Spar taking on Checkers, Pick n Pay and Woolworths with delivery in South Africa
The Spar group says that its newly launched on-demand delivery shopping platform SPAR2U is close to reaching critical mass, with plans to expand its operations in South Africa.
Reporting its annual results for the year ended September 2022, the group presented a sound set of results, given the economic headwinds facing businesses and consumers – not only in South Africa, but in all markets it operates, including Ireland, Switzerland and Poland.
Group turnover was up 6% to R135.6 billion, with operating profits up marginally (1.1%) to R3.43 billion for the period.
However, headline earnings we down, with HEPS 3% lower at 1,160 per share. The group declared a dividend of 400 cents, down 51% from 816 cents in 2021.
According to Spar, the group’s profitability continued to be impacted by the consequences of the pandemic in the first half of this financial year and new geopolitical circumstances, which have seen all regions experiencing fuel and energy cost pressures.
In South Africa, these pressures were further exacerbated by the impact of ongoing electricity load shedding.
Spar Southern Africa contributed 65.0% of turnover for the group and delivered strong growth in wholesale turnover of 8.4% to R88.1 billion.
This increase was assisted by an improved core grocery business performance which generated an increase in sales of 5.3%. Spar increased its promotional calendar to continue to attract cash-strapped consumers.
“This increased promotional activity, continued focus on store disciplines, a better fresh offering, as well as major store upgrades were key initiatives during the reporting period.”
Against the liquor trading restrictions in 2021, Tops at Spar delivered excellent liquor sales growth of 42.6%, rebounding strongly and reaffirming its position as the number one liquor brand in South Africa.
Notably, Spar made excellent progress with its newly developed on-demand shopping platform SPAR2U, which has gone live at 87 stores during the second half of the financial year.
“Feedback from consumers using this new channel has been extremely positive,” it said.
Spar launched SPAR2U in the first half of the reporting period. The platform is a consumer-facing, on-demand shopping platform for groceries and liquor.
Interest levels from Spar retailers to use the new platform remain high, the group said, and this is expected to enhance Spar’s ability to assist retailers in driving improved consumer service and engagement going forward.
The retailer said that the onboarding process has been rapid, with 87 sites as of 30 September 2022, and is about to reach critical mass.
It said that the platform is uniquely tailor-made for the group’s interdependent retail model and “takes all of the onerous effort out of our retailers’ hands, allowing them to focus on trading”.
The platform is a late entrant into a highly competitive market that is dominated by Checkers Sixty60. Other retailers also have their own on-demand platforms, including Woolworths’ Woolies Dash, which helped contribute to a 26% surge in online sales for the group in South Africa.
Pick n Pay, meanwhile, has two avenues of delivery, with its own Pick n Pay Asap platform working alongside a partnership with Mr D.
Checkers’ Sixty60 one-hour on-demand grocery delivery service launched in late 2019, just prior to the onset of the Covid-19 pandemic in early 2020.
Pick n Pay acquired the Bottles app in October 2020, rebranding it to Asap in 2021. Its partnership with Mr D launched in October 2022. Woolworths launched its same-day service Woolies Dash in December 2020.