February 2, 2005

By Dirk De Vynck

Cape Town - Clothing and food retailer Woolworths and Engen are set to make further inroads into the multibillion-rand forecourt convenience store market through the accelerated opening of Woolworths Food Stops on Engen forecourts.

Woolworths said the roll-out would start by mid-year, and 40 to 50 new outlets were planned for opening by 2008 at a rate of 10 to 15 a year.

Construction planning had already started, which would see more Woolworths Food Stops opening in the Western Cape, KwaZulu-Natal and Gauteng.

Engen would provide the capital required for the roll-out, and Woolworths would fund all operational costs.

Barbara Manson, the communications manager at Engen, said the cost of upgrading a service station to accommodate a Woolworths Food Stop was between R1 million and R1.5 million.

Woolworths said the partnership was based on a wholesaler relationship, meaning Woolworths would take a commission on the product sold to Engen.

The first Woolworths Food Stop opened its doors in September 2000 at Oranje Convenience Centre in Cape Town. This was the first time a major local retailer had entered the 24-hour convenience retail market.

The concept was successfully tested at two sites in Cape Town and three in Gauteng.
 
Richard Butt, Woolworths' product director, said: "We are delighted with the results and greatly look forward to the national roll-out.

"A strong presence in the 24-hour convenience markets means that we are reaching new and different customers.

"In effect, we are making the Woolworths brand available to younger, urban and suburban customers in a safe environment."

Engen dealers operate the Food Stops and they are trained and supported by Woolworths, which is responsible for the delivery of product to the outlets.

A joint Woolworths and Engen operations team manages the national network.

According to Woolworths, the products at a Woolworths Food Stop are priced at the same level as in all Woolworths Food stores.

Woolworths said the roll-out would not be affected by the intended merger between Engen and Sasol.

Research firm Nielsens has estimated the forecourt convenience store market at just over R4 billion a year, with growth of about 15.8 percent a year.

Woolworths' share price slipped 0.36 percent yesterday to close at R11, while the general retailers' sector fell 1.29 percent.