Image created by AI
The landscape of South African petrol station forecourts is rapidly transforming as traditional retail giants leverage their brand power to capitalize on the R33 billion market. Names such as OK Express, SPAR Express, Pick n Pay Express, and Woolworths Foodstop are becoming fixtures at these busy hubs.
Over the past five years, industry data from Trade Intelligence has demonstrated a strong expansion by these retail brands, increasing by 44.6% with 145 new stores launched. However, the expansion pace has experienced a moderate slowdown in the first half of 2024, adding just six more to the fleet.
OK Express, under the Shoprite umbrella, is leading the charge with strategic partnerships, including TotalEnergies and Puma, as well as a growing presence in Sasol stations. The franchise division is a unique feather in OK's cap, offering petrol station owners a share in the success of the forecourt convenience stores.
SPAR, while linked with Shell, has also established its SPAR Express brand under a franchise model, mirroring OK's approach and seeing similar benefits. Despite Shell's existing Shell Select, SPAR has managed to carve a space for its express brand within Shell's network.
Pick n Pay Express has aligned with BP stations, aggressively growing its reach and offering consumers new convenience options at petrol pumps. Conversely, Woolworths maintains a different strategy, keeping Foodstop locations company-owned, ensuring stringent control over product quality within Engen service stations.
The competition is stiffened by the presence of FreshStop. The Food Lovers Market extension dominates the market through a successful partnership with Caltex, now transitioning into Astron Energy under Glencore. Starting in 2009 and recently extended, the collaboration boasts over 800 forecourts.
Investing nearly R1 billion into FreshStop since inception, Food Lovers Market has witnessed robust growth, integrating Seattle Coffee Company and generating over 7,000 jobs, according to FreshStop CEO Joe Boyle. FreshStop stands tall with 330 outlets accompanied by 126 Seattle Coffee spots, a sizeable lead over its competitors.
The surging interest of retail giants in forecourt markets has a palpable rationale. Trade Intelligence’s insights reveal that retail sales within petrol stations are insulated from fuel sales volatility. With an 8.5% growth in 2023, convenience becomes the competitive edge, decoupled from the wavering trends in fuel consumption.
Moreover, the physical expansion is notable. Approximately 600 new forecourts have cropped up since 2019, marking a 14.5% increase in fuel forecourt footprint. It's evident fuel retailers are pivoting towards retail services to offset the decline in fuel revenue.
"Non-fuel retail offerings are gaining prominence in the forecourt sector," says Sandy Sutton, Retail Analyst at Trade Intelligence. The move amplifies as a strategic one, ensuring that these spaces don't merely serve as pit stops for fuel, but become a retail destination in their own right.
In a climate where convenience is king, South Africa's retail behemoths are closely contesting to secure their footprint at the nation's bustling crossroads of commerce - the petrol station forecourt.