Giant retailer Spar plans acquisitions to boost market share in SA

AFRICAN BUSINESS AND ECONOMYJune 23, 2024 at 5:16 PM UTC

TLDR

Spar Group, second-largest grocer in South Africa, aims to acquire smaller retailers for market expansion beyond food segment.
Spar plans to increase market share in a struggling economy, targeting revenue contribution in South Africa to rise from 60% to 70% within five years.
Company's stock surges after announcing sale of loss-making Polish unit, with plans to enter new categories like pet shops.

Spar Group, South Africa’s second-largest grocer by revenue, plans to acquire smaller retailers to expand beyond the food segment and increase market share in a struggling economy.

The company, currently selling its loss-making Polish unit, aims to boost South Africa's revenue contribution to 70% from the current 60% within five years, according to CEO Angelo Swartz.

Spar, which also owns a chain of building materials stores, plans to venture into pet shops and two other new categories. The company's stock saw its highest climb in nearly nine months on June 12, following the announcement of finding a buyer for its struggling Polish unit.

Key Takeaways

Vibrant competition in the supermarket industry benefits consumers across all income groups and significantly impacts farmers, producers, and manufacturers that supply supermarkets, as they often rely on supermarkets as a primary demand source and route to market. However, the formal South African supermarket industry remains concentrated, with major chains such as Shoprite, Pick n Pay, SPAR, and Woolworths dominating the grocery retail sector. Shoprite, with over 3,500 stores across Africa, has been gaining market share from competitors while expanding into the higher-margin upmarket niche traditionally dominated by Woolworths.

Spar

South Africa

Shoprite

Pick n Pay

Woolworths

Supermarket

Retail

Grocery Retail

FMCG