Following today’s release of Spar’s figures for the 52 weeks ending 30th September 2024; Aliyah Siddika, Retail Analyst at GlobalData, a leading data and analytics company, offers her view:
“As a Group, Spar performed notably better this year compared with last, with operating profit increasing 15.1% to reach R2.90bn, versus a decline of 47.0% the previous year. Operating expenses came down at a Group level this year as Spar worked on improving cost management and reducing warehouse inefficiencies that increased labour and transport costs; the convenience retailer also benefited from foreign-currency translations.
“The performance of Spar in Europe has been relatively subdued, with 2.8% turnover growth in Ireland and South West England year-on-year, and a 6.2% decline in turnover in Switzerland. While the retailer pins this poor performance on macroeconomic conditions and the high cost of living, Spar’s perceived lack of value relative to competitors within the convenience sector, and poor promotion of its private-label range, continues to hinder growth.
“Intense competition in the convenience market in Ireland and South West England, with the expansion of grocers such as Asda and Waitrose in the convenience space, as well as price matching by established supermarkets such as Sainsbury’s, will further challenge Spar’s market position. To address these challenges and improve its competitiveness, Spar should promote its private label to offer enhanced value to customers. Diversifying the product range to align with evolving consumer preferences, such as introducing more organic and healthier options, will help Spar better meet the changing needs of its customer base and strengthen its market position.
“Spar’s Southern African market saw a 3.7% increase in turnover this financial year, and a 26.1% rise in operating profit. This growth in turnover was primarily fueled by a 7.0% increase in Spar private-label sales, indicating strong consumer adoption of the brand’s value proposition in South Africa. The success of Spar’s pharmacy offer, which grew by 14.5% during the same period, also played a significant role in driving foot traffic to stores as they serve customers seeking both prescriptions and groceries. This is a strategy that Spar could implement more broadly across its markets as it has proven successful, and aligns with the trend of convenience stores becoming more multifunctional spaces, offering services such as parcel drop-off points for instance. Consumers’ use of the SPAR2U on-demand shopping app in Southern Africa has also improved as it caters to consumers who increasingly choose to shop for groceries online and via rapid-delivery services.”
