Retail

Watch out, Woolworths

Bianke Neethling • 17 March 2025

SPAR is planning to roll out a new chain of high-end stores across the country, with plans to open about 30 to 40 grocery stores.

SPAR is planning this chain of about 30 to 40 high-end grocery stores called SPAR Gourmet, with the first set to open in August 2025.

This move targets more affluent South African shoppers, a market currently served by Shoprite’s Checkers and Woolworths Food.

In his presentation on SPAR’s recent Capital Markets Day, SPAR South Africa CEO Max Oliva said these stores will be rolled out in high-end residential, urban and transient sites.

They will take the form of small supermarkets and fresh food stores, with the opportunity for SPAR to convert some of its KWIKSPAR stores into SPAR Gourmet locations.

“We have a huge KWIKSPAR footprint in Southern Africa. Our niche KWIKSPARs play into gourmet; our not-so-niche KWIKSPARs can play into SPARs,” Oliva explained.

This chain will employ a high-margin retail model, with differentiated ranges and bespoke product offerings through its Private Label SPAR Signature Selection range and strategic supplier partners.

The range and assortment of products at these stores will be specific to the chain’s targeted customer base.

“Key focus areas include premium food solutions, coffee, bakery, and indulgent products, with a curated assortment tailored to meet the needs of a more affluent customer base,” Oliva said.

Specifically, this chain’s objectives will focus on three key “shopper missions” – food-for-now, food-for-later and top-up shop.

These objectives will be made possible with the inclusion of SPAR’s key strategic partnerships. One of these partners will be Vida e Caffe, which will have a presence in all of SPAR’s Gourmet stores.

SPAR’s Private Label range will also play a big part in this roll-out. Oliva said in his presentation that Private Label’s significance is growing worldwide.

Around 35% of all groceries sold in Europe and 23% in the US are private-label products.

SPAR South Africa boasts 23% Private Label penetration.

“Our Private label branding is built around the ‘as good as the best for less’ promise and a ‘double your money back guarantee’, ensuring quality that meets or exceeds national brand standards,” the retailer said.

Oliva said SPAR South Africa has been partnering with some of its international businesses, including SPAR Austria, that already operate gourmet stores to gain inspiration for the eventual rollout of SPAR Gourmet stores.

However, it plans to work with its niche local retailers to “Africanise” a solution that will make this format work in South Africa.

“This is where Gourmet plays in – to give those niche retailers a bit of licence to show off and do something special,” Oliva said.

Road to recovery

The development of SPAR Gourmet is part of SPAR’s segmentation strategy, which will also see the retailer revamp its discount chain, SaveMor.

“We have to get that right – the positioning with our customers in South Africa. We have too many formats across the stables,” Oliva said.

He said the retailer has the opportunity to rationalise its formats going forward in line with market trends.

This means SPAR will operate with a similar model to its competitors, Pick n Pay and Shoprite, which both have higher and lower-end chains in the market.

Conversely, Woolworths dominates the higher end of South Africa’s retail market, with Woolworths Food being its best-performing segment.

SPAR has been on the road to recovery as the retailer looks to rebound from several strategic missteps made over the past few years.

Many of SPAR’s troubles over the past few years have centred around the botched implementation of a SAP enterprise resource planning (ERP) system at its distribution centre in KwaZulu-Natal.

This was significant because SPAR is the second-largest retailer in South Africa and its KwaZulu-Natal distribution centre is its largest.

The unsuccessful implementation of the new SAP system made fulfilling orders to retailers extremely challenging and was compounded by staﬀ being inadequately trained to deal with such a scenario.

SPAR had to resort to encouraging their KZN retailers to source products from other suppliers, leading to a drop in loyalty.

The retailer also made some bad investments in its European operations and recently had to sell its SPAR Poland business.

At the same time, SPAR’s largest competitor, Shoprite, went from strength to strength and is consistently gaining market share from other retailers.

Therefore, SPAR is looking to win back market share. With its SAP system now fully functional and its Poland operations sold off, the retailer is looking to position itself for growth.