Filling stations in South Africa will have to invest in and rely on their forecourt shopping offerings to remain relevant and profitable in the face of fluctuating fuel prices and the gradual shift to new-energy vehicles (NEV).
Approximately 83% of people stopping at these stations for fuel currently also make use of the convenience store, 13% come for the store only, and only 4% are there purely for petrol or diesel, retail research company Trade Intelligence revealed.
As a result, forecourt retailing has emerged as the fastest-growing segment of the South African convenience retail market behind online shopping, expanding by 6.7% in 2022 and grabbing a R40-billion (17%) slice of the overall R240-billion industry.
Thanks to fuel retailers partnering with major fast-moving consumer goods (FMCG) brands, these forecourt stores have moved beyond the traditional bread-and-milk shopping to become a regular destination for individuals buying their daily essentials or grabbing a quick takeaway when the power is out.
South Africa’s biggest retail player in this space is currently Food Lover’s Market, whose FreshStop brand is found at 342 Caltex forecourts, African Retail reports.
Other famous logos in the market include Pick n Pay Express at BP, which has increased by over 60% in five years, Spar Express at Shell, OK Express at Puma, and Woolworths Foodstop at Engen.
This illustrates the need for adequate convenience retail options at filling depots and the need to move beyond fuel to insulate businesses against volatile prices, said Trade Intelligence Forecourt & Convenience Report.
Untapped opportunities
Steven Heilbron, CEO of fintech Capital Connect, highlighted several untapped opportunities in the fuel forecourt sector that may be targeted in the coming years to bolster income streams, writes Retail Brief Africa.
These include:
- Grab-and-go dining market – Larger selection of grab-and-go (takeaway) food options, typically franchises.
- New communication channels – Providing easier access to products via delivery apps such as Uber Eats and MrDFood.
- Investing in new tech – Installing CCTV cameras to reduce shoplifting and stock shrinkage, and expanding digital payment options.
- Attracting price-sensitive shoppers – Offering product specials and promotions to reduce perceptions of high prices at convenience stores.
- Expanding product range and inventory – Offering more products to attract a wider range of consumers, and having more stock on hand to lose fewer sales.
- Workstations for remote workers – Installing workstations with power points and Wi-Fi to encourage people to meet, work, and in turn, spend money at the forecourt store.
“With fixed margins for fuel, rising operating costs, and volatile fuel prices, fuel retail is a challenging business,” said Reggie Sibiya, CEO of the Fuel Retailers Association.
“Convenience has emerged as an essential supplementary income stream for fuel retailers, helping them to weather difficult economic times and get an edge in a competitive market.”
Keyword: Petrol stations in South Africa will have to rely on this to survive the electric-car revolution