18 Varing Street P O Box 9059 George, 6530 15 March 2021 Our Ref: 20-058_CIA(rev0) Paprenax Trading 6 CC Pinnacle Point MOSSEL BAY 6500 FEASIBILITY STUDY AND COMPETITOR IMPACT ASSESSMENT FOR PROPOSED NEW FILLING STATION, ERF 13996, MOSSELBAY 1 INTRODUCTION Urban Engineering (Pty) Ltd was appointed by Paprenax Trading 6 CC to undertake a competitor impact assessment for a proposed new filling station on erf 13996, KwaNonqaba, Mossel Bay. 2 OBJECTIVE OF THIS REPORT The aim of this report is to assess the effect of the proposed new filling station on competitor sites. It is therefore necessary to estimate the projected sales of the proposed site as well as all existing filling stations. The assessment was based on the site being developed into a standard filling station with a canopy covered forecourt with four pump islands, a fast-food restaurant and a 370 m 2 convenience store (refer to section 2 below). 3 SITE LOCALITY AND PROPOSED DEVELOPMENT Erf 13996 hereafter referred to as “the proposed site” or “the site” is located in the residential suburb of KwaNonqaba in Mossel Bay, Western Cape. The site is bordered by Mooney Street in the north, Mayixhale street in the east and Louis Fourie road (TR33/1) in the south. A basic locality plan has been included as Figure 1 below. Figure 1 – Locality of the proposed site
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18 Varing Street P O Box 9059 George, 6530
15 March 2021 Our Ref: 20-058_CIA(rev0)
Paprenax Trading 6 CC Pinnacle Point MOSSEL BAY 6500
FEASIBILITY STUDY AND COMPETITOR IMPACT ASSESSMENT FOR PROPOSED NEW FILLING STATION, ERF 13996, MOSSELBAY
1 INTRODUCTION
Urban Engineering (Pty) Ltd was appointed by Paprenax Trading 6 CC to undertake a competitor
impact assessment for a proposed new filling station on erf 13996, KwaNonqaba, Mossel Bay.
2 OBJECTIVE OF THIS REPORT
The aim of this report is to assess the effect of the proposed new filling station on competitor sites.
It is therefore necessary to estimate the projected sales of the proposed site as well as all existing
filling stations.
The assessment was based on the site being developed into a standard filling station with a canopy
covered forecourt with four pump islands, a fast-food restaurant and a 370 m2 convenience store
(refer to section 2 below).
3 SITE LOCALITY AND PROPOSED DEVELOPMENT
Erf 13996 hereafter referred to as “the proposed site” or “the site” is located in the residential
suburb of KwaNonqaba in Mossel Bay, Western Cape. The site is bordered by Mooney Street in the
north, Mayixhale street in the east and Louis Fourie road (TR33/1) in the south. A basic locality plan
has been included as Figure 1 below.
Figure 1 – Locality of the proposed site
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The site is approximately 2,850 m2 in size. It is the site owner’s intention to develop a mixed-use site
that will provide the following:
• Filling station (80,000 litres storage capacity, 8 filling bays)
• Convenience store (185 m2 ground floor and 185 m2 first floor)
• Fast food restaurant (175m2 ground floor only)
• Office building (140m2 ground floor only)
The relevant site development plan has been attached as Annexure A, but for ease of reference an
extract has been attached as Figure 2 below.
Figure 2 – Proposed site development plan
KwaNonqaba is a low cost and affordable housing and informal settlement in Mossel Bay. The
estimated population of Mossel Bay is in excess of 100,000.
The surrounding residential area and new residential development will form a strong dedicated local
market for the proposed site. At present there is no filling station in KwaNonqaba. The only two
sites in close proximity are the Shell and Caltex approximately 2.3 km away. These sites are located
north and south of Louis Fourie road and are ideally located for transient traffic on this route and
local traffic in the suburbs to the north and south of Louis Fourie road, including KwaNonqaba. The
assessment area is within a radius of 3 km from the proposed site.
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4 ESTIMATED SALES OF THE PROPOSED SITE
The following empirical formula is used by the fuel industry to calculate the expected average litres
of fuel to be sold in a month:
𝐿 = 𝐴𝐷𝑇 × �̅� × 𝑝 × 𝑑
Where 𝐿 = Litres per month,
𝐴𝐷𝑇 = Vehicles per day (Annual Daily Traffic)
�̅� = Average fill per vehicle
𝑝 = Percentage vehicles of pass by traffic turning into the site
𝑑 = Average full normal trading days in a month
There is an established correlation between fuel sales and convenience store sales. The estimated
fuel, convenience store and restaurant sales combined will determine a site’s impact on competitor
sites and feasibility. The following sections detail the approach taken for estimating the fuel and
convenience store sales for the proposed development.
