As businesses in the Capital Region struggle to survive stagnant economic growth and rising energy prices, some have turned to a unique solution: use the high price of gasoline as a sales incentive.
Jay Scott, the program director and on-air radio personality for Latham-based Magic 100.9 FM, said he’s heard more and more companies use gasoline giveaways as part of radio advertising sales pitches. He said his station is running a contest where listeners of the Jay & Ben morning show who call in with the correct title of a song can win a $10 gas card as well as car wash and oil change at Hoffman Car Wash. Scott said the high price of gasoline has become such a concern for people that a mention of free gas is being used as a tool to get customer’s attention.
“It certainly perks people’s ears up,” Scott said. “We’re finding a lot of commercials that are being run by car dealers are giving away gas as an incentive for people to purchase cars.”
Last week, the average price for a gallon of regular unleaded gasoline in the Capital Region was around $4.20, according to AAA Northway.
Some local retailers, like Rotterdam-based supermarket chain Price Chopper, have begun testing the potential for tying sales to gas savings. Price Chopper spokeswoman Mona Golub said Price Chopper has experimented with programs linking grocery purchases to reductions in gas cost at some of its stores in outlying areas, including one in Watertown.
“[We wanted to see] how appealing it would be to consumers and how well it would work systematically. I would say overall it’s worked well,” she said.
Golub would not comment on whether Price Chopper would attempt a groceries and gasoline program in the Capital Region. Officials at Saratoga Springs-based Stewart’s Shops said the company has discussed gas savings programs internally but has not yet used one.
New cars, full tanks
Car dealers, wracked by sales losses, have been quicker to look to gas as a sales tool.
Thomas Flynn, a sales manager at Fogg’s Automotive & Suzuki in Glenville, said American Suzuki Motor Corp. has provided its new car customers who finance purchases through American Suzuki with gasoline debit cards ranging in value from $355 to just more than $500, depending on the model.
“[Customers] like it, but I don’t think they come in because of it,” Flynn said. “What we see, generally, is an upswing in the number of people just wanting to have a newer, inexpensively priced, fuel-efficient vehicle.”
Some dealers are also using gas giveaways to help sell used, low-mileage vehicles. Jim Rosamino, a car salesman at Metro Ford on State Street in Schenectady, said his dealership is using gas cards redeemable at Mobil gas stations, valued up to a maximum of $1,000, to help sell used Ford Explorers.
“That’s something we’re doing at the dealership level. Ford hasn’t done anything like that [for the new cars],” Rosamino said. “It’s nice and appealing to have a gas card you’re only going to use on gas. You can’t spend it at Home Depot or anywhere else. It’s nice because people who tend to buy [sport utility vehicles] take long trips to the Jersey Shore or other vacations.”
Come visit — it’s on us
Fear that people won’t be willing to drive far for vacations was part of the motivation for the Residence Inn in Saratoga Springs to offer $50 gas cards, coupled with $50 coupons from Saratoga’s Downtown Business Association. The gas cards are for guests of the hotel who book two-night stays from now until the start of the horse racing season July 23, said Bob Herrold, the inn’s general manager. He said his hotel’s ownership group is so concerned that gas costs have cut consumers’ willingness to travel that Residence Inn is also offering an additional $25 gas card for every night stayed beyond the two-night package.
“At this point, we haven’t had anybody who’s booked the package yet, which I find a little bit surprising,” he said. “The season so far, year to date, is off. We’re geared more to the extended-stay market, with people who are doing projects. I would say that aspect of the business in this area is down compared to the year before by about 10 to 15 percent.”
Many small businesses share the fears of Residence Inn. According to a survey by the National Federation of Independent Business released last week, 42.3 percent of small business owners nationwide rank the cost of natural gas, propane, gasoline, diesel and fuel oil as a “critical” concern, up from 26.1 percent on the previous survey, conducted in 2004.
Greg Dixon, the tourism vice president for the Saratoga County Chamber of Commerce, said the chamber has held off on using any gas giveaway promotions because they anticipate that the unique draw of horse racing will overcome consumers’ concerns about high gas prices. He said the high cost of gas may make it cost-prohibitive for some companies to offer meaningful incentive packages.
“It may not make any sense financially for certain attractions if their admission cost may be less than the total of, say, a $25 gas card, whereas a hotel stay is going to cost more in general,” Dixon said.
Herrold said Residence Inn’s booking pace for the horse race season during July and August is on par or slightly ahead of past years.
Luisa Craige-Sherman, the executive director of the Lake George Regional Chamber of Commerce, said her chamber has given away about 15 $100 gas cards at tourism travel shows around the U.S.
“People registered to win it, and that’s how we collect names and e-mails to send them vacation information,” Craige-Sherman said.
Dixon and Craige-Sherman both said tourism in the greater Capital Region may benefit from the higher gas prices because it’s centrally located within a three-hour drive from major population centers in Montreal, Boston and New York City.
“What may happen is instead of traveling to Virginia Beach or [Cape Cod], where you might sit in extended traffic for an hour, people may choose to come here because we’re an easier destination to get to,” she said.
If this past weekend is any indication, businesses dependent on tourism have reason to worry. AAA spokesman Eric Stigberg said Thursday that for the first time in 10 years, AAA is estimating a decline in the number of motorists expected to travel for the July Fourth weekend. He said AAA expects 34.2 million motorists nationwide to travel, down 1.1 percent from last year, and 5.7 million motorists to travel in New York state, down 2 percent.