Friday, 19 August 2022
Meet the JournalistsPremiumAucklandWellingtonCanterbury/South Island
CrimePoliticsHealthEducationEnvironment and ClimateNZ Herald FocusData journalismKāhu, Māori ContentPropertyWeather
Small BusinessOpinionPersonal FinanceEconomyBusiness TravelCapital Markets
Politics
Premium SportRugbyCricketRacingNetballBoxingLeagueFootballSuper RugbyAthleticsBasketballMotorsportTennisCyclingGolfAmerican SportsHockeyUFC
NZH Local FocusThe Northern AdvocateThe Northland AgeThe AucklanderWaikato HeraldBay of Plenty TimesHawke's Bay TodayRotorua Daily PostWhanganui ChronicleStratford PressManawatu GuardianKapiti NewsHorowhenua ChronicleTe Awamutu Courier
Covid-19
Te Rito
Te Rito
OneRoof PropertyCommercial Property
Open JusticeVideoPodcastsTechnologyWorldOpinion
SpyTVMoviesBooksMusicCultureSideswipeCompetitions
Fashion & BeautyFood & DrinkRoyalsRelationshipsWellbeingPets & AnimalsVivaCanvasEat WellCompetitionsRestaurants & Menus
New Zealand TravelAustralia TravelInternational Travel
Our Green FutureRuralOneRoof Property
Career AdviceCorporate News
Driven MotoringPhotos
SudokuCodecrackerCrosswordsWordsearchDaily quizzes
Classifieds
KaitaiaWhangareiDargavilleAucklandThamesTaurangaHamiltonWhakataneRotoruaTokoroaTe KuitiTaumarunuiTaupoGisborneNew PlymouthNapierHastingsDannevirkeWhanganuiPalmerston NorthLevinParaparaumuMastertonWellingtonMotuekaNelsonBlenheimWestportReeftonKaikouraGreymouthHokitikaChristchurchAshburtonTimaruWanakaOamaruQueenstownDunedinGoreInvercargill
NZ HeraldThe Northern AdvocateThe Northland AgeThe AucklanderWaikato HeraldBay Of Plenty TimesRotorua Daily PostHawke's Bay TodayWhanganui ChronicleThe Stratford PressManawatu GuardianKapiti NewsHorowhenua ChronicleTe Awamutu CourierVivaEat WellOneRoofDriven MotoringThe CountryPhoto SalesNZ Herald InsightsWatchMeGrabOneiHeart RadioRestaurant Hub

Advertisement

Advertise with NZME.
Business

Are fuel loyalty and discount schemes being used as a substitute for competitive prices?

20 Aug, 2019 02:03 AM3 minutes to read
Commerce Commission report looking into the retail fuel sector heavily questions the relationship between discount and loyalty schemes and fuel prices. Photo / Getty Images

Commerce Commission report looking into the retail fuel sector heavily questions the relationship between discount and loyalty schemes and fuel prices. Photo / Getty Images

Aimee Shaw
By
Aimee Shaw

Business Reporter

VIEW PROFILE

A Commerce Commission report canvassing retail fuel prices has highlighted the possibility of discounting in the sector being used to "avoid direct price competition".

The commission found discount and loyalty programmes had become increasingly common within the fuel market, and were "closely linked" to rises in margins on fuel.

"We are continuing to consider whether the relationship we observe between discounting and margins is best seen as a means to avoid direct price competition," the commission said in its 424-page report into competition in the market.

"Discounts appear to have increased alongside increases in the margins on board prices and the average margin across all sales," the consumer watchdog said.

Advertisement

Advertise with NZME.

"If board prices were cost-reflective, as we would expect in a workably competitive market, we currently consider that there would be less scope for discounting."

Fuel companies BP and Z Energy disagreed on the commission's view on discounting in the sector.

"The increase in the prevalence of loyalty programmes is indicative of strong competition to retain customers and is of substantial benefit directly to customers," BP said.

