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Major retailers like Costco (COST-0.22%), Sam’s Club, and Walmart (WMT+0.77%) are stepping on the gas even as the age of electric vehicles creeps closer. These big box stores — traditionally not a place for pumps, unless they are the kind sold in the shoe aisle — are turning into gas giants, expanding their hours, adding car capacity, and building more infrastructure
None of this is surprising, say those who watch the fuel business.
“The world still runs on gas, not EVs. Everyone talks like the switch to EV is happening overnight, but big industry shifts like this take decades,” said Joe Camberato, CEO of NationalBusinessCapital.com. Camberato noted that the EV infrastructure just isn’t there yet — not enough charging stations or power supply.
“So in the meantime, there’s still plenty of money to be made in the fuel business. Change is coming, but nowhere near as fast as people predicted,” he said.
As testament to that, Walmart is opening more than 45 new gas stations across the United States this year.
“With the openings this year, we will have more than 450 locations across 34 states,” said Amanda Cantu, a Walmart spokesperson. “Walmart fuel and convenience stations operate at stores without Murphy USA (MUSA-1.01%) stations,”
“Our one-stop shops offer low prices at the pumps, and Walmart+ members save up to 10 cents per gallon with their membership,” Cantu said, adding that Walmart fuel and convenience stations also provide a wide range of grab-and-go items.
Costco and Dollar General (DG+0.87%) did not return requests for comment, but earlier this year Costco announced that they would be expanding the hours of their members-only fuel centers, with most to stay open until 10 p.m., rather than 9 p.m., and still well beyond the typical 6 p.m. closing time of the store.
“Generally, our stations are now staying open an hour later than they did previously, with some opening earlier as well,” said Costco CEO Rob Vachris in a March earnings call with investors.
Dollar General’s move into fuel has been more halting, starting with a pilot location in Alabama that has now expanded to more than 40 stores, primarily in the South.
But according to Placer.ai’s foot traffic estimates, there has been an increase in the number of retailers visited for non-discretionary goods and service, increasing competition among chains.
“Retailers are looking for a way to incentivize consumers to forgo competitors, and adding gas offerings or other services is certainly a lever that chains can utilize,” according to Elizabeth Lafontaine, director of research at analytics firm, Placer.ai.
“Our data also indicates that the cross-visitation between the convenience store channel and other non-discretionary retailers has grown since the pandemic, and retail chains may be looking to take back some of that share of visitation.”
Gas stations become department stores and vice versa
Usha Haley, an expert on international strategy and currently the W. Frank Barton Distinguished Chair in International Business at Wichita State University, has studied the fuel business. She said that the retail giants appear to mirror each other’s strategies as they compete for price-sensitive consumers. As the companies’ operating margins are often below 3%, each does not want to risk giving competitors an advantage.
“Walmart’s move into fuel signals an effort to rival Costco’s successful fuel business, roughly 12% of its total sales in 2024. But, Walmart’s gas stations will be open to any customer, unlike Costco and Sam’s Club which restricts access to members. This could broaden Walmart’s reach and boost revenue,” Haley said.
She added that Costco, on the other hand, has followed Walmart’s lead on U.S. tariffs, asking Chinese suppliers to absorb the costs, but they have resisted due to already operating under razor-thin profit margins. Walmart has now admitted that it may be forced to pass the costs of the tariffs to consumers and expects a drop in sales. Gas sales could cushion that blow.
“As gas prices are expected to fall initially under President Trump’s policies, Walmart plans to compensate for some of the tariff-induced losses – before gas prices rise again, as they probably will,” Haley said.
Manish Choudhary, president of the SymphonyAI Retail CPG division, which offers AI-driven analytics for retailers, said that since gas is a product that a vast majority of consumers still buy, it makes sense even for non-traditional fuel retailers to invest in it.
“The trend of retailers investing in gas stations highlights the broader industry trend of expanding on offerings beyond the traditional grocery or retail stores and placing an emphasis on responding to customer needs,” he said, adding that by investing in gas stations, retailers are able to further build loyalty with their customer base and provide the convenience of offering a filling station next to where shoppers are picking up their groceries for the week.
And in a retail landscape that has been scrambled by supply chain kinks, tariffs, and inflation, gas is a no-frills winner.
“ As consumers’ expectations continue to evolve amid tariffs and market index fluctuations, retailers are forced to find new ways to foster loyalty, deliver exceptional customer experiences, and enhance each customer touchpoint,” Choudhary said.
SymphonyAI’s new Grocery Sentiment Index highlighted the importance of nurturing customer bases as the behavior of loyal shoppers significantly impacted overall sentiment.
Choudhary also explained that some of these retailers may be betting on the future that EV stations will one day replace gas pumps almost entirely, in which case, there is an opportunity to capture more business.
“The rise in EVs will present another opportunity for retailers. As traditional gas fueling stops take an average of seven minutes, EV charging can take half an hour or longer, even with fast charging technology,” he noted. This extended downtime presents a unique opportunity for retailers to reel shoppers into their stores.
So retailers might seem like they are going retro by adding gas, but they are actually betting on the future, in hopes that you’ll charge on your card, while your car charges in their lot.