Tesco axes fuel discount scheme

Tesco is scrapping its Fuel Save scheme, which offers customers up to 20p off the price of a litre of petrol, after just 16 months.

While the website still proclaims 'Keep on saving up to 20p a litre with Clubcard Fuel Save', a new addition has appeared warning customers that the offer will end on August 31.

The scheme, which has already been extended by two months, gives Clubcard holders 2p off a litre of petrol for every £50 they spend in-store, up to a maximum of 20p. When it was launched in March last year, the company trumpeted it as being 'unlike other fuel promotions, which are generally short-term and involve a one-off minimum spend.'

Last summer, the then chief executive Philip Clarke said Fuel Save 'will be a key point of difference in building long-term customer loyalty.'

Now, though, Tesco plans to stop issuing vouchers at the end of next month, and customers will need to trade them in by September 30.

It says that, while the scheme has been popular, many customers would prefer to see savings on their shopping instead, and that it now plans to concentrate on cutting prices in-store.

The current low fuel prices have also had their effect, making the scheme rather less of a draw.

"[Fuel Save] has proved very popular with shoppers, particularly when it was launched at a time of record fuel prices. It has also helped to break the pressures of demand surges on stores linked to the fuel couponing campaigns that were previously run regularly," says consultancy firm IGD.

"However, clearly Fuel Save carries significant running costs for Tesco and with fuel prices no longer such a major issue for shoppers, the retailer has decided to stop issuing Fuel Save points at the end of August."

Fuel costs are currently low - 117p per litre for petrol and 120p for diesel, according to the RAC. However, according to the International Energy Agency, worldwide demand is increasing. Prices are likely to carry on rising - meaning that Tesco customers may miss Fuel Save rather more in a few months' time.

Last month, Tesco chief executive Dave Lewis told investors he planned to simplify pricing, and ease off on the heavy promotional activity of last year.

Indeed, IGD says it believes the company may scrap the Clubcard altogether, on the grounds of cost-effectiveness: "With Sainsbury's having cut the Nectar points that its customers earn on everyday purchases at a time when Tesco needs to compete harder on price to reclaim market share from the discounters, Clubcard is likely to come under scrutiny," it says.