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Our material relationships

SUPPLIERS

Who they are

In South Africa, SPAR’s approach is to source from local suppliers with a strong commitment to supplier development for our SPAR brands.

Our rural hubs are examples of how we enable authentic shared value creation with emerging suppliers over the long term. We provide our suppliers with a growing market for their products, which ensures their businesses are viable and sustainable.

5 000+

multinational, small and medium enterprises, and individual trade suppliers

500+

multinational and small artisan producers for niche fresh food categories

 

Multinational and Swiss manufacturers with a substantial amount of smaller local suppliers

BWG Foods has a wide range of suppliers, with smaller suppliers accommodated through a central billing arrangement which guarantees their payment for direct store deliveries. The Value Centre Cash and Carry network and the BWG Foodservice business are important elements of the total supply network available to retailers.

In the annual benchmarking survey carried out by The Advantage Group in 2018, suppliers ranked BWG Foods at number two across the trade in terms of overall performance. The survey covers all retail operators in Ireland and is completed by the top 40 to 50 fast-moving consumer goods (FMCG) suppliers. The supplier group rated BWG Group and its employees as number one across the trade. Suppliers rated BWG first for building profitable businesses for both parties, and second for implementation of business plans, including being a good company to do business with. BWG was ranked second within our peer group for payment process and resolution of invoice issues.

In Switzerland, our range of relationships allows us to provide a comprehensive offering at retail while supporting local industry as a responsible corporate citizen.

How we engage with our suppliers

  • We have regular interaction through distribution centres and satellite warehouses during deliveries
  • Our joint business planning sessions target efficiencies in the supply chain, to the benefit of suppliers and SPAR
  • We engage through the emerging farmer development programme
  • We participate in trade shows: in Switzerland, our annual autumn trade show is used as a platform to share strategy and progress against our action plans with suppliers. BWG Foods organises the largest trade show event for FMCG suppliers annually in June.

Collaborating for shared value

SPAR’s operating model in all territories relies on an efficient supply chain and robust relationships with suppliers to ensure an appealing value proposition for retailers at acceptable wholesale margins. The scale of our logistics and distribution systems provides suppliers with substantial volumes at reduced operating costs. The high volumes handled at our distribution centres ensure a spread of fixed costs that translate into reduced unit costs.

Joint business planning with our suppliers encourages vertical co-ordination and efficiency, and we have identified several cost-reduction opportunities. These include, for example, backhauling and one-way loads, optimal buying configurations and supply chain mapping. We are increasingly focusing on trade marketing with marketing volume and value tracked against a scorecard, which is reviewed at biannual joint meetings.

Backhauling and one-way loads require collaboration with suppliers to deliver goods to retailers on their return journey from our South African as well as cross-border distribution centres, where possible. We deliver goods to retailers near our suppliers, then collect goods from suppliers, and return to the distribution centre with a full truck. These initiatives reduce the unnecessary labour and fuel costs associated with empty delivery trucks returning to their point of origin. Optimised supplier fleet utilisation furthermore results in a reduction in our carbon footprint.

Supply chain mapping uses our cost-to-serve modelling tool and enables us to work with our suppliers to optimise the most effective route to market. These initiatives result in increased efficiencies and shared savings for our suppliers and the group. By stripping unnecessary costs from our supply chain, we are further able to pass the cost-saving benefit to our retailers.

Most of our procurement happens at distribution centre level, and certain products are sourced from local suppliers at store level. This enables sourcing that supports local enterprise. We work with suppliers to encourage sustainable product development and transparent sourcing. Our emerging farmer development programme assists vertical co-ordination between commercial and community farmers to the benefit of the surrounding rural economies.

Buyers typically engage with suppliers on a cycle of every six weeks and monthly with larger suppliers. Purchasing managers engage quarterly and the divisional marketing director at least every six months.

Build it’s supplier base is made up of strategic national and regional suppliers with a healthy balance of broad-based black economic empowerment (BBBEE) companies. Suppliers are selected and maintained to meet the specific and, in some instances, tailor-made requirements of Build it retailers. Dedicated marketing employees are responsible for regular engagement with existing and prospective suppliers to ensure that the group’s offering to retailers and consumers remains highly competitive.

Within Appleby Westward, a joint business planning process creates a sustainable climate of co-operation with suppliers. Promotional forecasting and the implementation of agreed plans are key areas that benefit from effective collaboration.

In Switzerland, we rolled out a central billing and drop shipment network that enables small to medium suppliers to participate in an expanded retail network. Local suppliers, including the local manufacturers for multinationals, small producers and farmers, constitute the largest part of our supplier base.

We have set up joint business planning sessions with major suppliers, including the largest dairy supplier in Switzerland. Significant cost benefits have already been identified and the sessions will be rolled out to more suppliers soon.

Ensuring sustainable supply

We formalised engagement with our South African house brand suppliers on a range of sustainability matters. We have commenced collecting data on their environmental management systems, specifically focusing on energy use, transport, greenhouse gasses, waste and waste water, water use, emissions, pollution prevention and treatment of hazardous substances. This allows us to compare sustainability indicators across suppliers, and assess the extent of their gearing for the longevity of their businesses. Our engagement includes site visits, during which suppliers share information. By using this information, we can build relationship while increasing awareness of our collective environmental responsibilities.

