SHELL SOUTH AFRICA
SHELL SOUTH AFRICA
Shell Drives Roll Out of
Retail Network PRODUCTION: Karl Pietersen
When you pull up to refill at a Shell service station, gone are the days of ‘splash and dash’ petrol fill-up. Today, you’ll find a whole host of retail offerings that bring convenient services to drivers, helping to make their journeys that little bit better.
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Driving East down the M2 in Johannesburg, towards Germiston, between Denver and the Gables, one could be forgiven for feeling rather bored. The Francois Oberholzer Freeway is not the most exciting of roads. Flat, with grassy verges, looking onto various industrial sites, this Jo’burg service road stretches
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from Main Reef Road in the West, South of the city, to the N3 in the East. It’s straight, long and rather dull. But it is a vital transport link for the city and as such, it is a busy road, often laden with cars, vans and trucks. This is one of the reasons that global fuel and automotive powerhouse corporation, Shell, chose the road for a
fully equipped service station. Offering a mix of Shell fuel products, as well as an unrivalled retail offering, this is a service station with a difference. Ultra City Johannesburg, as it is known, is an all-encompassing retail forecourt and epitomises the offering that Shell is looking to roll out across the country in a bid to gain market share in a
INDUSTRY FOCUS: AUTOMOTIVE
// PEOPLE’S LIFESTYLES HAVE EVOLVED AND CONSUMERS ARE LOOKING FOR MUCH MORE THAN JUST FUEL WHEN VISITING A SERVICE STATION // challenging environment where fuel prices are strictly regulated. As Enterprise Africa has learned in recent years, Shell has poured resources into its forecourt operations and Retail Marketing Manager of Shell SA Downstream, Yaasier Abrahams explained last year that new partnerships are extremely helpful in boosting traffic. “What we do well in South Africa
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is leverage partnerships. Because of the fuels regulations within SA, oil companies are not allowed to have loyalty programmes and we can’t incentivise fuel sales, but our partners can,” he says. “Because margins are regulated, the non-fuel retailing space is where you actually start seeing money and differentiation from competition.” By installing Vida e Caffe outlets on forecourts, and following that with the rollout of partnerships with Clicks, KFC, Steers and Vitality, Shell offers a whole host of products and services for South Africa’s drivers. Convenience items such as groceries, snacks and drinks are complemented by quick service restaurants, contactless payment offerings and a network of more than 600 sites. “People’s lifestyles have evolved and consumers are looking for much more than just fuel when visiting a service station,” details Abrahams.
“Where we’ve put in coffee shops, we’ve seen the basket size in the store increase and we’re also seeing an uplift in fuel volumes because we’re attracting more consumers from the forecourt into the stores. “In terms of investments, where we are putting in coffee, we are still seeing improvements in the overall purchase size and CR basket size, and the group doesn’t see that in other markets. That is because we have a full-service model and we can use our service staff to upsell products and build one-on-one relationships with customers.” Shell’s nearest competitors have seen the success achieved by this world-recognised brand and all are now looking to bolster their foot traffic by competing with non-fuel offerings. “It’s an exciting time for us,” admits Abrahams. “As consumers wants and needs have changed, and as technology has shifted, it’s opened up so many opportunities for Shell.
