April 14, 2020
Could COVID-19 foster Revolution in South African Fuel Retail Industry?
As the entire country is waging war against one of the most merciless viruses in human history, a new era is being ushered, which will not only help fight the virus but completely change the way we socialise, move and do business. This is the new normal and will live with us far beyond Covid-19. Fuel Retail Industry is no exception.
Could it be possible that we have always been prolonging the inevitable? Is it possible that our industry is long overdue for a massive restructure? Is Covid-19 really the real cause for such dramatic changes in businesses and communities at large, or it is simply accelerating what was already happening? These are some of the crucial questions worth thinking about.
Before I get to the gist of this article, let me give you some basic statistics which will help contextualise my point of view.
In South Africa there are about 5000 petrol stations across all brands, employing a total of over 100 000 petrol attendants. While the number of attendants employed vary per petrol station depending on the size and volume sales, each petrol station will have an average of 15 – 20 petrol attendants (excluding cashiers and merchandisers who sometimes may multi-task).
An average petrol station in South Africa would sell between 300 000 to 350 000 litres per month, requiring no less than 15 petrol attendants who work different shifts. Due to economic disparities between township and suburban petrol stations, the number of vehicles filled by each petrol attendant per day may vary. This is because in lower LSM, one petrol attendant services 3 times more vehicles for the same volumes as that of a higher LSM petrol station, due to low average fill per vehicle. Simply put, lower LSM petrol stations average fill per car is about 12 lts - 15 lts whereas in upmarket petrol stations, the average is about 30 lts - 35 lts. Therefore, a petrol station in township for example may require slightly more number of petrol attendants to sell the same amount of volumes as an upmarket petrol station. With those numbers in mind, a lower LSM petrol station can serve an average of 35 000 cars per month.
Based on the above numbers, each petrol attend could potentially serve just over 2300 motorists per month. One may argue that some of these are repeat customers and that the actual number of new customers served could be lower. According to a research conducted by Lightstone in 2019, a significant majority of customers are loyal to the same (brand) petrol station. The study shows that 83% stop once a week to fill up while 13% visit the service station twice in week. These numbers may also vary from site to site depending on location and LSM. All things being equal, we can safely assume that at least 50% of the 35000 vehicles filled per month are repeat business, which leave us with 17500. One petrol attendant therefore could potentially be in contact with 1150 motorist.
Why Are All These Numbers Important?
BECAUSE PETROL ATTENDANTS COULD POTENTIALLY BE THE BIGGEST TRANSPORTERS OF COVID-19, UNLESS WE PROACTIVELY RESORT TO DRASTIC AND UNCONVENTIONAL WAYS OF SERVING OUR CUSTOMERS.
All that’s needed is for just one petrol attendant to contract the virus and the entire community gets exposed. If one attendant infects just 5 colleagues in his shift, who each contact 1150 motorists PER DAY, this could be catastrophic! By the time the virus shows any symptoms, at least 64400 people could have been exposed and potentially infected!
WHAT SHOULD BE DONE TO AVOID THIS CATASTROPHE?
While we do not claim to have all the answers, our intention is to open up a debate among all
By stakeholders to come up with progressive interventions, in order to strike a balance between putting people’s lives first while ensuring job retention. This is certainly not an easy task in country ravaged by unprecedented unemployment rate.
We however believe that it is high time that the industry engages on whether we should be looking at self-service as an option at our petrol stations. Admittedly, this would come at a massive cost to employees who would be ultimate casualties of retrenchments, however with creative interventions there could be opportunities to absorb some of these employees through new opportunities.
Pros and Cons of Self Service
- Reducing the number of motorists' infections by petrol attendants, who each could infect their families, friends and colleagues
- Reduction of pump price by appropriate petrol attendants’ allocation of the 75c/litre staff related cost, which will go a long way in boosting economy
- Reduction of staff related operational costs for a retailer, ultimately improving profitability sustainability
- Eradicating risk of contaminations as motorists will be responsible for filling their own vehicles
- Reduction of insurance and maintenance costs for retailers associated with contaminations, drive offs etc.
- Pre-payment, which will help eradicate drive offs
- Increase in unemployment not all staff can be absorbed within the existing business operations
- Some SA motorists totally rely on Petrol Attendants to help them with the correct grade of fuel, correct engine oil for their vehicle etc. Very few know how to inflate tyres.
- Surge in fraudulent card (cloned cards) transactions if no one is checking them
What other opportunities can be identified?
- Expansion of Quick Service Restaurants (QSR’s) in service station
- Introduction or expansion of home delivery services
These and many other ideas will emerge as stakeholders open up discussions on how best do we protect not only our own petrol attendants but the communities which we serve. Could this be the time to hit reset button?
“The Fear Of An Event Is Always Worse Than The Event Itself” - VT
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