By: Hanno Labuschagne  - MyBroadband

South African grocery retailer Spar has recorded substantial user and revenue growth for its on-demand delivery app Spar2U over the past year.

The service was initially piloted with selected stores in early 2022 and rolled out to a group of outlets in the northern suburbs of Johannesburg in March 2022.

MyBroadband tested the service in September 2022 and was impressed with the offering, with our order arriving about an hour and 16 minutes after placement and within the scheduled time.

In supplementary feedback comment following the release of its annual results for the period ended September 2023, Spar told MyBroadband it had expanded the service to 373 stores across all major metros by November 2023.

A further 170 outlets are earmarked for rollout in the coming months.

Spar also said it had increased its app downloads by slightly over 350,000 during the past year. 20–25% of these installations had active users, which Spar said aligns with the industry benchmark.

Based on that percentage, Spar2U had amassed around 70,000 to 87,500 new users during the year.

It is unknown from what starting base this growth came, but seeing as the app was still only about six months old at the beginning of Spar’s financial year and limited to 87 stores, it was unlikely to have been a high base.

As a result of its user growth, Spar2U’s month-on-month revenue and volumes increased by an average of 27% over the year.

Spar said a major development for the service will be the integration of its Spar Rewards Programme in the coming weeks.

It also plans to roll out an updated app for the service in the first quarter of 2024.

A crowded space with established players

Spar2U has some tough competition from three major retailer-operated on-demand grocery apps, which are helping transform the way South African consumers shop for essentials.

While most shoppers are still going in-store for groceries, a recent study by Insider Intelligence estimated that South Africa’s online food delivery market would be worth R34 billion in 2023 and grow another 16% in 2024.

The three biggest players are Checkers Sixty60, Pick n Pay Asap!, and Woolies Dash, which all launched before Spar2U.

The biggest — Sixty60 — had 3.1 million downloads by March 2023.

Sixty60 has been around since November 2019 and was available from 466 stores by September 2023.

Woolworths launched the trial of its Dash service just over a year after Sixty60’s launch.

Between its debut in December 2020 and March 2023, Woolies Dash grew to over 2 million users, partly thanks to its integration with the retailer’s older Woolworths app.

The origin of Pick n Pay Asap! is slightly more complex.

It was initially available as the liquor delivery app Bottles. It launched in 2016 and partnered with Pick n Pay in 2018.

During the Covid-19 pandemic and its accompanying ban on alcohol sales for several months, Pick n Pay and the app’s developers pivoted it to general grocery deliveries.

In August 2021, Bottles was rebranded to Asap! and relaunched.

Pick n Pay has also partnered with Naspers-owned Mr D for deliveries in some areas, helping to extend its on-demand footprint and capacity.