Food retail in South Africa is characterised by an extremely competitive trading environment. For example, this year, Choppies Enterprises, a Botswana budget retailer, announced it will be exiting the local market due to low growth and high unemployment rates. Consumers are facing increasing living costs and food inflation.

The SPAR branded private label products continue offering real consumer value and quality, and remain a shopping differentiator for our retailers. SPAR’s distribution capability and market leading brands are well positioned to support independent retailers to deliver exceptional value to price-sensitive consumers.

The economy remained challenging for the past few years, forcing us to permanently adapt to this environment. We started thinking differently about sustainability and success. We do not have the advantage of cash-flush consumers spending money on luxuries: most consumers want to buy essential products at competitive prices. This impacted retailer growth, profitability and loyalty. Retailers who invested in refurbishments and opened new stores clearly set themselves apart from the competition.

Show more…

Many retailers participated in focused meetings and working sessions around cash flow and retail profitability. We worked with them on financial health and creating awareness of the factors driving sustainability. It is important that we keep our retailers in the game, as we can maintain and grow our market share with the prospect of better trading conditions.

Other efforts to support retailers include appointing additional regional operations managers to assist with the financial controls and analyses of stores, to give category leadership and focus, and to ignite retail growth in stores with negative sales trends and subinflation growth.

The SPAR corporate stores are equally challenged in current market conditions. We ensure employees with appropriate skills are given the latitude and time to focus on the turnaround of loss-making stores. Although we managed to sell numerous corporate stores to independent retailers, there are several requiring difficult decisions, especially where our plans for turnarounds did not materialise.

The rollout of our inland consolidation project continues, with North and South Rand completed and testing taking place for the Lowveld distribution centre. The project will centralise about 6 500 slow-moving stock keeping units into one warehouse. This will free up space in the three distribution centres to introduce new lines and reduce their stock levels, enabling them to become more agile and efficient.

Once the Lowveld integration is completed, additional ranges will be available and efforts to increase total perishables warehouse sales will begin. These initiatives are expected to significantly increase retail loyalty.

Show more…

We experienced some challenges and delays since starting the consolidation, including process issues, space constraints and balancing loads. These were solved and we now have a smooth and optimised setup.

As part of the project, new lines were added onto the fast-moving liquor range and a new caged warehouse section was created to accommodate every stock keeping unit within the range.

The balance of the lines classified as slow moving remains in the inland consolidation centre and is cross-docked daily. The transshipment liquor process was terminated, and the inland consolidation system is fully operational.

An important benefit of the project is the prolonged life of all three distribution centres: with optimised space and lines they operate much longer without having to incur costs for expanding. Although we still plan to build a new facility on the West Rand, we now have more time and will potentially have to build a much smaller facility than anticipated.

To improve our distribution capability in the Transkei and Eastern Cape, we will move into a new strategic depot in Mthatha to replace the facility that we rented for the past 10 years. The new depot is customised for SPAR and built according to our requirements. Expected benefits include reduced transport and fuel costs.

Fuel costs comprise 4.1% of SPAR’s overall expenses and constituted R212.1 million for the year (2018: R184.4 million). Therefore, the SPAR vehicle fleet’s continuous improvement is a core, long-term focus. Our logistics team continues finding alternative ways to get products to market and ensure load optimisation, as well as driver management and effective routing solutions. Over the past 18 months, the KwaZulu-Natal distribution centre successfully piloted various prototypes for the world’s first commercially available, battery-electric truck refrigeration system.

Show more…

The battery-electric truck refrigeration system will replace the standard diesel truck fridge and could save up to 90% of monthly fuel and servicing costs. The system results in a significant CO2 reduction while recharging batteries at an average of 30 minutes and running for up to 18 hours between charges.

About 30% of the SPAR fleet consists of refrigerated trucks to be converted to the new system over time.

SPAR KwaZulu-Natal was the first in Africa to build and trial a hybrid fuel and battery powered rigid truck in collaboration with the engineering department of the University of KwaZulu-Natal.

We continue prioritising delivery from source where possible. This entails factory collection and point-of-order delivery, thereby avoiding the distance, handling cost and risk, and administration requirements of transfer into regional distribution centres.