Our aim is to contribute to efficiency improvements and ensure that our suppliers are sustainable and secure.

Sustainable supply also relies on developing and attracting new suppliers.

In 2018 we launched the SPAR Natural brand that provides products which are free of synthetic chemicals and minimally processed. The launch this brand required extensive dealings with suppliers to ensure sustainable, scalable and reliable access to the required product.

An example of a new supplier contracted this year followed the popularity of the Johannesburg fresh produce market, which has evolved into a one-stop destination for retailers, shopkeepers, street traders, restaurateurs and exporters. The market offers a wide variety of fresh fruit and vegetables. We identified a supplier already operating within the market with their own packhouse and a strong relationship with market agents and farmers. The new SPAR supplier now secures good quality produce at good prices and delivers it directly to the South Rand distribution centre.

One of the trade-offs that we manage in the supply chain is where there are long standing relationships at distribution centres and suppliers are at risk of losing their share of the business when new suppliers are introduced. Buyers are expected to objectively assess strategic value and benefits in managing their supplier portfolio.

Our commitment to ethical supply chain development

SPAR continues to engage with non-profit organisations, suppliers and activist groups to plan our approach to dealing with any unethical practices currently being carried out in our supply chain. SPAR understands the difficulties in addressing these issues and is committed to actively drive education in the supply chain towards understanding the need for change. We take these considerations into account when designing enterprise development businesses that become part of our supply chain, thereby ensuring that developments are based on ethical principles. We address any instances where unethical practices are identified with a supplier.

A strong food safety focus

As a South African retailer and member of the Consumer Goods Council, SPAR has adopted the Global Food Safety Initiative (GFSI) assessment, which provides a global benchmark for advancing food safety. This means we require all our suppliers to comply with these standards and, eventually, to be GFSI certified, as this will ensure common standards for the production and trade of food products in the group.

Our role is to support suppliers and enable capacity building. The GFSI global market capacity building programme is for small or less developed businesses that encounter difficulties in implementing even basic levels of food safety (according to the Hazard Analysis and Critical Control Points system (HACCP)) in their food businesses. This can be due to their size, the nature of their work, and lack of technical expertise or economic resources.

The GFSI has a tiered approach to certification, which allows individuals responsible for food safety within small and less developed businesses to develop a systematic action plan that can be implemented over time. This reassures customers that they are developing effective food safety management programmes that will reduce food safety risks.

The SPAR house brand food safety requirements are:

  • Certificate of Acceptability (Department of Health);
  • GFSI food safety audit: basic (low-risk products such as biscuits);
  • GFSI food safety audit: intermediate (high-risk products such as cut vegetables and processed products);
  • Global Gap for Farmers (fruit and vegetables);
  • Abattoir certificate (meat);
  • Export Certificate (Department of Agriculture, Forestry and Fisheries); and
  • FSSC 22000, BRC or International Featured Standard certification.

All private label suppliers are audited at intermediate level and we encourage them to apply for certification (FSSC 22000, BRC, IFS, AIB).

Key facts about SPAR supplier certification

ELEMENT TOTAL SUPPLIERS GFSI INTERMEDIATE (%) CERTIFIED (%)
Freshline Bakery 42 79 21
Freshline Produce 103 15 85
SPAR brands 144 37 63

A new initiative has been launched to monitor and track all regional suppliers to align them with the GFSI Global Markets Capacity Building Programme.

Read more about food safety in our stores in the section on our relationship with retailers.

Strategic risks relating to suppliers

  • Political instability in SPAR markets may hinder business
  • Disruption of operations may occur due to labour disputes and/or industrial and mass action
  • Transformation issues across all areas may impact the business negatively
Creating a scalable and sustainable food system

The concept of having rural farmers supply fresh produce to SPAR distribution centres started as an aspirational idea. In theory, we knew that this would provide employment, grow rural economies, ensure food security and improve nutrition, reduce transport costs for SPAR, shorten lead times, and increase freshness and shelf life. Even as a concept, there were evident challenges such as financing, infrastructure and skills. Nevertheless, four years later, we have created a sustainable model that can be rolled out nationally.

According to the current model, each hub consists of a packhouse that works much like a mini distribution centre, to which local farmers bring their produce. The produce is then distributed to stores within a 200 km radius. SPAR committed to funding the capital and operational expenditure, as well as the associated logistics infrastructure required for the development of the three initial packhouses.

The success of the model requires the support of a range of stakeholders, including farmers, communities, government, food manufacturers and wholesalers, retailers, financial institutions, and funders.

The intention for the hubs is to have a 51% BBBEE ownership model.

