SPAR emerges as South Africa’s ‘biggest loser’ in the grocery delivery war

SPAR is emerging as the “biggest loser” in South Africa’s grocery delivery revolution, as it increasingly falls behind rivals such as Checkers, Woolworths, and Pick n Pay.

South Africa’s grocery retail sector is being reshaped by the rapid rise of online shopping and on-demand delivery services, and one retailer appears to be falling dangerously behind.

Competitors such as Shoprite’s Checkers, Woolworths, and Pick n Pay continue to invest heavily in digital platforms and delivery networks.

However, retail analyst Finance Ghost told The Money Show that SPAR has become the biggest casualty of the country’s grocery delivery revolution. “The biggest loser is unquestionably SPAR,” he said.

His comments come as SPAR’s latest interim results revealed mounting pressure on its South African operations.

For the six months ended March 2026, the retailer reported a pre-tax loss of R50.9 million compared to a pre-tax profit of R602.9 million a year earlier.

Although the group returned to overall profitability, largely thanks to its Irish operations, the performance of its Southern African business paints a far less encouraging picture.

Revenue in the segment increased by 3.9% to R51.6 billion, but operating profit plunged 72.6% to R237.7 million. This left the division with a razor-thin operating margin of just 0.5%.

The deterioration continues a trend that has been building for years. Since 2022, SPAR’s Southern African operating margin has collapsed from 3.2% to 0.5%, despite consistent revenue growth.

According to the Finance Ghost, one of the biggest shifts in South African retail is that convenience is increasingly replacing location as the key competitive advantage.

“The way that we shop looks completely different to how it used to be,” he said. “It’s all about our phone now and a lot less about anchor tenants.”

For decades, retailers competed by securing prime store locations and attracting foot traffic. Today, consumers increasingly expect groceries to arrive at their doorstep within minutes.

This has created a significant advantage for retailers with sophisticated delivery networks and strong technology platforms.

Shoprite’s Checkers Sixty60 remains the clear market leader, with sales through the platform growing more than 30% in the latest reporting period.

Woolworths has also gained traction through Woolies Dash, while Pick n Pay has seen growth through its asap! service and Mr D partnership.

SPAR faces mounting challenges

According to the Finance Ghost, retailers can no longer afford to treat online shopping as a secondary channel. “I think the risk for any retailer is to be half pregnant,” he said.

“You’ve got to either decide that you’re going to be the best of the best at in-store or you’re going to be really good with online fulfilment. But I just don’t think that the market is forgiving enough for any retailer to go half and half.”

The Finance Ghost said successful omnichannel retailing also depends on substantial investment in technology, data systems, and fulfilment capabilities.

“You can’t do omnichannel properly if you don’t do the upfront capex of having the systems in place,” he said.

“Only really at that point can you actually start to behave like a proper omnichannel retailer.” This is an area where SPAR has faced repeated setbacks.

The retailer continues to deal with the consequences of previous technology failures, including its troubled SAP implementation.

During the latest reporting period, SPAR recognised a further impairment of R30.7 million on its GiCom software module after determining that it would not be deployed.

The group is also facing a R168 million damages claim from the Giannacopoulos Group linked to earlier software-related disruptions, forcing it to recognise an additional settlement provision.

Perhaps the clearest example of SPAR’s difficulties in adapting to the new retail environment is its delivery platform, SPAR2U.

Unlike Checkers Sixty60, which has become a common sight on South African roads, the Finance Ghost said SPAR’s offering has failed to gain meaningful traction.

“SPAR2U has unfortunately been a complete non-event,” he said, adding that there are many issues, such as getting retailers to participate and access to data. The platform’s limited visibility highlights the scale of the challenge.

“I still to this day don’t think I’ve seen a SPAR2U vehicle on the road, and I live about three kilometres away from an excellent SPAR. Whereas if you throw a stone on the road, you’ll hit a Sixty60 scooter,” he said.

Other retailers are leaving SPAR in the dust

Part of SPAR’s problem lies in its business model. Unlike competitors that operate large numbers of company-owned stores, SPAR relies heavily on independent franchisees. This makes rolling out national initiatives more complex.

“The group, the wholesaler, would then have to provide the fulfilment arm, and they would have to get the retailers to buy into participating in it,” the Finance Ghost explained.

He added that the relationship between SPAR and its independent retailers has become increasingly strained.

“The relationship between SPAR, the wholesaler, and the independent retailer is already somewhat fractured,” he said. Those challenges are now being reflected in the company’s financial performance.

In addition to software impairments, SPAR’s South African business was hit by impairments related to newly acquired stores, losses on store disposals, and additional write-downs on property assets.

While the group’s liquor and health divisions delivered encouraging growth, these gains were not enough to offset broader pressures.

The Finance Ghost stressed that the concern is not simply that SPAR is losing market share today, but that the gap between it and its competitors continues to widen.

“The South African business is pretty marginally profitable now, and I just worry that they’re getting left behind more and more and more by the competition,” he said.

The retailer’s challenge is no longer merely fixing stores or cutting costs. It is competing in a retail environment where convenience, technology and fulfilment have become as important as product range and location.

“I’m starting to struggle to form a bull case on how to actually get out of that,” the Finance Ghost added.