fuel discounts.

They've talked about it a lot and the other competitors, you know, in the mass merchant space, specifically Amazon which doesn't have stores and Target which doesn't have fuel and has probably no designs at all to get into it, they can't touch this idea.

So I $98 per year, you can subsidize a heck of a lot of gas discounts and keep your customers loyal at Walmart.

Plus so for me it's, it comes down to one plus one equals three retailing.

You got, you get them to pay for the subscription, you get them to buy heavily discounted gasoline.

Oh and then also some higher end apparel or other items while they're shopping via their Walmart plus subscription online or in your stores.

That's the play here.

I think it's super smart and you can tell that they're seeing some success with it too because those are some pretty big growth plans.

44, 45 stores a year.

When you only have 450, I think you in the store base roughly.

So, so this is, this is smart and it's a, it's a big move too.

Yeah, I, I, you kind of hit on all the points that I had down, Chris.

I think the thing that I would add is, I think that's still a missing piece of the Walmart plus membership is the convenience of the fuel discounts.

Because there are like, especially for us, like I think in Minneapolis, like I love Walmart Plus.

I, I thought that I would be using the fuel discounts but I think the closest one to us is like, you know, 10 miles away.

Like that's too far for me to go to really get the advantage of the Walmart plus fuel discount.

So I think as they start to position these in more convenient locations in the parking lots of their stores, just like the Costco example that you gave, like they're going to beat everybody else on price being Walmart, Walmart will beat everyone else on price.

And if you look at the lines outside Costco, it's an exact proof point of what people will be willing to do, where people will be willing to go to change their behaviors to, to shop at so that they can get these fuel discounts.

So I think that this is a tremendously smart move and will only continue to kind of catapult this Walmart plus membership like you said.

So just, just feeding the flywheel with those key areas of differentiation and discounts.

Yeah, that's a great point because when you put it in that, in those terms like you just did.

Yeah, if there's only four, I think I look back at the exact number you quoted.

415 stores currently have, you know, gas stations out front of them and you know, the Walmart store base is 4,600 plus stores.

So that's like less than 10% of the store base where the actual fuel discount through the Walmart plus membership is actually available.

So tremendous opportunity here.

And then the last point, and as we learned last week Vanessa Yates, formerly the head of Walmart plus, is now the CEO of Walmart Canada.

So my hunch is Walmart plus is doing very, very well and they are let all systems go on this idea.

Wouldn't you think so, Ann?

Yeah, I mean, I totally agree.

I think the benefits, like, they, they just continue to get better and they will continue to bring in more and more members because it's, it's an undeniable value for that 98 a year.