The emerging farmer development programme is SPAR’s flagship corporate citizenship initiative, aiming to establish sustainable, commercial rural food hubs. Two hubs are already in operation:

  • The Mopani hub was established in June 2016 in Ofcolaco, Mopani, Limpopo. The packhouse was opened in August 2017. Hub farmers supply the packhouse with produce and are building up a basket of goods to sell to retailers. It had a turnover of R10.1 million for 2018 and is set to reach breakeven in year four. Funding was provided by the Dutch government and SPAR – the latter at no interest with 90% of the loaned funds paid back. Capital was invested in tractors, ploughing equipment, delivery vehicles, fridges, packhouse equipment, etc. The SPAR distribution centre in the Lowveld provides financial management support.
  • The Ikhwezi hub in Mpumalanga opened on 1 October 2017.

Key facts:

Number of farmers
Hectares planted
Number of stores serviced
Full time employment created
Number of staff employed in packhouse

Training and technical support for a sustainable hub

A non-profit organisation provides technical services and lends comprehensive, on-the-ground support to the smallholder farmers. Moreover, a commercial farmer mentor was appointed, thereby providing a critical link between the rural and commercial supply chains.

All hub farmers were trained in the following modules:

  • Economics
  • Land preparation
  • Planting
  • Legal
  • Pest and disease
  • Fertilization
  • Irrigation
  • Harvesting

All of the farmers will receive localg.a.p. training as a stepping stone to achieving GLOBALG.A.P. certification – an internationally recognised standard for good agricultural practice (G.A.P.) and farm production that ensures safe and sustainable agriculture. All Ikhwezi hub farmers are receiving training including localg.a.p.

Nutrition and food security for a sustainable hub

One of the aims of the emerging farmer development programme is to increase food security – particularly in the lower-income groups – by improving access to diverse, fresh and nutritious produce. Comprehensive nutrition diversity research was commissioned by SPAR to identify baseline nutrition intake in rural areas.

Based on the research, a nutritional campaign was developed according to five levers of change:

  • Make it understood
  • Make it easy
  • Make it desirable
  • Make it rewarding
  • Make it a habit

The nutritional campaign aims to increase awareness and provide education by using a variety of channels – from newspapers to radio, and point-of-sale material. By providing consumers in targeted areas with messages, tips, and opportunities to learn about the benefits associated with certain fruit and vegetables, the campaign supports health and wellbeing in communities while driving demand for the rural hub produce.

Opportunities to expand our concept sustainably

In the past year, we launched the SPAR RASET alignment project: a collaboration with the KwaZulu-Natal Provincial Government to build an effective and secure agro food system for the province. The aim of the project is to ensure meaningful participation by previously disadvantaged farmers in the food value chain, and improve the distribution of fresh produce in KwaZulu-Natal. Potential sites were identified and discussions are underway with donors and financial institutions to generate funding for additional hubs and to create a fund for entrepreneurial development.

By taking a holistic approach to food system development and working with a network of partners the SPAR rural hub concept is gaining traction and creating a multiplier effect to the benefit of all stakeholders. We are creating a new future together.

EMPLOYEES

Who they are

SPAR is built on strong relationships between all stakeholders, which hinge on our employees and their ability to forge, maintain and serve these relationships.

We therefore aim to develop leaders and employees who deliver excellent service within the parameters of a lean business model that directs decision-making at the right levels.

How we engage with our employees

  • In South Africa, each distribution centre has a fully fledged human resources (HR) department to support business operations in all matters related to our employees. We interact with the team in Ireland in terms of sharing ideas on strategic HR matters and use existing synergies to learn from each other. Interactions with the team in Switzerland were mainly on business processes and general information sharing.
  • From a group perspective, we have functional forums that review progress according to focus areas and agree on group projects.
  • We support career and skills development through the SPAR Academy of Learning.
  • Engagements include various committees established at the South African distribution centres, including health and safety, shop stewards and values committees, as well as an employee wellness clinic at each South African distribution centre.

Creating a work culture based on values

Motivated employees are crucial to SPAR’s future. We pride ourselves in being a business built on solid relationships that align behaviour to our values and foster meaningful workplace interaction.

Living our values is an integral part of advancing SPAR’s organisational culture. We keep the values top of mind by creating awareness and recognising employees who are actively living the values. The associated behaviour is integrated into HR processes, such as, employee on-boarding, training interventions and recruitment.

We have a Values Committee, the members of which we train to ensure they become catalysts for driving values-based behaviour. An example is the training offered to shop stewards: this includes the duties associated with their roles, understanding our values and culture, and the importance of maintaining a positive culture.

The SPAR values are integrated into our leadership capabilities and form part of management development and performance management.

SPAR is committed to maintaining an organisational culture that respects human rights principles aimed at promoting and protecting human rights. This includes the Universal Declaration of Human Rights and the International Labour Organisation’s Declaration on Fundamental Principles and Rights at Work.

Being a top employer

SPAR was certified as one of the Top Employers in South Africa in 2018. This is the 5th year we were compared with top organisations worldwide, and certified based on an independent audit.

Crucial to the Top Employers certification procedure is a stringent research process – the Top Employers Institute’s international HR Best Practices Survey – to assess participants against the standards set to achieve the certification. To further reinforce the validity of the process, all answers were independently audited, meaning this research verified our outstanding employee conditions among a select group of certified Top Employers.

