Our strategy development process

The SPAR strategy articulates the key imperatives and enablers required to deliver on the group’s outcomes and vision of being the ‘First-choice brands in the communities we serve’.

A broad, executive-level action plan was developed in 2014 to support the implementation of the strategy in the various functional and operational areas of the business.

A comprehensive review of the SPAR supermarket strategy in South Africa will be concluded in February 2018. Due consideration will be given to the connection between our values, the Sustainable Development Goals and government’s National Development Plan and how these impact our strategy.

Detailed plans were then developed, and specific key performance metrics relative to the desired outcomes were identified to enable the group to measure performance against strategy. Furthermore, the board believes that there is an inextricable link between strategy, risk, sustainability and performance management, which is effectively measured and controlled by means of the enterprise and risk management (ERM) process.

Our material strategic and sustainability elements:

The board’s role in considering and approving strategy includes ethical leadership, which evaluates, for example, the trade-offs between different stakeholders that ensures that progress is measured and monitored. To enable the latter, the board approves policies, frameworks and the plans that drive budget allocation.

We recognise that risk management is integral to the achievement of SPAR’s strategic imperatives. We perform an annual, comprehensive ERM analysis to ensure our sustainability risks are integrated with our group risks and group strategy, with appropriate action plans in place.

Our ERM framework furthermore identifies key risks linked to our imperatives across SPAR’s value chain.

The risks outlined below have been identified and ranked as the top 12 risks most likely to impact the achievement of the group’s strategy. These risks are monitored and managed at board level. To strengthen accountability and mitigate the key risks identified, detailed action plans have been developed, with clearly defined roles and timelines.

High inherent risk
Medium inherent risk
Increasing   Unchanged   Declining
Ranked risk description and trend Mitigating actions Related strategic imperative

Macroeconomic factors causing a decline in business due to, for example, currency depreciation, deflation/inflation, unemployment, etc

  • Identify key macroeconomic factors impacting the business such as, for example, the oil price and exchange rates
  • Develop medium- to long-term mitigation plans that can include taking forward cover or stockpiling fuel
  • Track and report on trends and flag when factors reach certain thresholds

Political instability in SPAR markets hinder business through national or international events and fundamental shifts in economic systems due to policy changes

  • Active participation in industry bodies such as SPAR International, the Consumer Goods Council of South Africa and the CEO Initiative in South Africa
  • Increase constructive engagement with government

Poor individual retailer performance impacting SPAR Group in terms of reputation, brand, price perception, store viability, group profitability and efficiency. This includes increased working capital and poor financial management by retailers, or lack of involvement by retailers in the communities they serve

  • Increase financial disclosure and benchmarking for retailers
  • Offer new retailers training and support
  • Actively manage the list of poor-performing retailers per region and identify appropriate and specific action plans to address performance

New and existing competition, including foreign entrants, take market share through price, range or hygiene factors

  • Develop competitive plans for all strategic stores
  • Develop a market share matrix for each region and formulate an action plan to close market share gaps
  • Develop a clear emerging market strategy for each region in South Africa

Loss of retailers and retail stores to competitors

  • Continuously work on and improve retailer relationships to ensure loyalty
  • Analyse each retailer’s specialist support needs
  • Improve retailer selection and track performance

Poor adherence to and implementation of group initiatives by retailers, thereby limiting our ability to market offerings on a national basis which results in financial and reputational damage

  • Conduct and document robust pilots for all new concepts/initiatives in most appropriate stores
  • Document case studies of successful pilots to act as reference in roll-out to retail
  • Develop a list of mandatory initiatives

Inability to develop new sites stunts growth due to lack of approvals, retailer objections, competitor activity, etc.

  • Identify new business drivers
  • Identify unique actions to improve developer relationships in each region
  • Identify and formalise relationships with retailer groups for co-ordinated development in line with their capacity to own more stores
  • Develop a group funding strategy and model for new site development

Major customer groups negatively influence the sustainability of the business through disproportional impact on distribution centres and efficiencies

  • Identify key risks per major customer group that could impact SPAR’s future sustainability
  • Document and implement action plan to address key risks

Disruptions of operations due to labour disputes and/or industrial mass action

  • Develop action plan to improve relationships with union and employees
  • Develop action plan to improve the capacity of shop stewards
  • Annual review and update of strike contingency plan
  • Conduct annual comprehensive climate survey at all sites

Poor data quality and analysis capabilities prevent effective business intelligence

  • Engage each function on their information needs
  • Develop a needs analysis to prioritise development of business intelligence components
  • Continue to drive, through training and other means, the proper use of systems both at retail outlets and corporate offices
  • Implementation of a group-wide data governance program which introduces governed master data and data quality management

Failure of financial model to provide retailer profitability, thereby jeopardising SPAR sustainability

  • Develop an action plan to reduce cost or enhance revenue within retail in each region
  • Determine true cost and profitability for both SPAR and retailers across the value chain for a selected basket of goods
  • Identify the key drivers impacting the wholesale/retail model

Transformation issues including, for example, management, ownership, supply chain and enterprise development, are negatively impacting the business

  • Strong focus on execution of the transformation plan
  • Offer retailers leadership in completing their transformation scorecards
  • Identify further entrepreneur and supplier development opportunities