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SPAR International, the guilds and the voluntary trading model

SPAR International key facts

SPAR’S RANKING PER 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 trade food retail chain, with stores in 48 countries.

In 1963, The SPAR Group Ltd and BWG Group were both licensed 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 2018:

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

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

The concept of voluntary trading is almost a century old and is based on mutually beneficial co-operation between the independent wholesaler (SPAR) and its retailers. Because SPAR applies the voluntary trading model, it is 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.

This model relies on the quality of the relationship between SPAR and our retailers. Therefore, the group’s performance relies on our 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, and affords them the freedom to stock their stores from any supplier. This ensures that each SPAR store has its own ‘personality’ and a 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 example of a model that balances the interests of different stakeholders. A singular focus on creating financial capital by any one stakeholder would compromise the entire model. This is mitigated by initiatives and structures such as joint business planning with suppliers, and by the guilds platform shared with retailers, where any issues putting the model at risk can be proactively resolved.

What SPAR offers retailers as a listed wholesale distribution company
  • Guild custodianship
  • Superior warehousing and distribution capability
  • Single delivery source and purchasing convenience
  • Competitive pricing

THE VOLUNTARY
TRADING MODEL

THE VOLUNTARY
TRADING MODEL

What independent retailers licencing the SPAR brand gain from the model
  • 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) has 937 members (2017: 903 members), and the Build it Guild of Southern Africa (NPC) (the Build it Guild) has 376 members (2017: 368 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 names 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 SPAR Guild’s chairman, Roelf Venter, is appointed by SPAR. The SPAR Guild has six regional committees, on which SPAR is represented by executive management of distribution centres. The regional guilds visit stores as part of their annual work plan.

The members pay subscriptions to the SPAR Guild, who uses these monies to advertise and promote SPAR. During the year, subscriptions of R9.0 million (2017: R8.0 million) were paid to the SPAR Guild.

The intercompany asset/(liability) with The SPAR Group Ltd as at 30 September 2018 amounted to a liability of R83.6 million (2017: a liability of R25.9 million) for the SPAR Guild; and an asset of R5.2 million (2017: an asset of R0.4 million) for the Build it Guild. The liability is interest free, unsecured and no date is 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 Build it Guild’s chairman, Wayne Hook, is appointed by SPAR. The Build it Guild has six regional committees, on which Build it is represented by executive management of the Build it division.

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