SPAR adopted several digitisation initiatives to enhance the in-store shopping experience, and to ensure data can be used to meet customers’ needs. A live, online, digital-driven concept in liquor stores allows retailers to customise content for events, the weather or time of day. Consumer behaviour can be tracked and the effectiveness of promotions monitored.

Show more…

A similar concept was piloted for personal care items in SPAR stores. This was typically a difficult category for retailers to drive. The concept is focused on making the personal care isle interactive by featuring scan codes and screens, which means promotions can be customised to specific market segments. Pilots illustrated a significant sales increase for participating stores.

The SPAR rewards programme has grown from 300 000 card activations per month in 2015 to more than 6 million this year. Participating consumers enjoy the benefit of free purchases and preferential treatment in competitions. We promoted baskets of goods catering to market segments and created substantial savings for consumers. The combination of instant rewards and accumulated benefits continues to attract new members. At store level, retailers are experiencing additional sales driven by the Text Me system, as these can be targeted for high impact.

How our stores performed in 2019


New stores opened


Stores refurbished


Stores closed


Stores disposed of


Corporate stores acquired*

* SPAR acquires these stores as they constitute strategically important sites. These stores are often refurbished and sold to new retailers. In the meantime, they offer the group a unique opportunity to offer practical retail training and serve as a testing group for experimental products and services.

Of all retailers, SPAR has the most stores in urban residential areas in South Africa. While striving to give our customers an enjoyable and memorable shopping experience, we also offer more than 1 300 exclusive SPAR house brand products, available at stores nationwide.

We make premium quality products at very competitive prices using only the best and freshest ingredients. To ensure we keep ahead of brand standards, our products are tested monthly by an independent laboratory. Because we are so sure of our quality, we offer customers a “Double Your Money Back Quality Guarantee” on our SPAR house brand products, including fresh produce purchased from us.

Our in-store concepts are becoming a strong differentiator and income driver as the brands gain traction. Beantree proved its success as a standalone coffee shop whether in store or adjacent to SPAR stores. Chikka Chicken is also maturing into a standalone option for retailers.

Our goal is to provide our customers with unwavering quality of the highest standards, complemented by excellent and personalised service in a warm and inviting community environment.

Read about South Africa’s financial performance here.

Retail turnover increased by


R84.1 billion

(2018: R79.7 billion)

Wholesale turnover increased by


R57.6 billion

(2018: R53.7 billion)

New stores opened


(2018: 44)

Stores closed


(2018: 10)

Stores refurbished


(2018: 170)

SPAR branded stores are at the core of our offering: a format well suited to urban and non-urban South African markets being the driving format for countries such as Botswana and Zambia. Refurbished stores add to positive consumer experiences and support turnover growth despite challenging trading conditions.

Customer numbers in SPAR and SUPERSPAR formats continue declining in some areas, but baskets significantly increased, indicating a further move by consumers to shop less frequently for higher-average baskets.

The rollout of 17 SPAR Express stores was excellent. Great looking stores with expanded offerings are becoming competitive and attracting new business.

SPAR Mini is in a testing phase. It takes the form of a small satellite or extension store near the main retail store offering a limited fresh food grocery range and relying on the main store for systems and replenishment support.

Retail turnover increased by


R12.8 billion

(2018: R11.2 billion)

Wholesale turnover increased by


R7.6 billion

(2018: R6.5 billion)

New stores opened


(2018: 45)

Stores closed


(2018: 4)

Stores refurbished


(2018: 53)

TOPS at SPAR, the local liquor store format for beer, wine and spirits, continues growing superbly with great stores, excellent promotions and high levels of consumer loyalty. This positive trend was further accelerated by the SPAR Guild’s decision to allow retailers to open more than one TOPS stores. Furthermore, TOPS stores no longer have to be within line of sight of a SPAR, SUPERSPAR or KWIKSPAR store.

In the past year, owner involvement was driven by performance through better focus and attention to detail in stores. The increased implementation of category management principles was successful showing significant improvements in ranging, stockholding, ordering and service levels.

Employee training played an important role in changing the customer experience. We saw improvements where employees work according to our GUEST programme; they did online training covering all areas of liquor trading/retailing and completed continuous in-store training.