SPAR earned the certification as a Top Employer because our employee offerings across all measured criteria surpassed the minimum requirement.

We recognise the importance of positioning SPAR as an employer of choice in an unpredictable business environment where we must compete for scarce skills.

Our employment offering has expanded significantly over the past few years, following the acquisition of several international operations. Throughout the group, employees have career options in different geographies.

During the 2018 financial year, 16 316 days (2017: 13 411 days) were spent on employee training in South Africa. Courses cover a wide spectrum – from enhancing operational proficiency at floor level, to developing programmes to grow management. In total, R22.9 million was spent on training (2017: R25.3 million), which reached 7 204 employees across the group’s operations. Read more about our employee development here.

Industrial collaboration for value

SPAR upholds our employees’ rights to freedom of association and collective bargaining. In South Africa, we have a record of strong relations with our workforce and the trade union, the South African Commercial Catering and Allied Workers Union (SACCAWU). We are committed to maintaining positive relationships with unions at the relevant distribution centres and to agree on acceptable terms of employment of unionised members.

Three of our South African distribution centres, namely KwaZulu-Natal, North Rand and South Rand, are unionised and have recognition agreements in place with SACCAWU. Each of these distribution centres engages in wage negotiations according to a cyclical programme, and these negotiations are conducted directly between senior management and union representatives. The other five distribution centres, namely Western Cape, Eastern Cape, Lowveld, S Buys and Build it, are not unionised.

A two-year wage deal was signed last year, with the next round of wage negotiations in 2019.

It is important for SPAR to have an industrial relations climate conducive to providing excellent service to our retailers. Any disruptions in the supply chain due to industrial action result in out-of-stock situations which directly impacts all financial indicators, as well as our relationships and reputation. Such disruptions further carry potential risks related to the safety of our people and assets.

We build good relationships with our employees and unions and, if disputes occur, we deal with them as soon as possible. We have green area meetings where departmental objectives are discussed and if any issues are raised, we ensure that they are addressed as soon as possible.

In addition, we have management and shop stewards’ meetings, workers’ councils and various forums to ensure communication is effective in the workplace.

We invest in the development of our shop stewards as well as sharing information with them. We involve the union officials as stakeholders to ensure we educate them about our business. We pride ourselves in paying above-average salaries in our industry. We provide a minimum of eight weeks’ notice prior to the implementation of any significant operational change that could substantively affect employees or their elected representatives as we believe in being transparent in our dealings and involving those affected in finding a solution.

No material industrial relations incidents occurred in the 2018 financial year.

Supporting employee wellness

SPAR provides employees with a wellness service through clinics at each distribution centre. These fully fledged clinics are operated by an occupational health practitioner. A doctor visits weekly to attend to matters of employee wellness. We invested R4.6 million (2017: R4.3 million) in this service during the 2018 financial year. The service is provided free of charge to all on-site employees, with support focused on health and wellness, and liquor and substance abuse. In terms of wellness, we partnered with a biokineticist, who developed an exercise programme offered to employees twice a week at head office, to build strength, and aid body conditioning and stress release.

HIV/Aids continues to be an area of focus and includes peer education to avoid discrimination in the case of someone living with HIV/Aids. SPAR has an HIV/Aids policy and management framework in place. HIV-positive employees have access to voluntary counselling and support. SPAR runs HIV/Aids awareness campaigns, accompanied by regular training facilitated by dedicated peer counsellors, to address workplace challenges relating to HIV/Aids. All employees have access to an annual voluntary medical examination.

Although our retailers’ employees are a secondary level stakeholder, we provide retailers with HR support, training and information.

Strategic risks relating to employees

  • Disruption of operations may occur due to labour disputes and/or industrial action
  • Poor data quality and analysis capabilities may prevent effective business intelligence
  • Lack of transformation across all areas may impact the business negatively

Read about how we mitigate these risk in the strategy and business model section.

RETAILERS

Who they are

SPAR retailers are independent entrepreneurs who choose to own their businesses and manage these under our internationally recognised brand.

Each SPAR store has its own regional personality, offering consumers products that are unique to their local store and requirements. Our retailers take full advantage of the benefits of the voluntary trading model by sourcing specific goods from local traders, while using SPAR’s buying expertise.

BWG Foods has a company-owned retail estate operated by a network of franchisees: there are 104 company-owned stores operated by 71 retailers. There are a further nine company-owned and company-operated stores which are in transition to new operators. It is not BWG Foods’ policy to operate individual company-owned stores on a long-term basis.

Within the wider independently operated SPAR and EUROSPAR estates, there are several retailers who operate more than one site, and in some cases also operate different formats.

MACE and Londis share a similar profile of ownership: most independent retailers trading under these banners operate one store. MACE has over 20 retailers who operate two stores or more. There is also a supply contract in place with Maxol, which operates more than 70 forecourt sites.

In the Appleby Westward business, most independent retailers own one store with a minority owning between two to five stores.

