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  1. Interviews
October 16, 2013

WORLD RETAIL CONGRESS 2013: just the answer – Spar International MD Dr Gordon Campbell

Symbol retailer Spar International has continued to expand its presence in emerging markets this year. The group entered into a partnership agreement in the Middle East earlier this year and more recently signed two licencing deals in Russia. Michelle Russell caught up with Spar MD Gordon Campbell at this year's World Retail Congress in Paris to find out more about the group's international ambitions and its long-term plans.

Symbol retailer Spar International has continued to expand its presence in emerging markets this year. The group entered into a partnership agreement in the Middle East earlier this year and more recently signed two licencing deals in Russia. Michelle Russell caught up with Spar MD Gordon Campbell at this year’s World Retail Congress in Paris to find out more about the group’s international ambitions and its long-term plans.

just-food: Your 2012 sales were driven by expansion in Russia and China. Do you expect to see those trends continue?

Campbell: If we go back to last year’s sales, we reached US$32bn. We’ve been very fortunate during the recession that we’ve had such a great geographic spread because Austria performed very well last year and has done for the last five years. South Africa also delivered strong growth last year and for the last five years. Spain was good for us last year because we opened 170 new stores. So they were very positive results from Western Europe and then when you add to that the results from China and Russia, we had a very good outcome last year. We expect those trends to continue.

This year we are growing at about 17% in China and about 18% in Russia due to new stores openings and like-for-like sales growth.

just-food: You entered into an agreement with Abu Dhabi Co-operative Society earlier this year to help form franchise partnership deals in the Middle East, opening Spar stores in the United Arab Emirates. How is this progressing?

Campbell: It’s ongoing … sites have been identified in Qatar … but it may be 2015 before the first ones open. The next country we’ll target is Oman. We want to get stores opened in these countries before we think about going anywhere else.

In the Middle East, we now have a hypermarket, a supermarket and an Express store in Abu Dhabi. But there are two more supermarkets, almost ready, that will open at the end of the year.

just-food: As well as Oman, you said earlier this year you had reached “an advanced stage in negotiations” with potential partners in Lebanon. How is this progressing?

Campbell: Those license agreements are already signed and we are now sourcing sites with partners. Sites have been identified and some will open in the first half of 2014. But in Oman we have not yet signed a license.

just-food: There has been a lot of talk about a slowdown in growth in emerging markets. Is this something Spar is experiencing or is concerned about?

Campbell: There are certainly parts of China, in the south, that have slowed down but the parts we operate in seem to be growing ahead of the market so we have not stopped growing.

just-food: What about competition from the larger players in those markets that operate the same formats as Spar. What are you having to do in order to remain competitive?

Campbell: We first developed the hypermarket sector in China and developed that with compact hypermarkets, which would have fresh food and a focus on the food range. So typically the stores are 6,000sq m. What we’re doing is upgrading non-food and turning it into more of a lifestyle concept and making sure that, as well as the basic offerings, there is a focus on lifestyle. But we are also opening supermarkets in China with very good quality fresh foods, anything from 1,000 to 2,000sq m. In Russia, we have so far developed supermarkets, typically from 500 to 2,000sq m. We also have the first three hypermarkets open there and by the end of 2014 we’ll certainly have six, maybe seven. In addition we have Spar Express. So effectively, what we’re doing in Russia is rolling out the multi-format strategy.

just-food: So, the multi format strategy is clearly key for you in all the markets you operate in?

Campbell: The key thing for us in all of our markets is the multi-format strategy, the fact that we can decide which strategy we will lead with in any one market, whether it’s the supermarket or the hypermarket. We don’t lead with the Express, we like to enter with a hypermarket or supermarket presence before we go to the Express.

just-food: Is having an online presence part of Spar International’s multi-format strategy?

Campbell: Yes, we are developing an online retail presence in China, but it is at an initial stage. And in Russia we’ve just initiated the project, but we are only looking at this stage.

just-food: You ended your franchise partnership deal with Landmark in India last year. Are you looking to make any other deals?

Campbell: We are looking yes and we are in discussions with people. I really can’t comment any further though at this stage.

just-food: Are there any markets you are finding particularly challenging to operate in at the present time?

Campbell: One market we have started in is Nigeria and our partner there finds it very difficult because of the lack of infrastructure. The African markets are difficult because there isn’t the infrastructure … I’m talking about roads, electricity, water, and that applies in Nigeria and other countries we’ve looked at. Obviously not South Africa, Zambia, Zimbabwe etc.

just-food: You’ve talked previously about scrutinising North American retailers for inspiration for your own operations. Is this something you continue to do?

Campbell: We don’t operate in North America, but we go there to see what they’re doing. We look outside of Spar at best-in-class retailers and particularly the regional retailers in the US that compete against the big box retailers. We really enjoy going there and seeing how they do their fresh foods, seeing their new product innovations, how they train their staff, technology, etc. We’ll be going again in March. We scrutinise best practice.

just-food: Is North America not a market Spar would consider entering?

Campbell: We are now 81 years old but the US market was already well developed in terms of independent retailers and how they operate before we started.

just-food: Spar is expected to issue its first-quarter results in November. What can we expect from these?

Campbell: I would expect much of the same, I would expect to see our growth to continue, not really at a great pace because many of our western European markets are still not showing growth. There is a glimmer of hope that the situation in Europe is improving but I think it’s far too early to say that we actually see a recovery coming.

just-food: What can investors expect from Spar over next 12-18 months?

Campbell: Our focus to the end of 2015 is very clear. We want to build our presence in China and Russia and gain a bigger footprint across the multi-format strategy. We will be looking to go into Asia, into one or two other countries, and the same in Africa. Our target is 40 countries by the end of 2015.

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