AMSTERDAM, May 21 (Reuters) – Dutch retail partnership Spar sees big opportunities to expand in markets where other Western chains fear to tread, exploiting a model of sharing global best practice among independent businesses trading from Angola to India and Ukraine.
The company was launched in 1932 as an association of independent Dutch wholesalers and retailers, and now 12,300 stores bearing Spar’s fir tree logo are present in 40 countries around the world, with combined sales of 31.9 billion euros ($35.6 billion) last year.
"The potential in China is still enormous and in Russia it is too because we’ve only just started opening hypermarkets," managing director Gordon Campbell told Reuters in an interview at the group’s Amsterdam headquarters. "We see enormous potential in India. We’re only just starting in Indonesia."
In addition to entering Indonesia and India, Spar opened its first stores in Angola, Malawi and Georgia in 2014 and is in active discussions with potential partners in the Philippines, Malaysia, Thailand and Sri Lanka, Campbell said.
Spar International licenses its brand to independently-owned national or regional partners, provides them with a range of 300 Spar own-brand products and offers guidance on issues ranging from store layout to merchandising and logistics.
That approach has allowed the brand to spread to high-growth but risky markets just as others have reined in their ambitions in such places, with Carrefour recently pulling back from India and Metro selling its Vietnam business.
Spar International’s own revenue comes from the licence fees for the brand rights, which it said were set on a market-by-market basis, without elaborating. When asked about financial details, a spokesman said the company did not publish results.
Spar’s top market is Austria, followed by South Africa where the Spar Group is the country’s second-biggest grocer. It is also well-established in Britain and Ireland, where it runs thousands of convenience stores, as well as Italy.
All stores have a focus on fresh produce and follow Spar manuals on layout and operations, but local managers still have autonomy on product choice and run stores of all sizes.
"We never have these issues about stores not having the right products. Our stores do have the right products, they have local management, local staff, they know the locations," Campbell said.
Local knowledge has also proven key in expanding in sub-Saharan Africa given huge challenges like poor roads and intermittent electricity supply, he said.
"The local partner knows his or her way round the obstacles of bureaucracy that would be a nightmare to navigate on your own," he said.
Campbell has led the group since 1994 and been the driving force behind its international expansion. He is due to step down in December and hand over to Tobias Wasmuht, head of the China business.
While Spar has benefited from a shift in Western shopping habits towards convenience stores during the economic downturn, Campbell still sees a successful future for hypermarkets in some emerging markets, where they are relatively new.
Big stores with a wide array of products were still a novelty in some areas, he said. "It’s aspirational. They are thinking about the TV, the bed and all these other things that they are going to buy," he said.