Fuel sales are becoming less important to the success of forecourts in South Africa.
While petrol and diesel sales have served as the core of the petrol station business model for decades, this is starting to change due to shifts in consumer expectations, new technology, and economic trends.
This is according to Karen Keylock, National Retail Franchising Manager at Nedbank Commercial Banking.
Keylock explained that the South African fuel retailer sector is not in decline; rather, it is evolving to meet new demands.
She added that this is not a unique observation, as the same topic has been a source of discussion at recent fuel retailer conferences.
While global fuel supplies are under pressure, petrol forecourts remain one of the most valuable pieces of real estate in the modern economy.
Keylock said that petrol stations are being reshaped by a number of factors, including the rise of fuel-efficient hybrids, work-from-home shifts, the cost-of-living crisis, e-hailing, last-mile deliveries, cheaper domestic flights, public transport, and the gradual adoption of electric vehicles (EVs).
All of these trends are steadily erasing petrol and diesel as the dominant sources of revenue at forecourts.
“While fuel’s dominance as a profit driver is declining, these trends are unlocking new opportunities for value creation and diversification,” said Keylock.
This is supported by research the National Association of Convenience Stores (NACS), which concluded that fuel retailers can no longer rely on petrol alone.
Instead of fuel, forecourts are now focusing on “add-on” goods and services, including everyday items like energy drinks, mineral water, snacks like chips, and staples like soft drinks, bread, and cigarettes are also top sellers.
Data from NielsenIQ showed that forecourt convenience stores can have as many as 13,000 goods in stock, and that just 1% of this can generate half of its total revenue.
“Growth is not about expanding product ranges indiscriminately, but about curating the right mix, elevating quality, and designing a differentiated customer experience,” said Keylock.
In other countries, goods like fresh food, coffee, and premium convenience offerings have become anchors for forecourt profitability, illustrating the untapped potential that South Africa’s petrol station franchises explore.
The future of petrol stations in South Africa
Over the coming years, petrol stations are set to evolve into all-in-one hubs of economic activity catering to a variety of everyday needs.
This process was spurred on by the Covid-19 pandemic, which reshaped commuting and shopping habits for many households.
During Covid-19, proximity mattered most. Today, hybrid routines and e-commerce have expanded consumer choice and intensified competition for foot traffic, wrote BusinessTech.
The transition to new-energy vehicles like hybrids and EVs is another key factor, as petrol stations that include charging stations will be better prepared to meet future demand.
Adding to this, new technologies like artificial intelligence, sensor-based theft prevention, data-driven inventory systems, and digital loyalty programs will help to improve operational efficiency and drive customer engagement, according to Keylock.
She said the idea that South Africa’s petrol stations will disappear is misleading, and that those willing to expand their businesses beyond fuel sales will be the ones who will endure in the future.
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