When better-than-free grocery store manufactured spend pours

/

I don’t think it’s an exaggeration to say we’re in a kind of golden moment for grocery store manufactured spend, with widely-held credit cards like the Chase Sapphire Preferred and Reserve, the Chase Hyatt cards, and the American Express Hilton Honors Surpass and Aspire cards all offering increased earning at grocery stores (in the last case until the end of July), while grocery stores have been sending out volley after volley of negative-cost manufactured spend opportunities.

The fact that, yet again, two of my local chains are offering bonuses on the purchase of prepaid debit cards nudged me to think a little more deliberately about the various shapes these bonuses take.

Cash, groceries, or gas

In my neighborhood, I basically have two equally-distant grocery stores: one, a Safeway, participates in the “just for U” (alternately spelled “Just For You”) rewards program, along with Vons, Randall’s, Albertsons, Tom Thumb, Acme, Jewel, and Shaw’s. The other, Giant, belongs to the same corporate structure and shares a similar loyalty program with Stop&Shop and Martin’s, although there are sometimes-significant regional differences. Of course, other folks have access to different chains and loyalty programs, with Hy-Vee, Kroger, and HEB being important regional grocery chains with their own loyalty programs.

Currently, both Safeway and Giant are offering incentives to purchase MasterCard prepaid debit cards:

  • Safeway: “Save $10 when you buy $100 or more in Mastercard gift cards.”

  • Giant: “Earn 2x points when you purchase any Mastercard gift card with your Giant card.”

Normally these deals hopscotch around each other, so it’s rare (though not unheard of) to see virtually identical deals running simultaneously. The basic value proposition is, you can either save $10 up front (buying a $500 MasterCard gift card for $495.95 at Safeway), or you can earn 1,012 points to redeem later (buying a $500 MasterCard gift card for $505.95 at Giant). Since my market is a “Flexible Rewards” region, those 1,012 points can be redeemed for $10 off my next grocery purchase. In other words, as long as I’m sure to use my discount before it expires, and as long as I’m willing to shop at the Giant, the two promotions should be more or less identical. When they’re offered simultaneously I’ll still prefer Safeway’s upfront cash discount (money can be exchanged for goods and services), but Giant’s grocery discount works for me too.

The wrinkle is, those Giant/Stop&Shop/Martin’s points can also be redeem for per-gallon discounts on gas, and if you drive, you might have a strong reason to favor Giant promotions over Safeway. That’s because, even in markets where gas discounts are capped at $1.50 per gallon (1,500 points), you only need to buy a little under 7 gallons to come out ahead compared to a $10 grocery or upfront discount.

This creates a kind of charming game of rock-paper-scissors:

  • A cash discount from Safeway beats a grocery discount from Giant;

  • A grocery discount from Giant beats a gas discount if you buy less than 6.66 gallons at a time;

  • And a gas discount beats a cash discount — but only if your gas savings are higher than your cash savings.

Of course, this is another way of saying, “the more money you save, the more money you save.” If Giant is already your lowest-cost grocer, then every dollar you save there is worth a dollar. If Shell is already your lowest-cost gas station, then every dollar you save on gas is worth a dollar.

If the need to redeem your savings drives you to a higher-cost grocery store or gas station, that won’t eliminate all your savings, but remember to keep in mind it does reduce them.

Conclusion

Grocery store manufactured spend is one of the most geographically varied techniques out there, with the same corporate parent sometimes having different policies between brands and stores in different regions. For folks with unlimited liquidation capacity, the purchasing side might pose the biggest hurdle to scaling up, while folks with limited (or extremely limited) liquidation capacity may need to carefully select only the highest-earning purchase and redemption opportunities.

In either case, make sure that when you make or refine a manufactured spend strategy you’re comparing apples to apples.