4.1 EXISTING TRAFFIC DEMAND
Traffic counts were used the determine the traffic demand past the site. A classified 12-hour traffic
count was conducted on Wednesday 28 August 2019 at the intersection of Louis Fourie road and
Mayixhale street, KwaNonqaba. The count was taken prior to the Covid-19 pandemic and traffic
volumes were uninfluenced by any form of lockdown or deviations as a result of unusual traffic
patterns.
The detailed traffic volumes have been attached as Annexure B.
The average daily traffic (ADT - light and heavy vehicles combined) exposed to the site is
approximately 18,055 vehicles per day at this stage, of which 16,638 are light passenger vehicles.
The ADT at the site on the day of the count is broken down as follows:
• ± 3229 veh/day travelling south bound on Mayixhale street past the site (A1).
• ± 3375 veh/day travelling north bound onto Mayixhale street past the site (B1).
• ± 9267 veh/day of mostly transient traffic travelling west or east bound on the Louis Fourie
road past the site that may possibly be intercepted (C1).
• ± 2184 veh/day travelling in past the site in a direction such that it is conservatively estimated
that these vehicles will not be intercepted (D1).
4.2 TRAFFIC GROWTH WITHIN THE ASSESSMENT AREA
Current traffic growth rates are expected to be low due to the economic conditions in the country
and the Covid-19 pandemic. Nevertheless, KwaNonqaba and the surrounding suburbs are
considered developing residentials areas. The Western Cape Government Road Network
Information System (RNIS) provides traffic count data and growth rates for various legs of Louis
Fourie road.
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Considering the existing economic circumstances and the potential growth in the area, the traffic
growth rates below are used for the assessment based on the RNIS growth rates:
• 3.5% per annum is assumed for the first 5 years (2022 – 2026)
• 2.0% per annum is assumed for the following 5 years (2027 – 2031); and
• 1.0% per annum thereafter
4.3 FUTURE ROAD CHANGES
The upgrade of Trunk Road TR33/1 (Contract C964) has already been implemented at the relevant
junction and no other significant changes are currently planned for the immediate local road
network.
4.4 AVERAGE FILL RATE PER VEHICLE
Average fuel fill rates per vehicle for filling stations vary depending on the type of traffic that the
site is exposed to. Where the majority of traffic is transient, higher average fill rates can be
expected.
The proposed site will cater for some transient commuter traffic travelling on Louis Fourie road
and local traffic travelling on Mayixhale and Louis Fourie road. The site will be exposed mainly to
local and residential traffic, with a number of minibus taxis being likely. The minibus taxis will likely
have slightly higher fill rates.
Based on previous similar studies and volume forecasts for new filling stations, the average petrol
fill rates per vehicle are estimated at 12 litres per vehicle for a combination of light and heavy
local and transient traffic for the purpose of this assessment.
4.5 EVALUATION OF FACTORS DETERMINING INCEPTION PERCENTAGES
Various factors will influence the interception percentages of passing vehicle traffic for a filling
station, with convenience having the highest impact and filling station brand the lowest.
For example:
• If there are two filling stations on either side of a road between a motorist’s residence and
place of employment, the service station on the homebound side of the road will be more
convenient as a motorist will usually fill up on the way home.
• If there are two equally convenient filling stations on route, a motorist will likely choose the
station offering the best service or facilities.
• If two sites offer the same convenience and the same level of service or facilities, a motorist
will likely choose their preferred oil company brand.
The various factors determining the inception or turn-in percentage were evaluated for the
proposed site and a rating given to each. The rating scale and factors are described below:
RATING SCALE FOR CRITERIA DETERMINING TURN-IN PERCENTAGE
1 - VERY POOR 2 - POOR 3 - AVERAGE 4 - GOOD 5 - VERY GOOD
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VISIBILITY
A service station with excellent visibility will present a good view of the service station from a
reasonable distance with the main sign, canopy, entrance to the site and pumping position being
visible from the road. The visibility will determine how much time a passing motorist has to decide
whether to use a specific facility or not, considering the relevant speed limit. In a suburban
environment, at least 7 to 10 seconds of decision time is considered adequate.
Visibility for the proposed site is rated 3. The filling station will be visible from the Louis Fourie
road and Mayixhale street. Since a high percentage of traffic travelling on Mayixhale street is
considered to be residential traffic, these motorists will be aware of the existence of the filling
station.
