Revved for retail: Falling fuel revenue drives forecourt reinvention in South Africa

The humble garage or petrol station – in South African parlance – is having an identity crisis. For decades, the business model was simple: sell fuel, tack on a convenience store and capture passing traffic. But that model is faltering and the forecourt is being forced to reinvent itself.

At a Nedbank briefing unpacking the Forecourt Retail Report 2025/26 last week, the message was blunt: the future of the forecourt is not fuel-led.

The warning signs are there. Fuel consumption in South Africa fell 6.3% in 2024, part of a longer-term structural decline that has been driven by more efficient vehicles, hybrid working and financially constrained consumers.

Nedbank economist Crystal Huntley said although consumer spending was gradually returning and GDP growth improved in 2025, global risks remained significant. Geopolitical tensions around the Strait of Hormuz, which carries about 20% of global oil supply, have pushed oil prices higher and reintroduced inflationary pressures.

“Domestic conditions are improving, and consumer activity is recovering, but global risks, particularly oil, continue to pose a major threat to stability. While inflation is easing, rising oil prices and a weaker rand could push it above the Reserve Bank’s target range, as we saw during the Russia-Ukraine conflict in 2022,” Huntley said.

“That episode illustrates how rapidly fuel-driven inflation can spill over into broader price increases and influence consumer behaviour.”

This creates a familiar chain reaction: higher fuel costs, a weaker rand, rising inflation and renewed pressure on household finances. In this environment, the very product forecourts rely on is becoming both less predictable and less profitable. However, if fuel is the past, retail is pointing to the future.

Huntley said forecourt operators should plan for volatility as price shocks, demand fluctuations and cautious consumer spending would shape the market.

“Even with some recovery, consumers remain highly price-sensitive, and margins will stay tight. Growth will need to come from diversification and operational efficiency.”

Fuel still dominates total revenue, but the margins tell a different story. Fuel margins are tightly regulated and thin, whereas convenience retail offers significantly higher returns.

Enter the retail value-add

Forecourt convenience sales increased about 4% to R40-billion in 2024 from about 3,000 forecourt convenience stores, under the fuel brand and/or through a supermarket partner. This represents a 15% contribution to South Africa’s fast-moving consumer goods primary convenience channels. It’s expected to hit about R48-billion in 2028.

One of the biggest keys is the convenience factor. Nearly half of all customers visiting forecourt stores – 46%– are not buying fuel. Increasingly, they are stopping for coffee, meals, snacks or small groceries.

Research shows forecourt stores are becoming credible retail destinations. More than one in five consumers see them as a destination rather than a stopgap, especially younger, late-night and township shoppers.

Nicola Allen, forecourt analyst at Trade Intelligence, said 1% of all service station stops occur at midnight, but 2% of convenience stops happen then, indicating that consumers are twice as likely to be stopping for non-fuel reasons at that time. Allen forecasts forecourt convenience growth of between 4.5% and 5.4% for 2026 to 2028.

What do the numbers show?

This is not simply a cyclical downturn, says Allen. “We are seeing long-term behavioural and economic shifts – ranging from constrained consumers and hybrid working models, to improved fuel efficiency – that are fundamentally reducing demand.”

Despite declining fuel consumption since 2019, the number of forecourts continued to grow, increasing market saturation and intensifying competitive ­pressure on profitability. Industry stakeholders report that some forecourts – particularly in major metros – have experienced volume declines of 15% to 20% since the Covid-19 pandemic, with operators in effect “cannibalising” one another in an already constrained market.

Additional challenges include rising operational costs, unregulated competition from informal and foreign-owned retailers and illicit fuel trading, all of which further erode margins and sustainability.

Against this, forecourt convenience retail has emerged as a key growth driver. As fuel sales have declined, rising convenience sales have helped to stabilise overall forecourt income, with revenue per litre continuing to increase.

In some cases, forecourts are leaning heavily into food, positioning themselves as quick-service destinations. Others are expanding into services such as licence renewals, parcel collection or battery rentals.

BP, for example, has a nationwide refurbishment programme that includes plans to add up to 40 new sites by 2030. Services will include enhanced BP Express stores; tyre changes; licence disc renewals; expanded quick-service restaurant partnerships and a bPOWERd low-carbon battery rental service.

Surprisingly, one forecourt owner reported that a Shoprite opening next to him actually increased the footfall and turnover in his forecourt convenience store because of increased activity on site, shoppers wanting shorter queues and shoppers preferring the forecourt in spite of higher prices because they felt they got better service.

Shell Boksburg Motors’ owner said: “I’m a Select store, which means I don’t have that big bakery. So, I don’t have hot food, but can I stay without hot food? Hell no. So, I needed to find a way to be creative around it. If I can’t make my place bigger, I need to make a plan to sell hot food, and I did. I got the food truck… and I’m selling what I think people would like for the market that I’m in, from sandwiches to pap and steak, because my market is really people who are working in the area.”

Retail partners

Supermarket brands are playing a major role in this transformation. Partnerships with retailers such as Woolworths, Pick n Pay, Checkers and OK are reshaping the forecourt experience, bringing stronger product ranges, improved pricing perception and greater trust among consumers.

By mid-2025, the biggest player was FreshStop, owned by Food Lover’s Market, which through its partnership with Astron Energy (formerly Caltex) has more than 330 stores and 126 Seattle Coffee outlets.

There are about 100 Woolworths sites at Engen forecourts, and Pick n Pay Express has grown to about 188 BP sites. Coffee houses are making an appearance, too, from Seattle Coffee to Mugg & Bean On-the-Move, Bootlegger Coffee Company and Vida e Caffè.

Electric and hybrid vehicles add another layer to this transition for fuel stations. Although EV adoption in South Africa is relatively low, it is growing. Over time, Allen anticipates that this will further erode fuel demand, reinforcing the need for alternative revenue streams. However, infrastructure constraints and affordability challenges mean that internal combustion engines will remain dominant for years to come.

All this makes a difference, too, to any aspiring business owner seeking funding for a forecourt. “The forecourt of the future will be defined by diversification,” said Karen Keylock, national retail franchising manager at Nedbank Commercial Banking. “From a funding perspective, operators who adapt, diversify and differentiate will be best positioned for long-term success.” DM

This story first appeared in our weekly DM168 newspaper, available countrywide for R35.