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Four trends shaping the fuel retail sector in SA

By in Business, Economy, Finance on April 19, 2016

With over 4 600 fuel forecourts currently in operation and more expected in the future, this industry is rapidly growing as a key driver of revenue for fuel stations in South Africa.

Ronél Fester, FNB Franchise Industry Specialist, says the success and profitability of fuel forecourts lies in their ability to understand and meet the ever changing needs of consumers, while conveniently providing them with exceptional service at any time of the day. Even in the toughest economic conditions this business model has proven to be successful for service stations.

For instance, convenience shopping currently allows consumers to fill their petrol tanks, buy coffee, muffins or even fresh fruits while on their way to work. This gives fuel retailers a competitive edge and the opportunity to penetrate a growing market. 

“As more retail brands invest in this concept, competition has increased, leading to a battle for market share. Therefore, fuel retailers should constantly aim to innovate, reinvent themselves and keep abreast of industry developments to remain relevant,” says Fester, as she unpacks four trends currently shaping the sector.

  • Competitive pricing – while fuel forecourts provide consumers with the convenience of shopping 24/7 they still need to set realistic and competitive prices. Although price has traditionally never been a deciding factor, tough economic conditions have led consumers to no longer just look for convenience, but value for money, which makes it essential for retailers to constantly review prices.
  • Staff motivation and training – staff retention and performance is central to the success of forecourt stores. Employees are often easily discouraged due to long working hours and weekend shifts. As a result, many fuel retailers are investing in training and up skilling their employees which results in personal growth and development.

Forecourt managers also motivate staff by offering them rewards and incentives for good work and excellent customer service.  

  • Sustainable energy solutions the cost of electricity is one of the biggest challenges that keeps fuel retailers awake at night. Consequently, more forecourt stores are investing in renewable energy solutions to lower input costs and reduce their dependency on the grid. Energy intensive appliances such as fuel pumps, lighting, air conditioners and refrigeration systems are now being successfully operated through solar power during the day.

Fester says although solar power requires a substantial investment upfront, forecourt retailers can approach their financial services providers to find out more about finance solutions available.

  • Meeting changing customer needs – Forecourt retailers study the behaviour of customers and use this insight to improve product and service offerings.

Loyalty and rewards programmes are also being successfully used as marketing tools to attract and retain customers, as they enable retailers to better understand their preferences and buying patterns. Data and insights generated through loyalty programmes further enables forecourt retailers to make strategic and informed long-term business decisions.

“Like any other business, the fuel retail sector is not immune to economic headwinds; in fact, it is not an easy sector to operate in. However, it is by far one of the industries that still offers growth potential for entrepreneurs that are not afraid of challenges,” concludes Fester.