SA’s more than 4,600 garage forecourts are having to contend with dwindling fuel sales, with partnerships with retail outfits key in diversifying revenue streams, according to a report by Trade Intelligence, a market intelligence and research firm in the consumer goods sector.
The report found that nearly 600 new forecourts have opened in SA since 2019, while sales have been declining in the same period, forcing players in the sector to compete for dwindling spending.
The data shows the number of fuel stations in the country grew 14.5% in the past five years as fuel sales declined more 7% than to 21.9-billion litres in the period.
The study reviewed major players in the sector Astron Energy, Shell, TotalEnergies, Sasol, Puma, BP and Engen.
Fuel companies are ramping up their focus on forecourt retail to supplement their revenues.
“Fuel sales have not recovered since Covid-19. If you look at the numbers from 2022/23 versus 2018/19 we are down 7.6% in terms of fuel sales. There are a number of key reasons this is the case. One is an economically constrained shopper,” said Andrea Ellens, business development manager at Trade Intelligence.
“We have also had increased working from home. While people are going back to the office, this is not at the same level as we had in 2019. The lack of recovery in fuel sales is really compelling the fuel station owners to drive sales out of their forecourts to compensate for this lost revenue.
“We are expecting that forecourt convenient sub-channel to continue to grow and there is still money to be made in the forecourt retail space.”
In its 2023 annual report, Sasol said the outlook for petrol was not encouraging as sales of smaller and more fuel-efficient passenger cars were likely to continue, exacerbated by hybrid and electric vehicles in the latter part of the decade.
Sasol said as a significant part of its product slate was petrol, it was assessing various technological options to mitigate the risk of an oversupply of petrol to the country.
British energy major Shell recently announced its intention to disinvest from its SA downstream business, which houses more than 600 of the group’s forecourts.
“It is not just Shell divesting from SA. They are divesting downstream in a number of their markets because the margins for them selling fuel are small,” Ellens said.
Participants in Trade Intelligence’s webinar held on Thursday were of the view that the popularity of retail offerings in forecourts might see the country’s grocery retailers enter the race to buy Shell’s service stations.
SA has seen increased partnership between retail groups and forecourts. Ellens said there had been a 69% growth in such relationships over the past five years.
“FreshStop, which is a Food Lovers brand, has the highest number of partnerships and they are located at 348 forecourts. Pick n Pay comes in at number two, available 42% of BP’s forecourts. Spar Express has seen significant expansion over the past few years with a presence in 82 forecourts,” she said.
Woolworths “food stops can now be found at 90 Engen forecourts and OK Express is found at the Puma stores as well as some of the TotalEnergies stores. It is really interesting to see the growth of these retail relationships across the forecourts and we expect this to continue.”
SA’s grocery retailers are already engaged in tough competition to win market share, with Shoprite the runaway leader. Shoprite does not yet have a presence in SA’s vast fuel stations network.
The country’s fast food chains have a significant presence in forecourts. The Trade Intelligence study found Chicken Licken, Debonairs and Steers were the most popular outlets for consumers at forecourts.
The study also showed reward cards are driving consumer behaviour. “The other thing we learnt in the research is that 81% of consumers use at least one reward card at a fuel stop … the Sanlam money saver had the highest engagement,” Ellens said.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.