This article published September 2017. For latest news THIS MONTH'S ISSUE
You need a fish eye lens to get a proper perspective of the SPAR International business, as its managing director, Tobias Wasmuht, can testify. It’s a Thursday afternoon and he’s just touched down at the SPAR International HQ in the Netherlands, following a group conference in Norway, before jetting off on Sunday to a retail seminar in Asia to soak up the latest innovations in Korea, Hong Kong and Thailand.
“Most people see SPAR through the eyes of their own market,” he says. “People from the UK will think of SPAR in terms of convenience stores but in China, the average store size is 3-4,000sq m. We operate four different formats: SPAR Express (convenience stores), SPAR (neighbourhood stores) EUROSPAR (supermarkets) and INTERSPAR (Hypermarkets) and it’s an ever-changing business.”
Multi-format and faceted, SPAR International is also a growing and expanding business.
“We had a very strong 2016 and ended with presence in 44 countries and 70+ retail partners,” says Wasmuht. As the world’s largest food retail voluntary chain, SPAR International has a significant global presence - it operates 12,545 stores and serves 13m customers a day.
SPAR International sales rose by 4.5% to €33.1bn in 2016 - the strongest growth in a decade.
Strikingly, the growth came across the SPAR International board, from both emerging and mature markets; whereas in the previous leaner times and, especially during the financial crisis, the developing markets were the key drivers of growth and established markets were flat.
The Eurozone reported a sales surgence of 4.8% growth in 2016, for instance, fueled by a renaissance in neighbourhood retail, Wasmuht reports. Belgium posted an impressive 10% growth. The UK was up by 8.5% and Ireland delivered a 6.2% sales increase.
Wasmuht credits SPAR International’s continuous investment in new stores: proximity, city centre and forecourt locations for the uplifts. “We are very well placed - we have 6,000 stores in that format - we are very strong in neighbourhood and proximity,” he says.
The positivity has continued into the first half of 2017, Wasmuht adds.
Austria, which is SPAR International’s largest market with sales of €6.4bn, has been able to grow through acquisitions; especially in the Vienna region. SPAR Austria has also been extending its reach in neighbouring countries. In 2016, SPAR Croatia took over Billa stores from Rewe, for example.
Austrian SPAR International has also invested heavily in store modernisation and new compact formats in Hungary and has been able to grow strongly there too, Wasmuht reports.
Away from Europe, Africa is another SPAR International stronghold. “It’s surprising to many that 16% of our global turnover comes out of Africa and the Middle East. We have a very strong presence in South Africa and have enjoyed strong sales growth,” says Wasmuht.
SPAR International added 31 new stores in Africa last year, mostly larger format stores ranging from 1,000sq ft to 3-4,000sq ft in size; and today there are12 hypermarkets operating in Nigeria.
The Middle East has been a rich seam for the business too with growth from the UAE generated in Abu Dhabi and Oman, where it has partnered with leading petroleum chain Al Maha and introduced SPAR’s know-how and expertise in convenience and forecourt retailing to the market.
Aligning global expertise with local knowledge is what SPAR does best.
“We’ve transferred our experience from the UK and Ireland and opened our first SPAR Express stores in Oman,” says Wasmuht. Significantly, SPAR Oman has opened its first independent retail store in the region - previously they were company owned - a concept that’s entrenched in SPAR’s DNA, Wasmuht says.
“That’s a key moment in the Middle East and it will open up sub-licensing opportunities, bringing independents into the group,” he says.
SPAR International has a strong foothold in Asia too and significant ambitions for the region. It posted 6.7% of global turnover was derived from Asia last year with €2bn generated in China, SPAR’s largest market in Asia.
SPAR International launched in China a decade ago with 8,000sq m hypermarkets. As it grew its scale and volume it opened modern distribution centres, which enabled the development of a multiple format offer including the first generation of lifestyle-led convenience retail stores, which opened in 2009.
More than a convenience store, these outlets offered food-to-go, food-to-stay and a strong non-food proposition.
While these stores average 8,000sq m (the largest in a South China mall occupies 14,000sq m), the European trend to more compact hypermarkets is apparent in China too, Wasmuht reports.
There’s also an appetite for much smaller, 170sq m stores in transient and city centre locations, necessitating a multi-format strategy.
Guangdong, one of the most competitive provinces in China and the first to open through foreign direct investment, is a microcosm of the current format trends, says Wasmuht. Retail development began there in the early 90s. Hypermarkets followed in 2006 and SPAR’s lifestyle-led convenience offer in 2009. Now smaller stores in high flow locations are required. “We have perfected the format and realised we needed different sizes to suit different localities,” Wasmuht says.
