Costco’s lone city gas bar rules roost with lowest price

Hey there, time traveller!
This article was published 19/01/2010 (6081 days ago), so information in it may no longer be current.

WINNIPEG’S first Costco gas bar opened at the end of last year and the big-box discounter now sits firmly atop an online list of lowest gas prices in town.

It’s the same position Costco holds in most of the Canadian markets in which it sells gas.

The chain’s south Winnipeg location on McGillivray Boulevard is charging 91.9 cents a litre for gas, a full six cents a litre better that its nearest competitor (although Domo coupon-holders would get down to a similarly low price).

Ron Damiani, a spokesman for Costco’s Canadian headquarters in Ottawa, said it does not divulge its trade secrets on how it is able to charge so much less than everyone else.

"We’re a low-cost operator," Damiani said, agreeing only to cite some of the obvious elements to the company’s ability to charge less than the competition — it does not take credit cards (which cost retailers one to three per cent off the top), it does not stay open late and the gas bars only have two grade selections which cuts down on inventory and infrastructure costs.

"All these things mean a significant reduction on our costs and we are able to pass those savings onto our members," he said.

The membership issue is the element that may prevent Costco’s entry into the market from triggering a price war. Only paid members of Costco — at about $40 a year — are able to access those low prices.

Jason Toews, one of the founders of gasbuddy.com, which operates online retail gas listings in more than 100 cities across North America including www.winnipeggasprices.com, said Costco ranks near the top of his lists.

However, the prices on gasbuddy.com websites do not include regularly available discount coupons, like the five-cents-a-litre discounts for shoppers at SuperStore.

"It is common in the industry to use gas discount coupons as a hook to get you into the store," said Toews from his company headquarters in Regina.

At gasbuddy.com’s websites on Monday, Winnipeg had the largest gap between the lowest price — Costco’s — and the next-lowest of any of its markets.

Costco has had gas bars in Canada since 1999, but only 14 of its 75 Canadian stores have them.

Damiani said the company makes the decision to include them or not based on two main criteria. One is whether the property has enough room on its parking lot to be able to afford the space — about 100 parking spaces — and the other is whether the right zoning is in place.

martin.cash@freepress.mb.ca

 

The past and future

Winnipeg gas prices — a brief history (and prediction):

 

98.8 cents — current average, per litre of regular*

94.8 cents — average price in late December

86.0 cents — average price a year ago

$1.03 — average price at the peak of last summer

$1.41 — average price in the peak of the summer of 2008

77 cents — average price during the winter of 2008-09

$1.20 to $1.30 — predicted average peak price this summer

$1.50 — predicted average peak price in the summer of 2011

 

* all prices and predictions from gasbuddy.com