Ricochet News

Fuel franchising sector in South Africa is growing

Mar 27, 2018
Fuel franchising sector in South Africa is growing

Fuel retail sector continues to grow in spite of the relatively sluggish economic growth in South Africa. According to the South African Petroleum Industry Association (SAPIA), this sector contributes 8.5% to the South African Gross Domestic Product (GDP).

“There are more than 4,600 service stations in South Africa and a collected annual turnover in excess of R324 billion. This industry has been gradually increasing over the past three years and we expect it to continue in the same trajectory over the next coming years,” says Ronél Fester, FNB Franchise Industry Specialist.

She shares five key insights that continue to characterize this important sector.

Biggest contributor to the bottom line: Fuel is still the main driver in this industry – the comparison ratio between money coming from a convenience store and fuel is about R1.20 to R1.40 per liter sold on the petrol station. 

Alternative Profit Opportunities (APOs):  Consumers enjoy convenience. As a result, more and more forecourts are becoming a one stop shop. Consumers are now looking to do their banking, shopping, quick service meal and convenience shopping, while they are filling their petrol tanks.

Fuel loyalty programs: This is no longer a question of can I do it or not, it is about how can I incentivize my customers and make them come back for more. If implemented well, this can be a very powerful tool to market your brand.

Technological advancements: With the ever changing environment, fuel stations are diversifying their offering and streamlining efficiencies to have less cash on site. This also reduces the stress issues of handling cash for the business owner and consumers.

Leading in Africa: South Africa is the biggest consumer of fuel on the African continent, claiming more than 20% of the market share. 

“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 offer growth potential for entrepreneurs that are looking for a proven business model that is lucrative,” concludes Fester.