SPAR retailers in Switzerland are predominantly smaller individual store operators.

How we engage with our retailers

  • Retailers have regular interactions with regional and distribution centre management and operations teams
  • Our retail operations teams in South Africa make regular store visits and do monthly performance monitoring through tailored service packages (TSPs)
  • South African, Irish and Swiss retailers are invited to the annual SPAR retail convention
  • Retailers are members of the regional and national guilds with representatives who attend regular meetings to give input on marketing, pricing and strategy
  • We invite retailers on ‘Look and Learn’ trips, locally and abroad

Collaborating for shared value

The success of the voluntary trading model hinges on maintaining a robust working relationship between distribution centres and retailers. For SPAR, the quality of this relationship is dependent on our ability to equip our retailers to run a sustainably successful and professional business. Under the current economic conditions, and in the face of rising inflationary cost pressures and increased competition, maintaining this relationship remains our top priority.

The SPAR support team provides retailers with consultation and assistance in all areas of retail operations, including merchandising, promotions and advertising programmes, financial controls, employee and industrial relations, new store development, and refurbishments to existing stores.

We recently increased our support through financial benchmarking and the development of TSPs that respond to the unique challenges of individual stores. This is particularly important in South Africa, where customer demographics, spending power and the surrounding infrastructure vary greatly across regions.

All retailers have access to an online database with various store and product specifications, and best practice manuals. This includes guidance on recipes and pricing to achieve consistency and quality in fresh produce and the growing home-meal replacement segment. This is supported by the SPAR Academy of Learning, that provides access to a variety of e-learning programmes shaped in response to retailers’ needs. These programmes range from short-term guidance on how to solve day-to-day issues in-store, to longer-term programmes that build HR and supervisory capability. The guilds further provide retailers with marketing support and access to SPAR’s development fund to invest in refurbishments.

We remain committed to growing our retailer base, while supporting our existing retailers. We have a particular focus on attracting black entrepreneurs in South Africa. All new retailers receive support and guidance from the group as well as the guild in assisting them to overcome challenges associated with the initial set-up phase.

We also support our retailers in their engagement with their communities. SPAR retailers invest in a broad variety of community-based programmes.

Within BWG Group engagement with retailers is primarily carried out by the field-based sales team with support from additional functions such as the merchandising and development teams. Regional meetings encourage communication and information sharing, with most retailers seeking support to combat increasing costs being experienced in their respective businesses.

In Switzerland, the introduction of trade shows, members’ meetings, a new marketing committee, travel incentives and a revised co-operative and inclusive structure for our guild has allowed a lot more opportunity for engaging with retailers. We have consequently experienced a shift in culture towards what is familiar in South Africa.

We restructured our retail operations function to provide dedicated support for the various channels, including a dedicated store designer for new and refurbished stores. Ongoing financial and operational support is provided for stores in distress. Our biggest area of focus over the past year has been retail profitability.

Retail training initiatives in South Africa

Jumpstart

We collaborate with Mr Price Group to help address youth unemployment and provide invaluable retail work experience through the Jumpstart programme. It links unemployed youth with entry-level skills to job opportunities in retail and its supply chain. This creates a pool of candidates from which retailers can recruit.

SPAR will increase its investment to more than R10 million over the next few years. 1 391 candidates were trained during the year and 584 were placed in jobs.

Good Food Fundi

This is a skills programme in the areas of baking, fresh produce, home-meal replacements, and butchery.

Retail management programme

Our distance learning course improves skills of managers and assistant managers with credit-bearing modules. Since 2011, more than 600 delegates have completed this course.

Management induction programme

This programme assists new retailers to understand how SPAR operates. Since 2002, 1 544 delegates have completed the course.

Fresh programme

This programme helps to effectively manage wastage and shrinkage, identify ways of improving profits, implement and understand legislative health and safety standards and maintain the SPAR standards for a fresh department.

GRV training We developed an in-house goods receiving voucher (GRV) training programme aimed at our employees’ children who are unemployed to provide them with a scarce retail skill.
IT systems This is online training provided to retailers and teaches them how to manage their information systems.

E-learning

We reached 553 stores this year, with more than 350 000 topics conducted and 57 217 employees trained.

These training initiatives – e-learning, in particular – address the needs of retailers who require access to affordable training without employees having to travel extensively to attend sessions. Retail employees can complete training at times convenient to them and that do not disrupt operations.

Each distribution centre employs a training manager to roll out training interventions for retail. In some instances, this includes the physical delivery of training programmes, or finding alternate providers.

Shared food safety focus at retail level

South African retailers rely on SPAR’s supplier management and audits to ensure food safety compliance for the products provided by the distribution centres. Where retailers elect to source their own products from smaller suppliers, they take responsibility for food safety. Since this poses a risk to SPAR and retailers alike, we work with retailers and hold them accountable to ensure that the appropriate controls are in place and documented. We also assist small suppliers to improve and align with programmes such as GFSI.

The operations in Ireland and Switzerland rely largely on government inspectors who enforce food safety regulations, enhanced by an internal SPAR audit programme.

