South Africa: growing forecourt market
Convenience forecourts are the fastest growing store format in the South African market, according to Nielsen.
Speaking at the Insight/NACS Convenience Africa Summit in South Africa last month (February), Moira Dewar, director retail services, Nielsen, presented the state of the forecourt convenience market against the economic backdrop.
Consumer confidence has improved in South Africa
Dewar revealed 471 new forecourt stores were opened in South Africa in 2008 taking the total number to 2,907.
These stores are now competing strongly with ‘majors’, she said. They added 176 new stores last year to reach a total 2,271 outlets. Branded superettes, meanwhile, are being squeezed and their numbers have dwindled from 1,108 in 2007 to 982 last year.
However, rural and urban self-service and counter service stores still make up the bulk of South Africa’s retail market, accounting for 93.5% of a total 94,932 stores.
But majors, branded superettes and forecourts command the lion’s share of sales. Despite representing just 6.5% of total store numbers, they account for 67.9% of turnover.
Within this group forecourts have the highest number of stores – 3.1% of the total – with the lowest amount of turnover, 3.3%.
Majors, in contrast, account for just 2.4% of stores but take 58.2% turnover.
Forecourts are more expensive too, said Dewar. Reporting average retail selling prices for a basket of goods during the six months to November/December 2008, Dewar said that on average forecourts were 11.5% more expensive than majors.
Dewar presented the data against the economic backdrop in South Africa.
While three of the South African economy’s key sectors, including retail, are in recession, inflation is beginning to track back as fuel prices fall, she said.
Nielsen’s Consumer Confidence Index has also improved marginally in South Africa in the second quarter of 2008 while the global average has continued to slide.
“The Consumer Price Index eased to 9.5% in December form 11.8% in November, the lowest in 10 months,” she said. “Fuel prices are now plunging and inflation is expected to return the official target of 3-6%. Another point drop in interest rates is also expected.”