Online is also catered for in China with 30,000-40,000 skus available for home delivery or to click and collect.
Last year’s strong growth was helped in part with two key market entries and new retail partners - one in Asia. In Thailand, SPAR partnered with Bangchak Petroleum to develop a food retail division with a target for 300 stores. The first store opened in November 2016. Standalone stores are also being targeted. The first non-forecourt outlet was opened in Bangkok and has been shortlisted by the IGD as one of seven leading international retail formats.
“It’s a great acknowledgement,” Wasmuht states. “We set out to disrupt the market and took our learnings on convenience from the UK and Ireland to combine convenience with a QSR, coffee, food to go and food to stay, all under one roof in shared space - that was something very new.”
SPAR International’s second market entry in 2016 was Albania, where it has partnered with Balfin, which previously operated Carrefour stores, and leveraged its hypermarket and supermarket expertise. Twenty three stores have to date been converted to the SPAR format including two hypermarkets.
It’s no surprise that SPAR International’s global expansion continues apace.
In 2017 it has entered three new markets: the Ukraine, Belarus and Saudi Arabia.
“SPAR is growing - that’s the underlying message,” says Wasmuht. “The brand is growing in emerging markets and markets where it has had a presence for 85 years - we are celebrating 85 years of growth and 2017 is looking to be a strong growth year.”
With growth in discount, proximity, convenience and online channels an international trend, remaining relevant is key, Wasmuht maintains.
In Belgium, for instance, SPAR has invested in store formats and introduced a new SPAR format.
“To remain relevant, we have to invest in meeting shopper needs,” Wasmuht says. “We have converted a large number of stores to SPAR Express - our convenience and forecourt format. Targeting the needs of household in Belgium and converting stores has given us a strong boost.”
Similarly in the Netherlands and in Norway, where 62% of the population live in a single or two-person household, SPAR is delivering on the renaissance in neighbourhood retailing with ultra convenience stores.
“That’s why we see the discounters trialing convenience offers and an interest from the multiples - it’s a good channel to be in and one we are strong in,” Wasmuht says.
Unlike many rivals, SPAR can also draw on its unique business model to innovate. “SPAR International is the central entity for format development and innovation for 44 countries,” explains Wasmuht. It played a key role in the development of the 2017 NACS Insight award-winning SPAR Natural store, for instance. SPAR International worked with SPAR colleagues on Gran Canaria to bring international learnings and best in class development to create a concept focused on health, convenience, indulgence, authenticity and ecology, which was connected to the community.
“It was executed very well with local partners - bringing the best of local and the best of global to the format development,” Wasmuht says.
Similar learnings will no doubt transpire from Wasmuht’s pending visit to Asia with 46 executives from 14 SPAR countries. “We will capture new ideas, take them back, get together with our project teams and put those ideas into our thinking. We are in a very good position - we have expertise in different areas and formats, which we use to enrich our thinking in other markets. It’s a continuous cycle of sharing the experience of our teams in different countries and then fast tracking the whole project development.”
Wasmuht has enjoyed a long career with SPAR, joining the business when it had a presence in ‘just’ 26 countries. “I’m proud to be have been a SPAR man for 17 years and have really enjoyed working with our international partners, developing new concepts and formats in my role as retail and marketing director,” he says.
In 2004-5 Wasmuht took on an even more active international development role, which took him to China with a remit to drive and develop the Chinese market. He spent the next 10 years building the SPAR brand in China.
“Since opening our first store in 2005 to 2015, there’s been monumental change. It’s a rare opportunity to build a brand from ground zero and it was a tremendous experience.”
Wasmuht is equally thrilled to see the brand expand throughout Asia into Indonesia and Thailand etc and encourage its greater ambitions for the region going forward.
He returned to the Netherlands as managing director of SPAR International in 2016 and has a clear focus, which is encapsulated in SPAR’s ‘Better together’ slogan.
“It’s a call to action to reap economies of scale,” he says.
Wasmuht reveals that he wants to drive harder on buying and sourcing, using SPAR’s strength and global presence to source competitively and grow its buying scale.
“It’s been leveraged before but not optimised. As we become more international, new resources become available to the group and there are more opportunities.
“The key direction we are going is growth and entering new markets, which has only accelerated in the last 18 months. We have got to grow the organisation and reap the benefits of that scale,” he says.
I recommend that a very big fish eyed lens will be required.
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