How Upside helps fuel retailers as inflation rises
There are a number of factors combining to create major pain at the pump:
- Inflation and rising prices, caused by unprecedented supply chain strain
- Russia's invasion of Ukraine
- pent-up consumer demand post-COVID
Upside helps consumers feel some relief, while also giving fuel retailers a unique opportunity to capture more volume.
How much are gas prices rising?
The impact of rising prices is clear in the data. We’ve analyzed fuel transactions over the last year across our network of over 30,000 stations and c-stores. Our analysis shows that the average price for regular-grade fuel has risen by as much as 75% compared to the same time last year.
Drivers in certain markets, particularly parts of the Northeast and Southwest, are especially impacted, spending over 70% more on gas than they did a year ago. We’ll call these the “higher strain” markets, since consumers in these markets are experiencing the largest rise in gas prices.
In other markets (primarily the West), consumers are dealing with sign price increases of up to 50%. In these markets, rising costs are still substantial, but less dramatic than other parts of the US. We’ll call these markets “lower strain,” as consumers in these markets are experiencing relatively smaller increases in gas prices.
However, it’s important to note that, a year ago, gas prices in the West and West Coast markets were already high compared to the national average. Because prices were already elevated, the rise in prices over the past year is lower in percentage terms for these “lower strain” markets.
While Upside app usage has increased across all markets, three times as many consumers have purchased fuel with Upside in “higher strain” markets compared to “lower strain” markets. Our data also shows that users in “higher strain” markets are transacting more frequently.
Consumers dealing with the biggest increases in gas prices are turning to Upside to help reduce the pain.
Consumers are feeling the pain of high prices all across the country. The cost for a gallon of regular grade fuel grew to a national average above $4.80 last month, with most California markets reaching well above $6.00. Last month, you could find the cheapest gas in Macon, GA, at $4.26/gallon. By way of comparison, last year only 2 markets in the entire country had gas prices above $4.26/gallon. What was once the peak of gas prices now sounds cheap!
How are consumers shifting their behavior in response to inflation and rising prices?
Upside data shows that consumers are shifting their purchasing habits in response to rising prices. A survey published by AAA corroborates our data, reporting that 59% of consumers will change their driving habits or lifestyle when gas prices eclipse $4.00/gallon. At $5.00/gallon, that number rises to 75%. Given recent price trends, it's not surprising we’re already seeing shifts in consumer behavior.
So what does this change in behavior look like?
For some individuals, it means cutting back on driving. In a post-COVID world, many consumers have the flexibility to choose not to commute.
This means that many consumers can cut commuting costs when prices get too high. For others, behavior changes mean looking for relief in the form of promotions on gas or reduced spending in discretionary categories like eating out or entertainment.
Analysis of Upside transactions echoes this data, showing that as the cost of everyday spend categories like gas and groceries has risen, consumer spend at restaurants has decreased.
How does today’s inflation impact fuel retailers?
We know consumers are looking for value, and we know they’re looking online. In fact, Google searches for “cheapest gas near me” hit an all time peak in March, up 10x from a year ago. Searches then slowed temporarily until June when they peaked again. Right now, consumers are focused on the essentials - and looking for the best possible prices. And as a result, they’re turning to Upside.
When prices began rising in March, sign-ups for the Upside app grew 134% month-on-month to a peak of more than 500,000 downloads in a single week. This growth has continued, with Q2 sign-ups increasing by 40% on top of an already strong Q1.
Upside’s recent user growth has already led to a jump in transaction volume for stations on the program. In June, Upside fuel transactions were up 98% compared to January, and c-store transactions were up 66%. Right now, retailers have the opportunity to capture new customers and volume as more consumers consolidate their purchasing to businesses on Upside.
The opportunity for fuel retailers
By bringing more new customers on-site, fuel retailers also have an opportunity to drive transactions into other, higher-margin areas of their business. When faced with rising prices, consumers are opting for lower-cost restaurants when choosing where to eat. In an analysis of restaurants on the Upside platform, we found that consumer visit frequency among lower-priced QSRs has increased, while other restaurant types saw a decrease. Retailers can use this opportunity to present their c-store and/or QSR as an alternative to more expensive dining options at a time when consumers are open to changing behavior. Retailers that have launched their c-stores on Upside have seen an increase in pump-to-store conversion by as much as 50%.
Having your site on Upside enables you to reach more consumers when they are making everyday purchasing decisions and drive them from the pump into your c-store.