ACCESSIBILTY
A filling station with excellent accessibility will have unhindered access from the nearside road
without any level problems, a good site layout, good on-site turning circles and easy exit back into
the traffic flow.
Accessibility of the site is rated 2 as accessibility is poor for transient traffic and the main entrance
and exit from and onto Mayixhale street is only available to north bound traffic on Mayixhale
street. Secondary access is provided from Mooney street.
TRAFFIC VOLUMES
Traffic volume is the number of vehicles passing a site at the entrance of the filling station
determined from the traffic count. High traffic flows on a nearby road will not necessarily equate
to high traffic volumes through the site. The type of traffic (home bound, work bound, transient
etc.) passing a site will have a major effect on inception percentages.
The traffic volume on this route is rated 3. Mayixhale street is the north-to-south link through
KwaNonqaba from Louis Fourie road in the north (Voorbaai) and Louis Fourie road in the south,
but serves mostly local traffic. The site will serve mainly residential traffic with limited transient
and commercial traffic.
TRADE AREA
Trade area is a description of the type of area a service station is located in. These are ranked
from best (1) to worst (7) as 1) High-density residential areas, 2) Medium density residential, 3)
Low density residential, 4) CBD, 5) Industrial, 6) Commuter and 7) Transient.
Cyclic or seasonal effects (such as on national routes or in purely residential areas during holiday
periods) and traffic generators such as hospitals, schools, libraries and shops in the area also
contribute to the value of the trade area.
The trade area is rated 3. KwaNonqaba is a low-income residential area. There are a few new low-
cost housing developments in the area, although these are located closer to competitor sites.
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OPPOSITION SITES NEARBY
Opposition sites nearby may negatively affect estimated sales volumes. Sites outside a 3 km radius
or sites with different traffic flows (such as sites close to the target site but on the other side of a
barrier), will likely not have a major effect on estimate volumes.
The target site has two opposition sites targeting the local market in KwaNonqaba, but these sites
are approximately 2.3 km away from the site – opposition is rated 3. These existing sites also have
their own local market.
FACILITIES PROVIDED
Additional facilities such as a convenience store, restaurant or other facilities are taking into
consideration. Good quality facilities will increase inception percentages.
As the site will offer a fast-food restaurant and convenience store, the facilities provided are
rated 4.
SERVICES PROVIDED
The quality of service offered, the attitude and appearance of the staff and the tasks they perform
while attending to the motorist will affect inception percentages. As this is a proposed
development, current service is not rated.
4.6 ESTIMATED INCEPTION PERCENTAGES
The average rating for the proposed site based on the factors influencing the turn-in percentage
as described in section 4.5 above is 3 (AVERAGE). The estimated interception percentages for light
and heavy vehicles are provided in Table 1 below. These percentages are based on previous
studies.
ADT = ± 18,055 veh/day PASSING SITE
ROAD AND DIRECTION INTERCEPTION PERCENTAGE
MAYIXHALE RD SOUTH BOUND (A1) 6 %
MAYIXHALE RD NORTH BOUND (B1) 12 %
POSSIBLY INTERCEPTABLE TRANSIENT TRAFFIC (C1) 1 %
NEGLIGIBLE TRAFFIC ON OR OFF LOUIS FOURIE RD (D1) 0.5 %
Table 1 – Estimated inception percentages
The volume calculations in Table 2 and Table 3 below are based on the interception percentages
given in Table 1.
4.7 FULL TRADING DAYS IN MONTHS
The definition of full normal trading days in a month is the number of days where trading is similar
to that of typical weekday (Tuesday, Wednesday or Thursday) during a week with no holidays or
public holidays. Trading days for filling stations are determined by traffic volumes. Thus, if there
is no variation in traffic there will be 30.5 (365/12) full normal trading days in a month. If traffic
demand is lower over a weekend, the full normal trading days in a month will decrease, even
though a filling station is operated 24 hours per day.
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Although transient traffic on Louis Fourie road will decrease on weekends, local traffic will remain
nearly constant throughout the year. As the site will serve mainly local/resident traffic, the
number of trading days per month is estimated at 30.
4.8 ESTIMATE MONTHLY FUEL SALES
The estimated fuel sales are calculated in Table 2 and Table 3 below:
Table 2 – Estimated monthly sales based on inception percentages
Table 3 – Forecast estimated sales
From Table 3 it follows that after 2 years of operation, the proposed filling station will exceed the
Department of Energy’s Benchmark Service Station of 2,789,581 liter per year (average of 232,487
per month) as per the Regulatory Accounts System (RAS).
