Kroger and Costco both want to use cheap gas to get customers to their stores because gas prices have reached a tipping point that has impacted consumer spending.
With gas prices averaging more than $4 per gallon, BMO Capital Markets Senior Economist Sal Guatieri explained that most Americans will have to spend less in other areas. “Apart from undermining confidence, the increase will erode spending power, particularly for lower-income households
Gasoline and other fuels account for 2% of U.S. personal consumption, so the price increase, if sustained, could cut annual spending by about 0.7%. That works out to more than $1,000 for the average American household,” he wrote. An American Automobile Association (AAA) report from 2022, the last time the national average price for a gallon of gasoline was over $4, backs Guatieri’s comments. “Americans may have reached a tipping point.
Over half (59%) said they would make changes to their driving habits or lifestyle if the cost of gas rose to $4 per gallon,” AAA shared. The high price of gas has been a foot-traffic driver for Costco. Now, Kroger wants to leverage its fuel rewards to do the same thing, and perhaps even steal some traffic from the warehouse club.