We have a dedicated team of quality controllers in Switzerland and are regularly audited both independently and by government inspectors to ensure we achieve the highest standards of quality and cold chain.

Food safety audits

Food safety audits at distribution centres and stores are conducted through a service provider, SAI Global (QPRO). The distribution centres’ audit is aligned with the requirements for storage and distribution of food product, inclusive of good manufacturing practices. Distribution centres are subject to bi-annual audits. Store audits are aligned to the relevant and recently updated regulations. Store audits are conducted quarterly.

SAI Global assists SPAR with microbiological sampling and testing at stores and distribution centres. This typically includes one food sample, two hand swabs and two surface swabs. We test for bacteria such as Listeria Monocytogenes, Staphylococcus Aureus, E. coli, Bacillus cereus, Salmonella and Coliforms.

Following an audit, the retailer or distribution centre managing director receives a report and the micro analysis of the findings of the audit. The score rating varies depending on the risk to the business and businesses are scored according to critical non-conformance, major non-conformance, and partial conformance. This assists the stores to prioritise corrective action.

SAI Global supports our business in offering basic food safety training for food handlers. It also acts as a certification body for the GFSI programme.

The GUEST programme evolves

To assist our retailers in continuously improving their customer service levels, we launched a GUEST programme in 2017 around the following key themes:

Greet

Uniform

Engage

Sell

Thank you

The programme aims to treat customers as personal guests. It was launched with a manual, point-of-sale material, e-learning modules, and a monitoring element that will include video feedback per store.

The rollout of the GUEST programme included induction sessions, videos, and awareness initiatives. The GUEST champions are responsible for implementing and driving the GUEST programme in their stores.

Progress with retailer transformation

SPAR remains committed to fast track black enterprise development amongst its brands. Successful black retail entrepreneurs contribute to empowerment, job creation and are role models for young people seeking to start businesses. With funding being one of the main barriers to entry, SPAR launched a range of initiatives to support development.

During the 2018 financial year, SPAR placed 47 new BBBEE operators in SPAR stores in addition to its existing 292 BBBEE operators.

We are currently working on initiatives focused on:

  • Recruitment and identification of prospective black retailers from within our ranks at the distribution centres and from various other sectors of the population, including graduates and unemployed people
  • Placing recruits on the appropriate training programmes and in relevant partnerships until they are equipped to run their own businesses sustainably
  • Working with prospective funders from areas such as the Jobs Fund, the Labour Activation Programme through the Department of Labour and SETAs
  • Joint ventures and mentorships with existing retailers to assist in developing new operators will be explored

Strategic risks relating to retailers

  • Poor individual retailer performance may negatively impact the group
  • New and existing competition may take market share
  • Loss of retailers and retail stores to competitors
  • Poor adherence to and implementation of group initiatives by retailers
  • Disruption of operations may occur due to labour disputes and/or industrial and mass action
  • Poor data quality and analysis capabilities may prevent effective business intelligence

Read about how we mitigate these risk in the strategy and business model section.

CONSUMERS

Who they are

Due to our geographical spread and range of store formats, we service the full spectrum of income groups in all territories.

We strive to provide consumers with an enjoyable and memorable shopping experience through a service and product offering that includes more than 1 000 exclusive SPAR house brand products. These products deliver premium quality at competitive prices.

BWG serves a wide range of consumers across the Republic of Ireland. They span all age profiles and demographics. We serve an average of over 1 million consumers every day across our community-based stores.

SPAR consumers in Switzerland consist of middle- to upper-income earners that are ethnically diverse – the immigrant population makes up 25% of the total Swiss population. Our stores vary in location from rural villages to suburban and central business districts, commuter nodes and forecourt operations each with an offering customised to their relevant market.

How we engage with our consumers

  • We invite consumers to interact with us through marketing and promotional campaigns
  • We do ad hoc customer perception surveys
  • In South Africa, we have an in-house customer care line
  • Our owner-managed store model facilitates direct daily interaction with consumers
  • We engage through social media channels, including through Text Me and our SPAR Rewards programmes

Creating authentic shared value for consumers

Quality and convenience is critical in growing and maintaining our market share, while ensuring that SPAR is perceived as offering customers value. In South Africa, we remain within the industry price benchmark on the surveyed basket. We also work with our retailers to offer consumers a comfortable and rewarding shopping experience focused on cleanliness, convenience, and employee friendliness.

The income spectrum of clients exposes the group to a wide range of trading patterns. Generally, higher-income consumers opt for convenience items and fresh produce. This includes ready-to-eat products, home-meal replacement items, and daily, top-up shopping. Conversely, lower-income consumers are more likely to do a monthly shop, with an emphasis on commodity and bulk products. The ability to stock the appropriate product mix to cater for unique customer profiles at store level is a key strength of the voluntary trading model. This enables retailers to customise their service offering, thereby unlocking value for consumers.

