We marvel at the stock that the Spar store holds and some of the different items available in the Spar that you just don’t seem to get at your local Spar in Cape Town or Johannesburg.
While we as consumers love the special food items that we find at the holiday Spar, are they really good for Spar, the listed entity?
Spar is a distribution business that distrib- utes stock from their distribution centres to the predominantly franchised Spar stores around the country.
While Spar expects some level of loyalty from these franchisees in the form of the amount of goods that they purchase from Spar, they do of course offer some latitude so you can get that special goodie at your holiday Spar.
Loyalty challenges and the impact of SAP issues
It’s this loyalty that has plagued Spar South Africa, after a woeful SAP implementation at their KwaZulu-Natal (KZN) distribution centre (DC) where franchisees could not reliably get what they had always bought from Spar and had to improvise and find product elsewhere, it led these franchisees down the path of direct procurement and not via the Spar DC.
This has driven a gap between Spar retail sales (i.e. through the tills) in the 18 weeks to end January 2025 to growth of 3.4%, while sales out of the DCs only grew at 1.6%.
Although loyalty is improving slowly in KZN it is still a problem that Spar is working hard to resolve.
When sales through the DCs don't keep up with the retail sales, it puts pressure on margins in the distribution business. Spar management is working hard to close this gap and take the South African net margin back to where it was in the past, a healthy 3%.
This task is made all the more di...
While we as consumers love the special food items that we find at the holiday Spar, are they really good for Spar, the listed entity?
Spar is a distribution business that distrib- utes stock from their distribution centres to the predominantly franchised Spar stores around the country.
While Spar expects some level of loyalty from these franchisees in the form of the amount of goods that they purchase from Spar, they do of course offer some latitude so you can get that special goodie at your holiday Spar.
Loyalty challenges and the impact of SAP issues
It’s this loyalty that has plagued Spar South Africa, after a woeful SAP implementation at their KwaZulu-Natal (KZN) distribution centre (DC) where franchisees could not reliably get what they had always bought from Spar and had to improvise and find product elsewhere, it led these franchisees down the path of direct procurement and not via the Spar DC.
This has driven a gap between Spar retail sales (i.e. through the tills) in the 18 weeks to end January 2025 to growth of 3.4%, while sales out of the DCs only grew at 1.6%.
Although loyalty is improving slowly in KZN it is still a problem that Spar is working hard to resolve.
When sales through the DCs don't keep up with the retail sales, it puts pressure on margins in the distribution business. Spar management is working hard to close this gap and take the South African net margin back to where it was in the past, a healthy 3%.
This task is made all the more di...
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The Mercury (Digital) - 1 Issue, March 24, 2025