The continual upgrading and revamping of existing stores went a long way in giving us better than average sales. In the past year, new stores launched with increased space compared to existing store averages and are some of the best in the country.

Liquor is growing at almost double the rate of grocery sales. This suggests that the trend towards home consumption continues gaining momentum. Craft gin remains a strong growth driver and beer grew largely due to aggressive marketing by big players. This is supported by innovation in beer: ciders and flavoured beers are in high demand.

Retail turnover increased by


R14.1 billion

(2018: R13.3 billion)

Existing store retail turnover increased


(2018: 7.4%)

Wholesale turnover increased by


R8.1 billion

(2018: R7.6 billion)

New stores opened


(2018: 18)

Stores closed


(2018: 10)

Stores refurbished


(2018: 51)

Build it is a fully fledged builder’s merchant offering, combining expert advice with quality products to suit all building material requirements for housing, including finishes.

The continued woes of the building industry have a far reaching effect on suppliers, construction companies and contractors. The lack of government spending on infrastructure is the main dampener to growth in the macrosector; however, political uncertainty, unemployment and a lack of consumer confidence and spending directly affect our business. Several stores were seriously affected by service delivery and political protests.

Some stores reduced their previously high ratio of credit sales to prevent those sales from becoming unrecoverable, which in turn reduced distribution centre sales.

This year, Build it assisted retailers by assessing every store’s growth prospects, identified potential category improvements and where loyalty opportunities exist. We developed store-specific game plans based on this assessment.

Our model is agile and retailers have the freedom to negotiate with contractors depending on size and scale of the project. Our target market also proved to be more resilient, consisting of the burgeoning middle class.

Following the rebranding of Build it in October last year, we crystallised brand standards, store designs and category management principles. About 41 stores transitioned to the new brand. SPAR offered retailers incentives to assist with costs, ensuring the rebranding is of high-quality standards.

We are rolling out the Build it Plus store format. The implementation of the GUEST service and culture programme is bearing fruit. We support retailers with an aggressive marketing and promotions programme and have a loyalty programme targeting contractors who constitute 65% of our customer base.

Training of retail employees is a priority particularly with regard to specialist product knowledge. We currently have two outsourced specialists in the decorative and plumbing areas of expertise.

Build it’s future opportunity is in embracing new concepts, primarily driven by building materials. This includes providing finishes previously in the specialist stores domain, creating a more complete offering. We also plan to include ancillary services such as board, key and glass cutting as elements of a one-stop destination store. These efforts aim to improve cash flows and deliver high margins, ensuring the profitability of our retailers.

Retail turnover increased by


R1 298.0 billion

(2018: R961.0 million)

Organic turnover increased


(2018: 17.2%)

New stores opened


(2018: 26)

Stores closed


(2018: 15)

Stores refurbished


(2018: 2)

Pharmacy at SPAR is a SPAR store format and service unique to South Africa. There is a significant opportunity to promote this store format to independent pharmacists and expand the dedicated supply to SPAR pharmacies through S Buys, the pharmacy wholesaler acquired by SPAR in 2018.

To drive Pharmacy at SPAR loyalty, including preferred procurement through S Buys, we focus on service and profitability. The service components performed well; stock management materially improved and a specific delivery window was created for each pharmacy. This allows the pharmacist to better manage orders and patient expectations.

Pharmacy profitability is achieved through procurement efficiencies in the dispensary and trading margins in the front shop.

At the S Buys distribution centre, upgrades and improvements to receiving and dispatch areas positively impacted operations and efficiencies.

We introduced new concepts into Pharmacy at SPAR including Beantree Express, the SPAR Natural range and the first national Pharmacy at SPAR smart vending machine. Planned future initiatives include introducing wellness clinics at some of the bigger pharmacy stores and opening a satellite warehouse in the coastal region.

Retail turnover increased by


R1.1 billion

(2018: R983.0 million)

New stores opened


(2018: 12)

Stores closed


(2018: 8)

Stores refurbished


(2018: 0)

The SaveMor group of stores continues offering a compelling value proposition for consumers, and an equally attractive entry point for black retailers making their first investment. These smaller stores bring a basic product range to price-conscious consumers in township and rural markets, have lower capital investment requirements and focus on active cost management.