SHELL SOUTH AFRICA
“We have more than 100 quickservice restaurants at our forecourts, catering to the growing demand for food across the network.” When he spoke to IgnitionLIVE at the Ultra City on the M2, he said that the site attracts around 128,000 visitors every day. He spoke of the importance of installing local feeling across the retail network, as well as understanding the historic success that has been achieved over the company’s 116 year life in South African. “Shell was the first to introduce motorway sites in the late 1990s in this country and those are still some of the best located sites on our national routes. Understanding where population growth is coming from and where the new suburbs and hubs are coming from is absolutely critical. Taking the data on what customers are buying in the area
and what the market segment is looking at all determines what offers you put on the forecourts. “We take great pride in our ‘Welcome to Shell’ service ethic that we instil in our forecourt service attendants.” STRONG GLOBAL PERFORMANCE Away from South Africa, Shell displayed its ongoing global dominance when it released its 2017 Annual Report. Global CEO Ben van Beurden detailed successes in increasing earnings, disposing of non-core assets and bringing new projects on board. “Shell delivered a strong financial performance in 2017. We are making good progress towards building a world-class investment case,” he began. “Income for the period was $13.4 billion in 2017 compared with $4.8 billion in 2016. Earnings on a current
cost of supplies basis were $12.5 billion, compared with $3.7 billion in 2016. “Our delivery of new projects continues and we remain on track to deliver one million barrels of oil equivalent a day (boe/d) from new projects between 2014 and 2018. “Our $30 billion divestment programme for 2016-18 made good progress in 2017. Divestments included oil sands interests in Canada, onshore upstream operations in Gabon, a number of assets in the UK North Sea, and our shares in Woodside in Australia,” he said. Globally, the company continues to be recognised as an industry leader with its presence across all continents and in all major and developing markets almost unmatched. The red and yellow colour scheme is a welcome sight for drivers, especially on the Jo’burg M2
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INDUSTRY FOCUS: AUTOMOTIVE
where modern and exciting service stops are not common. NEW CHAIRMAN Last year, Shell SA’s longstanding chairman, the esteemed businessman Bonang Mohale, announced that he would step down from the role in the company he joined nine years ago. Since joining in 2009, the formerChairman and Vice President Sales & Operations Downstream and Vice President Upstream helped to increase the businesses retail network and drive traffic through the company’s refinery. He also served as CEO of Black Leadership South Africa and was a member of the country’s Institute of Directors. He was replaced by Hloniphizwe Mtolo, promoted from General Manager for Retail and the Downstream South Africa. When he announced his decision, Mohale said: “I am honoured to have been part of this dynamic organisation
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// WE HAVE MORE THAN 100 QUICK-SERVICE RESTAURANTS AT OUR FORECOURTS, CATERING TO THE GROWING DEMAND FOR FOOD ACROSS THE NETWORK // and to have had the opportunity to lead, serve and uphold the values and principles of the organisation. My journey in Shell has been truly remarkable and enriching. I leave Shell South Africa with contentment knowing that our business demonstrated resilience, continuous improvement and notable growth.” Mtolo commented: “It is an
exceptional opportunity to be appointed to this role, I look forward to working with all Shell partners to pursue our purpose of providing reliable energy solutions.” In March, Mtolo joined with prominent CEOs from other South African organisations to launch Brand South Africa’s ‘CEO’s Know’ campaign, a movement hoped to push South Africa as an investment destination. FRACKING Shell has previously expressed interest in extracting natural gas from the desert plains in the Karoo. Widely reported in the US as a clean, safe and sustainable energy source, obtaining natural gas by fracturing shale rocks deep in the earth and releasing gas is seen as a new energy frontier. But there is serious opposition to this relatively new concept. However, after years of research, Shell still believes that it could exploit the Karoo’s resources.
SHELL SOUTH AFRICA
Mtolo will look to meet with opposition to the idea in the near future after the Treasure the Karoo Action Group (TKAG) and Afriforum wrote an open letter to all energy organisations with an interest in fracking. TKAG CEO Jonathan Deal recently reiterated his thoughts on the idea of drilling in the Karoo: “It doesn’t make economic sense as South Africa can source the gas elsewhere at much lower costs and without any of the risks posed to underground water, farming and tourism. “It’s a non-starter and appears to be pushed by those who want to and will indeed make a lot of money in the short term at a great cost to the environment and local communities.” He also reminded of the country’s water crisis and stated that fracking is a water-heavy operation. Mtolo will meet with Karoo stakeholders and will discuss all aspect of the company’s plans following a SA
government announcement in March 2017 that fracking would be given the go ahead. “Based on the balance of available scientific evidence, government took a decision to proceed with the development of shale gas in the Karoo formation of South Africa,” said formerMineral Resources Minister, Mosebenzi Zwane. Zwane was replaced by Gwede Mantashe in February 2018. Wherever Shell sources its energy resources from, its position in South Africa as an automotive, energy and industrial industry leader is not in question. The 20,000-plus employees that work across the breadth of the country are part of a growing business that has its eyes on a top retail position as well as recognition as a leading energy and lubricants supplier. “We have such a strong heritage, particularly with our history with Formula 1 and our Ferrari technical endorsement. Most recently, we also have the
BMW M-Power recommendation for Shell’s performance fuels, and we are represented across all the major motorsports with our fuels and lubricants,” Abrahams told IgnitionLIVE. “We are a confident nation behind the wheel. South African’s drive for around 27 minutes per day,” he added. Fortunately, Shell is also a confident company and in the future it will look to replicate the success of Ultra City on the M2 at new sites throughout the country. Utilising its partnerships with the likes of Vida e Caffe, Clicks and KFC, Shell is driving convenience and driving its consumers. Full steam ahead for this very South African but very global company.
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