Spar has no margin for error
In an unforgiving sector, the retailer has its work cut out to address market positioning and other fundamental issues
Grocery margins are razor thin. Even for local juggernaut Shoprite it’s around mid-single digits at best, high by international standards. And that’s when discussing traditional retailers. A wholesaler such as Spar, which sells goods to a branded network of independent retailers, needs to allow for the latter’s markups too. It’s a tough business model in an industry where there’s little room for error.
Unfortunately for Spar, it has made some serious mistakes in the past few years. This includes losing billions of rand on a failed Polish venture which never gained enough scale to be competitive, embarking on a botched SAP rollout that cost the group billions in turnover and profits, and becoming embroiled in a nasty legal spat with a large franchisee group that hurt its reputation and potentially its pockets too...
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