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SPAR International, the guilds and voluntary trading

SPAR International key facts

South Africa is the second biggest SPAR country by turnover

Ireland is the 10th biggest SPAR country by turnover

Switzerland is the 14th biggest SPAR country by turnover

Our commitment to voluntary trading

SPAR International is based in the Netherlands, where SPAR originated. It constitutes the world’s largest voluntary food retail chain with stores in 44 countries. The SPAR Group Ltd and BWG Group were both licensed in 1963 to trade under the SPAR brand in South Africa and Ireland, respectively. SPAR Switzerland was licensed to trade under the SPAR brand in 1989.

The SPAR Group Ltd held the following country licences in 2017:

  • Botswana
  • Ireland
  • Lesotho
  • Mozambique
  • Namibia
  • South Africa
  • South West England
  • Sri Lanka
  • Swaziland
  • Switzerland
  • Zambia

These licences direct and allow the use of the SPAR brand and are rooted in the principles of voluntary trading.

The concept of voluntary trading is almost a century old and is based on co-operation between the independent wholesaler (SPAR) and its retailers, to mutual benefit. SPAR is therefore not a franchise business, nor do we operate chain stores. We are essentially a wholesaler and distributor of goods and services to our independently owned SPAR retail stores.

The model relies on the quality of the relationship between SPAR and our retailers, to sustain a mutually beneficial co-operative trading arrangement. Therefore, the group’s performance relies on its ability to attract and retain retailers’ business by using our trading expertise to offer competitively priced products and superior warehousing and distribution capabilities. We have developed world-class retail operations to support our retailers in running their businesses.

The voluntary trading model allows retailers to access our various brands and support structures, but also affords them the freedom to stock their stores from any supplier of their choosing. This ensures that each SPAR store has its own personality and unique offering targeted at its specific consumer profile.

SPAR’s primary source of income is the sale of goods to the independently run stores. Their success is essential to the group’s overall sustainability, particularly in tough economic conditions. We therefore place significant emphasis on supporting retailers to earn their business and loyalty.

Voluntary trading is an excellent example of a model that balances the interests of different stakeholders. A singular focus on creating financial capital by any one stakeholder would, however, compromise the viability of the entire model. SPAR has to ensure retailer success by minimizing margin impact while retailers rely on SPAR’s sustainability for replenishment and support services. When supply and demand factors are out of balance, for example where retailers can import certain products at a lower cost, they need to consider the impact on SPAR in terms of future availability when supply may be constrained. This is a dynamic and ongoing process, which is supported by initiatives and structures such as joint business planning with suppliers, and by the guilds platform shared with retailers.

What we
offer retailers
Listed company
THE SPAR GROUP LTD
  • Guild custodianship
  • Superior warehousing and distribution capability
  • Single delivery source and purchasing convenience
  • Competitive pricing

VOLUNTARY
TRADING MODEL

What retailers gain from the model
INDEPENDENT
RETAILERS
  • SPAR brands
  • Freedom to source local products
  • Support from SPAR, including planning and procurement
  • World-class retail operations services
  • World-class distribution

How the SPAR guilds work

SPAR’s relationship with retailers in South Africa is structured according to the guild system. The SPAR Guild of Southern Africa (NPC) (the SPAR Guild) currently has 903 members (2016: 890 members), while the Build it Guild of Southern Africa (NPC) (the Build it Guild) has 368 members (2016: 348 members).

The SPAR Guild is a non-profit company for the purposes of:

  • promoting, implementing and regulating the system of voluntary group trading by wholesalers and retailers;
  • prescribing regulations and obligations regarding the implementation of such systems of voluntary group trading that is binding for members of the SPAR Guild;
  • promoting and furthering the interests of members of the SPAR Guild;
  • promoting and fostering co-operation among members of the SPAR Guild;
  • promoting the improvement of services to consumers in the supply of groceries, provisions and general merchandise; and
  • implementing and enforcing agreements in terms of which members of the SPAR Guild are granted the right to participate in a voluntary trading group using the name SPAR or TOPS at SPAR or Pharmacy at SPAR and the trademarks relative thereto.

The SPAR Guild board comprises 10 retail members and 10 wholesale members and holds at least three meetings annually. The Chairman of the SPAR Guild, Roelf Venter, is appointed by SPAR. The SPAR Guild has six regional committees on which SPAR is represented by executive management of the distribution centres. The regional guilds visit stores as part of their annual work plan.

The members pay subscriptions to the SPAR Guild, which uses these monies to advertise and promote SPAR. During the year, subscriptions of R8.0 million (2016: R5.6 million) were paid to the SPAR Guild.

The intercompany asset/(liability) with The SPAR Group Ltd as at 30 September 2017 amounted to a liability of R25.9 million (2016: a liability of R51.9 million) and an asset of R0.4 million (2016: an asset of R0.9 million) for the SPAR Guild and the Build it Guild, respectively. The liability is interest free, unsecured and no date has been set for repayment.

The Build it Guild is a non-profit company for the purposes of:

  • promoting, implementing and regulating the system of voluntary group trading by wholesalers and retailers;
  • prescribing regulations and obligations regarding the implementation of such systems of voluntary group trading that is binding for members of the Build it Guild;
  • promoting and furthering the interests of members of the Build it Guild;
  • promoting and fostering co-operation among members of the Build it Guild;
  • promoting the improvement of services to consumers in the supply of hardware, building materials and general merchandise; and
  • implementing and enforcing agreements in terms of which members of the Build it Guild are granted the right to participate in a voluntary trading group using the name Build it or TrenDIY.

The Build it Guild board comprises six retail members and six wholesale members and holds at least three meetings annually. The Chairman of the Build it Guild, Wayne Hook, is appointed by SPAR. The Build it Guild has six regional committees where Build it is represented by executive management of the Build it division.

Read more about the Social and Ethics Committees of the guilds here.

“This year we saw rejuvenation at SPAR International with a managing director that is taking a new direction and driving the business forward. He created a world class skills set for SPAR International, particularly in logistics and marketing. There is so much potential to leverage business…”

– Graham O’Connor, Chairman of SPAR International

SPAR store manager, Clive Gould, and his team from SPAR Glenacres in Johannesburg, were awarded top honours in the International Category of the 2017 Store Manager Awards by the Food Marketing Institute. The award recognises outstanding managers who are committed to their communities and stores, and demonstrate remarkable leadership. Clive and his team competed against 100 other nominations for the top prize.