South Africa’s SPAR Group said on Monday that its wholesale turnover increased during the first 18 weeks of the financial year, as it stepped up promotions in a highly competitive environment characterized by low food inflation and deflation in some categories, according to Reuters.
The retailer reported a 2.1% rise in wholesale turnover from continuing operations in the 18 weeks to January 30.
Wholesale sales in Southern Africa grew modestly by 0.9%, with grocery and liquor sales increasing 0.8%, affected by a softer October. Retail sales for the period rose 1.7%, with South Africa posting growth of 1.9%.
SPAR said it had “deliberately intensified” promotional activity to support its retailers and protect volumes, as consumers remain financially strained and price competition among grocers intensifies.
However, the approach, combined with an unfavourable sales mix and ongoing investment in loyalty and margin-recovery initiatives in KwaZulu‑Natal, put pressure on gross profit margins in Southern Africa. By 0941 GMT, SPAR shares were down 4.80% at 79.79 rand.
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The company noted that South Africa’s grocery sector is engaged in aggressive promotional activity to attract cash-strapped shoppers.
Market leader Shoprite continues to outperform, drawing more customers through value-oriented pricing across both premium and budget formats.
In contrast, third-largest retailer Pick n Pay, still undergoing a turnaround, struggles to achieve meaningful sales growth as it closes underperforming stores or converts them to other brand formats.
SPAR also confirmed on Monday that it had been served with a summons related to alleged claims arising from its SAP system implementation.
The amount currently claimed significantly exceeds the initial claim of 5 million rand ($312,924).
The retailer said it is still managing the impact of the troubled SAP rollout at its KwaZulu‑Natal distribution centre, which caused major disruptions and contributed to substantial turnover and profit declines in prior years.
“To date, all KZN retailers affected during the early SAP implementation period, except for the claimant and one additional retailer, have reached amicable settlements with the Group,” SPAR said.
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Image Credit: Business Insider Africa
