Competition amongst retailers has been more intense than ever in recent months and now with the recently hiked tariffs for goods imported in to the United States, avoiding excess costs without raising prices as much as possible has become top priority for all companies.
Costco Wholesale and Walmart have long been competitors in the supermarket area, however, both of these retailers also have hundreds of gas stations in operation across the country and competition between the two appears to be growing in that aspect as well.
Walmart enacts ambitious plans for its gas stations
Growing macroeconomic factors have been the cause of great tension for retailers in recent months with each company trying to come up with creative solutions to minimize costs and grow profits without increasing prices so much that customers are compelled to turn away.
As such, these retailers often draw inspiration from each other when drawing up new plans for each quarter and one such example of this is Walmart’s latest plan to revamp and expand its gas station offerings. The supermarket giant’s move comes hot on the heels of competitor Costco’s recent decision to implement extended operating hours at all of its gas stations to allow more flexibility for its customers. The decision to extend operating hours was, in part, aimed at increasing usage so as to recover the minor the decline in fuel sales as that likely occurred as a result of the average gas price stabilizing somewhat last year
Now, Walmart has revealed its own plans to better the experience offered at its fuel station locations.
The retail giant will soon be opening and remodeling at least 450 of its fuel and convenience stations throughout the country, spanning a total of thirty-four states. This revamping plan has been slated to occur during the course of the year with the expected end date coinciding with the end of 2025.
Whilst Walmart operates around 450 fuel and convenience stations, Costco has over 700 filling stations in operation across the country. In 2024, 12% of total sales recorded for Costco were attributed to its fuel stations. However, the one advantage held by Walmart despite its significantly smaller offering is that customers do not require any sort of membership card to access the fuel stations, unlike at Costco Fuel. This provides the potential for a larger customer base which could also boost sales greatly.
In a press release, Dave DeSerio, vice president of fuel and convenience for Walmart U.S. shared, “By adding dozens of fuel and convenience stations this year, we are bringing even more value to our customers. Customers shop Walmart for our everyday low prices and convenience offerings, and fuel stations are another example of us responding to our customer and member needs.”
Walmart also offers a membership service with exclusive perks known as Walmart+. Members of this loyalty program can benefit from a 10 cent discount per gallon when filling up at Walmart fuel and other participating stations such as Exxon, Mobil, and Murphy.
Enjoying this benefit comes at the cost of a $98 annual membership fee, however, whilst competitor Costco charges a significantly lower $65 annual membership fee. In order to keep up with Costco, Walmart is counting on its convenience to help boost sales. According to the retailer, the pricing of items in the fuel station convenience stores matches that of the same items in the supermarket.
Tariffs cause increasing tension
This expansion was announced shortly after Costco followed in Walmart’s footsteps by asking its Chinese suppliers to absorb excess costs after the tariff fee was increased to 20%. Suppliers for both retailers were not impressed by this request and shared that they had already been on “razor thin” margins to begin with.
If these tariffs are not stabilized, Walmart has warned that the excess costs will be passed on to their customers. Costco, on the other hand, has shared that it will opt to phase out certain items rather than increase prices.