4.9 CONVENIENCE STORE SALES
There is a correlation between fuel sales and convenience store sales that is commonly used in
the industry. The average convenience store sales are estimated as between R1.20 and R1.50 per
litre of fuel sold for a service station with a branded convenience store and in-store food offering.
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As the target market is local residential, customer loyalty or customers who frequent a specific
filling station may also influence sales.
5 IMPACT ON EXISTING FILLING STATIONS
To determine the impact of a proposed new filling station on surrounding existing filling stations,
common industry practice is to assess the effect on all existing filling stations within a 3 km radius
of the proposed new filling station. Physical barriers such as freeways, railway lines and airports or
natural barriers such as mountains, rivers and dams will create different catchment markets for a
site which will dampen the effect.
For this assessment, the assessment area was divided into sections based on the type of traffic (local
vs transient) when considering the effect on competitor sites:
• The local market of KwaNonqaba east and west of the Mayixhale street
• Louis Fourie road - transient traffic on the provincial road
• The area north of KwaNonqaba, separated from the local catchment market by a large open
area with mixed industrial and informal agricultural developments.
The existing filling stations and factors that will determine the impact of the proposed site on these
existing sites are discussed in the sections below.
5.1 COMPETITOR SITES
Three existing filling stations are located within the assessment area (within a 3km radius of the
site). Other filling stations outside the assessment area may be impacted by the site, but the effect
is considered negligible as these sites have different target and catchment markets. Figure 3
illustrates the location of the competitor filling stations in relation to the proposed site within the
assessment area.
Figure 3 – Location of competitor sites in relation to a 3 km radius assessment area
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5.1.1 CALTEX DE’ALMEIDA SERVICE STATION
This is an old-fashioned style filling station. It has a convenience store and ATM, but no
restaurant. It is frequented by minibus taxis as its attraction is the accessibility of residential
areas adjacent to the site. With the residential trade area, it is estimated that this site pumps in
the region of 250 000 litres per month.
Figure 4 – Caltex D’Almeida filling station
5.1.2 SHELL MOSSEL BAY MALL
This is more modern style filling station than the Caltex filling station described above. It is
situated at the Mossel Bay mall shopping centre. Due to the location, the layout may appear
cramped and accessibility limited. There is limited parking space available on site. This station’s
convenience store is currently being renovated which will improve the facilities offered. It is
estimated that this filling station pumps in excess of 300,000 litres per month. This will likely
increase once the convenience store renovation has been completed.
Figure 5 - Shell Mossel Bay Mall filling station
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5.1.3 TOTAL SSK
This small modern style filling station with a convenience store is located 3.6 km away from the
proposed site when travelling via Mayixhale street. It is located next to the SSK Agricultural
Cooperation. Although it is inside the 3 km radius of the assessment area, it shares a trade area
with the two subsequent sites. As this site lies on the north side of Louis Fourie road and is
separated from the proposed site by a natural barrier (a ridge and a large area of mixed
agricultural/industrial use with undeveloped land in between), it has its own catchment market.
The effect of the proposed site on this existing filling station is considered negligible. It is
estimated that this filling station pumps in excess of 300,000 litres per month.
Figure 6 - Total SSK filling station
5.1.4 ATLANTIC OIL VOORBAAI AND ENGEN OCEAN VIEW
These two sites are located next to each other close to the Total SSK filling station, but outside
the 3 km radius assessment area and with different trade areas and catchment markets to the
proposed site. The impact of the new site on these sites will likely only be the sharing of some
north bound transient traffic on Louis Fourie road. It is estimated that both these sites pump in
excess of 200,000 litres per month.
Figure 7 – Atlantic Oil Voorbaai
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Figure 8 – Engen Ocean View
5.2 SHARED TRAFFIC VOLUMES
To assess the impact of the proposed filling station on other existing filling stations, the shared
traffic streams were determined based on the 2016 RNIS traffic counts with adjusted growth rates
applied. The percentage of shared traffic only gives an indication of the daily traffic movement
patterns and no inference can be made on loss of fuel sales at existing stations.
The estimated shared traffic volumes are presented in Table 4 below.
Table 4 – Shared traffic between the new site and existing filling stations
5.3 MOVING MARKET FACTOR BETWEEN FILLING STATIONS
A new filling station will have an impact on nearby filling stations that serve the same traffic
stream. Most filling stations attract between 1% to 8% of the passing traffic stream. The remaining
traffic will fill up elsewhere along their route. For the purposed of this assessment, the main area
of influence is considered within a 3 km radius of the proposed site, with a small effect on other
sites outside the assessment area.
