SPAR Closes 13 Stores in South Africa Amid Challenging Retail Environment

SPAR, one of South Africa’s leading retail groups, is closing 13 underperforming corporate stores in its South Rand Region as it navigates a challenging trading environment. The decision comes as the group reported a 1.6% drop in turnover for the 18 weeks ended 31 January 2025, citing constrained consumer spending and operational challenges.

A Tough Retail Climate

SPAR described the current trading environment as “challenging,” with lower sales across all regions due to reduced consumer spending. However, the group remains optimistic, highlighting positive momentum from cost controls, promotional activities, and improved operational efficiencies.

“We are seeing positive momentum, improving operating margin levels, and results from cost controls and promotional activity,” said Angelo Swartz, CEO of SPAR. “Our focus remains on enhancing operational efficiencies and driving growth in our core markets.”

Store Closures and Operational Adjustments

The closure of 13 underperforming grocery stores is part of SPAR’s broader strategy to streamline its operations and focus on profitability. The group has already reduced operating losses from corporate grocery and liquor stores through improved performance and the closure of non-performing outlets.

SPAR’s Southern Africa operations have shown resilience, with retail sales growing by 3.4% across its 2,029 supermarket and liquor stores. Same-store sales growth of 3.0% slightly outpaced national inflation, driven by robust performance in lower-income grocery stores. However, growth in middle- and higher-end stores remained subdued.

Bright Spots: Pharmaceuticals and SPAR2U

Despite the challenges, SPAR’s pharmaceutical division delivered strong results, posting 13.3% turnover growth. This was driven by robust performance in both wholesale and Scriptwise sales. Additionally, SPAR’s on-demand shopping platform, SPAR2U, saw order volumes grow by an impressive 285% compared to the previous period.

Strategic Focus on South Africa

SPAR’s decision to close underperforming stores aligns with its strategic pivot to focus on its core South African operations. The group recently finalized the disposal of its Polish business, marking a significant milestone in its European strategic review. SPAR aims to complete this review by June 2025.

“Our foray into Poland brought hard lessons, key of which is that we know local best,” Swartz said. “For now, our focus is on the heart of our business, being South Africa. Our energies are best spent at home, focusing on the challenges of the local market and expanding our business.”

Resolving SAP System Issues

SPAR has also made progress in resolving the SAP system issues that plagued its KwaZulu-Natal (KZN) distribution centre. The failed implementation of the enterprise resource planning system cost the group R1.6 billion in 2023. The next phase of the SAP rollout will focus on Build It, Imports Warehouse, and the Eastern Cape distribution centre in the first half of 2026.

Looking Ahead

SPAR remains committed to innovation and efficiency, ensuring that its communities, shoppers, and retailers remain at the heart of its operations. The group’s interim financial results for the six months ending 31 March 2025 will be published in June 2025.

“Looking ahead, we remain focused on innovation and efficiency, ensuring that our communities, our shoppers, and our retailers remain at the heart of everything we do,” Swartz said.

While SPAR faces challenges in a tough retail environment, its strategic store closures, focus on local markets, and strong performance in pharmaceuticals and e-commerce demonstrate its resilience. By streamlining operations and investing in efficiency, SPAR is positioning itself for sustainable growth in South Africa’s competitive retail landscape.

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