We further strive to offer consumers value through our South African SPAR Rewards programme. Participating consumers benefit from electronic product coupons that are sent to their mobile phones to help them save money. Steady growth in card activation, store participation and Text Me messages confirm the success of the programme. The launch of TOPS Rewards further expanded the programme.

Money market counters and kiosks are part of the South African customer experience, whereas BWG Group continues the rollout of ATM facilities at its stores. These provide another reason for consumers to enter the store and two additional opportunities (sending money and receiving money) for SPAR to build a long-term relationship with the consumer.

In South Africa, SPAR has an in-house customer care line that addresses complaints and queries. This number is provided on all SPAR branded products. All queries relating to non-SPAR branded products are directed to the relevant suppliers.

Marketing campaigns focused on promoting family values and a balanced lifestyle – important in maintaining the group’s positive engagements with consumers.

The business continually adapts to meet the changing needs of consumers in Ireland. Our campaigns over the past year focused on delivering strong value in a competitive environment. We also promote a wide range of healthy options through programmes such as our SPAR Better Choices programme.

Since the launch of the SPAR Friends loyalty card in Switzerland this year we have registered more than 123 000 card holders.

Our commitment to product responsibility and nutrition

SPAR’s commitment to food safety and nutrition provides consumers with quality assurance and aims to promote healthy living. We deliver on our promise to provide consumers with high-quality, traceable products through strict adherence to product and packaging specifications. This includes providing information on sourcing and ingredients.

To ensure our products meet the highest health and safety standards, we contract with an external laboratory that conducts random monthly testing across our entire product range. This ensures that our products meet a strict set of composition specifications. These specifications are in line with best practice and comply with all relevant legislation. This includes meeting government’s proposed reductions in sugar and salt concentration.

SPAR developed a nutritional strategy to support its commitment to house brand innovation and to raise awareness about healthy nutrition for consumers. The following are the core principles of the strategy:

  • Providing enough information to enable consumers to make informed choices
  • Leveraging our house brands and our suppliers’ brands to deliver on our strategy
  • Ensuring compliance with legislation
  • Collaborating with government, where possible, to deliver nutritious food to the lower end of the market

We are committed to promoting the responsible consumption of liquor. SPAR is a member of aware.org, a registered non-profit, public benefit organisation. Further initiatives in terms of nutrition is the introduction of water at checkout counters, leaflets in stores and options to reduce the sugar and fat content in products. Our future focus will be on the reformulation of products and the development of new products in our range, particularly in meal solutions.

Strategic risks relating to consumers

  • Macro-economic factors may cause a decline in business
  • Disruption of operations may occur due to labour disputes and/or industrial and mass action

Read about how we mitigate these risk in the strategy and business model section.

COMMUNITIES

Who they are

Our stores are owner-managed by individuals who engage with their local communities in the areas surrounding the stores and distribution centres.

How we engage with communities

  • Each SPAR store aims to be at the centre of the community by offering an end-to-end product range
  • Philanthropic activities at retailer level to grow brand loyalty and play a positive role
  • Investment in community development initiatives at group level, including sponsorships

Creating authentic shared value for communities

SPAR stores play a key role in the community as the local supplier of household goods. Other brand offerings, such as TOPS at SPAR and Pharmacy at SPAR, further ensure that a local neighbourhood SPAR can become a convenient, one-stop shopping destination. Build it stores provide rural and urban communities with a one-stop home building solution.

The voluntary trading model enables retailers to support local enterprise development and, in so doing, add value by growing the local economy. Retailers and their employees are also often from the local community, which strengthens personal ties with their target market.

SPAR is founded on entrepreneurship, family values and passion. To foster this culture and position the SPAR brand as a force for good in society, the group encourages retailers to be the centre of their community by supporting philanthropic and sponsorship initiatives at store level.

There is a symbiotic relationship between SPAR’s continued growth and the sustainability of the communities that support our stores. Our formal corporate social investment (CSI) policy ensures allocated funds support meaningful, sustainable projects, locally and nationally. During the year, SPAR invested R17.7 million (2017: R13.9 million) in CSI initiatives and R26.1 million (2017: R19.3 million) in various sponsorship projects.

Investing in our communities

SPAR has an established community investment programme, implemented according to the group’s CSI policy. This policy guides community engagement on a national, distribution centre and community level to ensure we move beyond donation-making to partnering with communities to contribute towards sustainable projects.

We believe in the power of education, and skills transfer and personal development are incorporated in our chosen community engagement initiatives. Our involvement in sports and sport-related initiatives is an area where we can promote SPAR as a brand associated with health and well-being, personal development, and community wellness.

In South Africa, on a national level, SPAR’s community projects address prevalent issues with a far-reaching impact. Many stores across South Africa are involved in projects, ranging from anti-drug campaigns to soup kitchens and sponsorships – all in collaboration with networks of stakeholders. On a distribution and community level, projects respond to the specific needs of local communities to create meaningful change.

Our main focus areas are:

  • feeding schemes, food production through income-generating projects, and educational programmes aimed at minimising the impact of poverty on communities;
  • educating communities on health issues such as nutrition, cancer, and the impact of HIV/Aids; and
  • training unemployed youth and supporting community transformation initiatives that play a role in combating crime.

