A new approach to sustaining the fuel retail industry is required as technology and new trends are set to disrupt the way retailers operate, Absa franchise Africa head Dumisani Bengu said on Wednesday.
Speaking at the Fuel Retailers Association Conference, held on the sidelines of the Automechanika exhibition, in Johannesburg, he said an innovative response to the changing dynamics of the passenger and commercial transport and mobility systems was required to ensure the sustainability of the fuel retail sector.
“Global phenomena, such as the emergence and growth of electric vehicle technology; the proliferation and adoption of artificial intelligence giving rise to vehicle autonomy and self-driving cars; the Internet of Things giving rise to real-time connectivity; and the rise of the shared economy, are but a few new concepts that demand a much more intense level of engagement among stakeholders,” Bengu told delegates.
“The question is, are you paying attention to some of these phenomenon, understanding what they mean for your industry, and how you want to respond?”
He advised delegates that it was time to start considering and responding to these trends with a view to either protecting their business’s income or embracing alternative opportunities in response to the trends, as the sector plays a particularly important role in combatting South Africa’s persistent triple challenges of poverty, inequality and unemployment.
Bengu pointed to the 4 700 service stations and 90 000 employees spread across the country within an entrepreneurial network that required support.
Amid consumer convenience and technological disruptions, the fuel retail industry is also under threat from negative economic growth, reducing demand, growing fixed overhead costs, rising consumer goods inflation, the rising militancy of the labour force, rising wages, the issue of fuel supply and infrastructure constraints, and security and consistency of supply.
“Do you even think about the implications of the disruptions to the industry?” Bengu asked, citing the rise of mobile app-based transport services Taxify and Uber, the rise of car sharing and car pooling and the impact of the Gautrain and bus rapid transit systems.
“We see the effects of a shared economy, with Uber and Taxify disrupting business models,” he added.
Bengu further pointed to the minibus taxi transport industry which had been impacted on by the introduction of these new services.
The taxi industry, which generates about R40-billion a year in revenue, operates over 250 000 vehicles and employs over 600 000 people directly, and is responsible for transporting 15-million people daily.
This translates to the consumption of over 15-million litres a day and nearly 500-million litres a month of fuel.
“The industry is at the crossroads of disruption and this could risk 500-million litres of fuel a month,” Bengu said.
In commercial transportation, there were also transformative processes under way informed by urbanisation, the need for decongestion and air pollution and emissions reduction, besides the rapidly changing logistics arena.
“[We] ought to reflect on these trends and provide direction and leadership to ensure a sustainable future. [We need to engage and encourage] new innovation that will shape the role of the business in a fast-changing world,” he concluded.