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The number of filling stations in an area will determine the overall impact of any new filling station
on the remaining filling stations. If there is only one existing filling station in an area, a new filling
station close to the existing one will take away a large percentage of the existing filling station’s
customers. If there are a large number of filling stations in an area, a new filling station will take
away a smaller percentage of the market share of each existing filling station.
If an existing filling station captures 8% of the passing traffic and a new fillings station upstream
or downstream opens, also capturing 8% of the passing traffic, the two filling stations will not
capture the same 8% of the passing traffic stream. When a new filling station opens there will be
a moving market – customers of the existing filling station that will “move” to the new filling
station due various factors.
The said factors are detailed in Table 5 below with estimated moving market factors for each
factor.
Table 5 – Moving market factor
The various factors described thus far can be combined with the estimated fuel sales to assess the
potential impact of the proposed site on existing sites. The information is summarized in Table 6
below. These calculations are attached as Annexure C.
Table 6 - Impact on surrounding sites
The development and operation of the proposed new filling station will initially have a negative
effect on the five closest filling stations, but all existing filling stations should be able to recover
the possible lost sales within 3 to 5 years.
A brief explanation of each column in Table 6 is presented below:
PRESENT ESTIMATED FUEL SALE VOLUME – the current estimated fuel sales volumes per month
for each site.
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The present fuel sales volume is estimated by considering the following:
• Potential pass-by traffic per day (ADT) as per Table 4
• Trading days per month – assume 30 days per month
• Average fill for the sites in the area – estimated as 12 litres/vehicle
• Average interception rate for traffic passing the site (ranging from 3.5 – 6.25 %)
MOVING MARKET FACTOR - Refer to Table 5
LOST FUEL SALES – potential sales lost to the proposed new filling station if developed, calculated
by multiplying the moving market factor with the present sales volume.
PRESENT FUEL SALES – LOST FUEL – potential remaining fuel sales after loss to the new filling
station.
THREE-YEAR FUTURE SALES – recovered fuel sales at the applicable growth rate (refer to section
4.2) to determine what the impact is on a competitor site once the proposed site reaches its
assumed potential after three years.
It is assumed that the fuel sales for the area can increase by 2-5% per annum, depending on the
new developments in the area. This growth will be driven by the completed new developments as
well as various planned developments in the area.
From Table 3, an approximation was made that the proposed site has a potential sales volume of
± 250 000 litres of fuel per month for the base year of which ± 175,000 – 210,000 litres per month
could possibly be gained from the surrounding sites.
Based on the potential growth and accessibility of available new markets, it is estimated that the
proposed new filling station will not jeopardize the feasibility of any competitor filling stations in
the assessment area.
6 CONCLUSION
The estimated fuel sales volume for the proposed filling station’s third year of operation is
± 280 000 litres per month. The volume is expected to grow as the surrounding areas develops. The
convenience store and fast-food restaurant facilities will likely increase the inception percentages
of passing traffic. The estimated projected fuel sales are summarized in Table 3.
It is our opinion that the impact of the proposed new filling station development will not jeopardize
the viability of any of the existing filling stations in the area. General traffic growth in the area will
likely ensure the recovery of some losses incurred due to competition with the new filling station.
There are also other options available to existing filling stations to increase the attractiveness of
their offering and recover potential fuel sales losses.
Prepared by:
Ruan Espach (B. Eng) (on behalf of Urban Engineering (Pty) Ltd)
Urban Engineering (Pty) Ltd
ANNEXURE A SITE DEVELOPMENT PLAN
ERF 13996 MOSSELBAAI - Hersoneer na BZVI - 2885 vk.m
WILL SHARE TRANSIENT TRAFFIC - DIFFERENT CATCHMENT MARKETS AND MORE THAN 3 KM APARTWILL SHARE TRANSIENT TRAFFIC - DIFFERENT CATCHMENT MARKETS AND MORE THAN 3 KM APART
Notes: 1. The average conservative inception percentage from previous studies is 4.92%. This percentage is adjusted based on factors influencing inception percentages.2. Estimated sales volume is rounded to the nearest 10,000 litres.
WILL SHARE LOCAL TRAFFIC. PROPOSED SITE WILL HAVE BETTER FACIILITIES AND WILL BE MORE CONVENIENT TO LOCAL TRAFFIC
GENERAL COMMENT
WILL SHARE LOCAL AND TRANSIENT TRAFFIC. SHELL HAS GOOD FACILITIESWILL SHARE TRANSIENT TRAFFIC - DIFFERENT CATCHMENT MARKETS.