Community engagement is fully integrated into the daily operations of SPAR – at our corporate offices, distribution centres and warehouses. The table below contain a few examples of the kind of projects where SPAR retailers and distribution centres are involved, listed according to our focus areas:

Food security and nutrition – eat smarter, live stronger

  • In addition to the commercial benefits generated by the emerging farmer hubs, the Mopani rural hub assists in providing food security. Read more in the case study on the emerging farmer development programme.
  • The SPAR Western Cape distribution centre partnered with Root to Grow to plant vegetable gardens in communities. School children plant vegetable seeds as part of their curriculum which covers planting, healthy eating choices, self-sufficiency, responsibility and recycling. They can run their own farmers’ market with the surplus produce or sell the produce to their local SPAR store.
  • The South Rand distribution centre supported the Sparrow FET College Project through the sponsorship and stipends for 10 learners participating in the Professional Cookery Learnership.
  • The My Spaza My SPAR initiative at the Lowveld distribution centre teaches young children about healthy food choices, how to use money and be an entrepreneur.

Health and wellbeing – supporting healthy living

  • The SPAR Western Cape distribution centre participated in the Annual Cancervive Ride to educate communities and employees on the importance of early cancer detection and treatment.
  • In 2018 a HIV/Aids campaign at the Western Cape distribution centre included workshops to raise awareness and promote testing.
  • The SPAR distribution centres at North and South Rand were title sponsors to the Whispers of The Orient event with Igazi Foundation as the beneficiary, focusing on the treatment of blood cancers.
  • Build it supported the upgrade of the Tswelopele Primary School toilet facilities.

Crime prevention – empowering communities

  • A Victim Friendly Support Room Initiative was launched by the SPAR distribution centre in the Western Cape in conjunction with Business Against Crime. The partnership pledges to combat domestic violence, sexual offences, and other crime-related events.
  • Trauma counselling is provided for retail store employees if they are exposed to a crime incident.
  • 58 learnerships and internships were implemented at the North Rand distribution centre to provide work exposure and build skills that can be used in the future to secure employment.
Better ways for better learning

The Unilever/SPAR partnership with the Department of Basic Education aims to deliver a behavioural changing hygiene and sanitation programme to over 15 000 primary schools in South Africa, focusing on grade 1 learners. Hygiene packs were delivered by distribution centres to SPAR stores for onward collection by school headmasters.

Achievements to date are:

  2018 2017
Stores 2 448 10
Schools 5 439 542
Children 457 982 32 496

Wake up and talk about cancer

SPAR contributes to the Vuka Khuluma (wake up and talk) campaign run by the Childhood Cancer Foundation of South Africa (CHOC). The campaign highlights the prevalence of cancer among children while increasing diagnoses of childhood cancer and driving access to available care and treatment.

Through its national store footprint, SPAR can reach communities even in rural and peri-rural areas. The opportunity to participate in Vuka Khuluma was extended to all SUPERSPAR, SPAR, KWIKSPAR, SaveMor, Build it and Pharmacy at SPAR stores in KwaZulu-Natal. Stores volunteer an in-store representative to be trained by CHOC on the early warning signs of childhood cancer. These stores then serve as Vuka Khuluma touchpoints to which the community may turn for guidance and assistance.

Investing in our communities in Ireland and Switzerland

BWG Group supports a wide range of community projects through our retail brands, consisting of a combination of fundraising and awareness campaigns. Our current charity partnerships are:

  • SPAR: Cystic Fibrosis Ireland
  • EUROSPAR: Irish Heart Foundation’s Mobile Health Unit/Defibrillator at Every EUROSPAR Programme
  • Londis: Pieta House, providing therapeutic support for people who are in suicidal distress and those who engage in self-harm
  • MACE: Downs Syndrome Ireland
  • XL: Simon Community, working with homeless people

Our selection of partnerships is based on social causes that resonate with our retailers, store employees, consumers, and the communities in which our stores operate. Retailers vote for their preferred charity every two years. Since 2013 we have raised more than €1.5 million to support a range of very worthy charity causes through our retail brands.

The effectiveness of the charity programmes is measured through brand awareness and shopper research. We set fundraising targets for each programme and benefit from positive press coverage.

In Appleby Westward, charity fundraising demonstrates social responsibility while engaging in positive activity.

At SPAR Switzerland our marketing byline is “Being the good neighbour” and most of the projects conducted this year were aimed at enhancing this position. Employees, retailers and consumers participated in initiatives that included:

  • Kids Flight day in association with Swiss Cancer Association
  • Ladies run/walk series sponsored in several towns and cities
  • Swiss Handball sponsorship
  • Good Neighbours day

Strategic risks relating to communities

  • Political instability in SPAR markets may hinder business
  • The inability to develop new sites may stunt growth
  • Disruption of operations may occur due to labour disputes and/or industrial and mass action
  • Transformation issues across all areas may impact the business negatively

Read about how we mitigate these risk in the strategy and business model section.