Z Energy said competitors' strategies were continuing to evolve over time, "in a manner that suggests competitive retail markets and include: (a) greater focus on "off price board" discounting strategies through loyalty programmes, such as AA Smartfuel and Mobil Smiles."

Consumer NZ, quoted in the report, said the discounted price usually was not the cheapest.

"It's an illusion of 'getting a discount' rather than getting the best price," it said.

Related articles

Business

Fuel50 raises $21 million, reveals next stage of expansion

19 Aug 03:53 AM
Business

Evans: Looking for economic clues? Try the retailers

19 Aug 05:00 PM
Business

Used car retailer 2 Cheap Cars appoints Huffer founder as CEO

19 Aug 02:24 AM
New Zealand|Politics

PM 'ready to act': Kiwis fleeced on petrol for a decade

19 Aug 10:25 PM

"We think it'd be fairer for all consumers without fuel discounts and loyalty programmes. Pricing would be transparent and we could fill up as and when needed, at our choice of cheaper or convenient service station, without jumping through hoops to eke out a few more cents of savings."

The report outlined that discount and loyalty programmes did not always drive loyalty, and that consumer choices of fuel retailers was often "habitual" and often based on station locations and visibilty.

Advertisement

Advertise with NZME.

"Fuel firms try to use discount and loyalty programmes to generate loyalty to their
brand," the commission said. "According to some documents we have viewed, petrol is a "grudge" purchase for many consumers and some consumers are not motivated to seek out new suppliers."

Retail analyst Chris Wilkinson said fuel disruptors such as local operator Waitomo often offered a regular price that was advertised as a discount or special price at other fuel retailers.

The likes of Waitomo offered cheaper fuel prices generally as their service stations were usually unmanned, without a retail store, which meant they had lower overheads.

"It's been really interesting to see how people have orientated to those retailers - people will often travel to them for those better prices," Wilkinson told the Herald.

"The reality is, without the likes of these category challengers, fuel retailers have been able to benefit from [non-competitive prices].

"The 'Waitomo factor', we call it, is making a significant difference in areas they are putting their sites," he said.

Advertisement

Advertise with NZME.

Unmanned fuel stations enabled simple operations and greater transaparecny for the consumer. Wilkinson said automated sites were "the way forward" and would bring cheaper for consumers.

Gull and Waitomo with their unmanned stations were already bringing the price of fuel down in areas they operated in, Wilkinson said.

Advertisement

Advertise with NZME.

Latest from Business

Premium
New Zealand

New supermarket for Havelock North approved

19 Aug 03:26 AM
Business

Facebook sacks 60 staff 'at random'

19 Aug 03:16 AM
Premium
Business

Should the All Blacks wear black? And the other no-brainer for Air NZ's Greg Foran

19 Aug 02:02 AM
Premium
Business

Adrian Orr accepts mortgage rates could fall next year

19 Aug 01:45 AM
Premium
Business

Results at a glance - Genesis, AIA, Kiwibank, Skellerup, Precinct

19 Aug 01:26 AM

Most Popular

No cycle or walking lanes for Auckland Harbour Bridge
New Zealand

No cycle or walking lanes for Auckland Harbour Bridge

19 Aug 04:41 AM
Man tried to hire hitman for $300 to kill a person who didn't get along with his wife
New Zealand|CrimeUpdated

Man tried to hire hitman for $300 to kill a person who didn't get along with his wife

19 Aug 03:13 AM
Parole denied: Mark Lundy to remain behind bars 22 years after killing his wife and daughter
New Zealand|CrimeUpdated

Parole denied: Mark Lundy to remain behind bars 22 years after killing his wife and daughter

19 Aug 03:00 AM

Advertisement

Advertise with NZME.
About NZMEHelp & SupportContact UsSubscribe to NZ HeraldHouse Rules
Manage Your Print SubscriptionNZ Herald E-EditionAdvertise with NZMEBook Your AdPrivacy Policy
Terms of UseCompetition Terms & ConditionsSubscriptions Terms & Conditions
© Copyright 2022 NZME Publishing Limited
TOP