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Our value creation contribution

SPAR creates value on a global scale through our voluntary trading model and convenient delivery of fresh food and groceries to where people live.

The group creates significant value for our independent retailers, who benefit from the economies of scale gained by our buying efficiencies, and the cost savings through operational efficiency and a wide scope of products offered and distributed through our distribution centres.

Our business model relies on relationships in all aspects of value creation. We explain our material relationships here, as these provide input into our business activities and help us mitigate the risks, including waste and resource depletion, associated with a distribution and wholesale business.

Retailers further benefit from the value created by the merchandising expertise, support services and benchmarking offered by SPAR, which enable them to offer a range of products at competitive prices. Voluntary trading further equips retailers with the ability to customise their product and service offering to be responsive to their local, niche consumer segment’s needs and expectations. This unlocks value for both retailers and consumers.

We strive to manage our use of resources and the six capitals of value creation through environmentally and socially sustainable business practices. Read more about these commitments and our progress against targets in the South Africa, Ireland and Switzerland operational reports.

During the 2017 financial year, we developed a sustainability pledge: to create authentic shared value, though the following outcomes:

  • contribution to societal change;
  • contribution to responsible living;
  • opportunity creation; and
  • resource stewardship.

Our commitment to creating authentic shared value is inherently linked to our values and our support of the 17 Sustainable Development Goals (SDG) in the following ways:

SPAR value Related SDG SPAR alignment
Entrepreneurship Entrepreneurs are exceptionally well placed to be agents for positive change – and not only as profit generators. These goals encourage entrepreneurs to think innovatively and unlock new business opportunities, especially for cost and resource savings and efficiency gains.
Passion Passionate employees are engaged and motivated, and believe in the work they do. They have a vested interest in the success of SPAR and are willing to make meaningful contributions. When we are passionate about goals such as well-being, gender equality and decent work, we create and aspire to standards that positively impact our personal achievements and performance.
Family values The long-term sustainability of our group is linked to the socio-economic health of the society and communities in which we operate. A family-orientated business ethos creates an organisational culture that is focused on continuity, stewardship and heritage. Family-orientated businesses differentiate themselves through sustainable management practices and sensible financing arrangements, while investing in durable relationships with stakeholders.

Our business activities and outputs

Our business activities are similar to that of other companies managing wholesale and distribution businesses. What differentiates SPAR is the dynamics of the voluntary trading model, which also extends our scope in terms of retail support and marketing activities. Our business activities ensure that we fulfil our purpose.

Our business activities are executed within three very different operating environments in Southern Africa, Ireland and Switzerland. Read more about these trading challenges and opportunities in the South Africa, Ireland and Switzerland operational reports. Outputs in the three territories are similar, and summarised with the business activities below:

THE SPAR GROUP LTD

PROCUREMENT

> 5 000

suppliers and service providers

> 1 300

SPAR branded products

Buying goods from suppliers and selling them to retailers at a margin.

Bulk procurement power that benefits economies of scale – fixed costs are spread over vast volumes, thereby reducing cost per unit.

Joint business planning with key suppliers, targeting supply chain efficiencies, including responsible use of resources.

Local sourcing supports small businesses, whenever possible, including our emerging farmer development programme.

WAREHOUSING

286 935 m2

total floor area

39 676 m2

satellite warehouse space

4 386 565

cases despatched per week

Warehousing across our distribution centres and satellite facilities, across various temperature disciplines.

Advanced technology to optimise the complex process of storing vast quantities of goods for delivery.

Goods are received from suppliers and unpacked into pick slots.

Retailers’ orders are processed electronically and sorted for transportation.

DISTRIBUTION

361 trucks

in South Africa

406 trailers

in South Africa

223.6 million

cases despatched group wide

Fluctuations in fuel prices emphasise the importance of route management systems, truck specifications, turnaround times and driver efficiency.

There is a dual strategic drive to increase our bottom line and decrease our carbon footprint.

Increasing use of biodiesel as fuel, which we collect from South African retailers and recycle.

Joint business planning to streamline with supplier processes, including backhauling and packing techniques.

RETAILER SUPPORT AND MARKETING

2 138

independant retail owned stores in South Africa

Emphasis on relationship with retailers to share benefits inherent in the voluntary trading model.

Encouraging retailers’ entrepreneurial flair, within SPAR guidelines, to ensure consistency.

The provision of a range of support services:

  • Store refurbishment and design assistance
  • Merchandising best practice
  • Public relations assistance
  • The SPAR development fund for retailers

Our strategic outcomes

We have identified six outcomes of our business model, which consider impacts that are internal or external to SPAR and its material stakeholders throughout the value chain. Details about these outcomes and the value created during the 2017 financial year are set out in the South Africa, Ireland and Switzerland operational reports.

World-class replenishment system As a wholesaler and distributor of goods, our first priority is supply chain optimisation to ensure that we run a lean organisation.
Competitive pricing Creating a competitive price perception is essential to attracting new customers to our stores and maintaining their business in the long-term.
Comprehensive range To remain competitive, it is essential that we deliver excellence in Fresh, increase the range of our products and the sales of our house brands, and keep abreast of current market trends.
World-class brands The strength of our brand is fundamental to our ability to attract independent retailers and draw customers to their stores.
Best retailers The system of voluntary trading means that we are only as strong as our retailers, which necessitates our provision of expert retail leadership and support.
New business growth We seek to expand our organisation through organic and real growth opportunities.