There’s not an awful lot that Spar management and the Giannacopoulos family seem to agree on, which is a great shame. With 46 Spar stores under its management, the Giannacopoulos family is one of Spar’s most important independent retailers. So, the fact that there have been low-level hostilities between the two for more than six years is not good news for Spar management, the Giannacopoulos family or Spar shareholders. They are all now grimly contemplating the share price sliding to one of its weakest levels in years.
Occasionally, hostilities escalate into a kind of open warfare. Recall that rather innocuous-sounding “contingent liability” in the 2022 annual financial statements?
“Summons has been served on the company by one of its larger retailers for damages relating to a membership dispute. The company has engaged senior counsel to consider the validity of the claim,” said note 41, avoiding any useful details, such as the amount of damages and the name of the “large retailer”.
However, shortly thereafter, the Giannacopoulos family treated the public to a full reveal of the “membership dispute”. It made for grim reading: Spar management had, on what turned out to be spurious grounds, essentially triggered the invasion of some of the Giannacopoulos stores, intending to grab them back and hand them over to Spar’s corporate office. That’s what’s known in Spar’s world as “perfecting”.
You see, Spar’s relationship with its independent retailers is structured around bonds, which are generated in exchange for the funding Spar provides. If Spar suspects a retailer is struggling, it will move swiftly to “perfect its bond” – identify the movable assets and claim ownership before the banks or any other creditor can get hold of them.
Competing interests
The theory that’s driven Spar’s worldwide growth is that this funding (along with other services) helps independent players build prosperous retail operations that can compete with dauntingly well-resourced corporate stores. In South Africa, businesses are owned by the likes of Shoprite, Checkers, Woolworths and Pick n Pay.
It’s an excellent system, at least in theory. And this is why Spar’s annual report devotes so much space to reminding stakeholders of just how important its independent retailers are.
Crucially, its success relies heavily on the Spar Guild playing an even-handed role in balancing the often-competing interests of the Spar Group and its independent retailers.
As it happens, the Spar Guild plays a central role in the hostilities between the group and the Giannacopoulos family, with the latter claiming it lacks the necessary independence to play an effective role.
Serving summons
Anyway, back in 2019, it was only prompt action by the family that prevented the stores from being “perfected”. Unfortunately, not before considerable damage had been wreaked on their operations and reputations; R2.1bn of damage to be precise. Or at least that’s what the Giannacopoulos family claimed in the summons it served on Spar in 2022.
For the next three years, the “contingent liability” remained a fixture in Spar’s annual financial statements. Indeed, it seemed to be the most stable aspect of the group’s business. Over the same period, the top management was cleared out, the board was completely revamped, and the international loss-making operations – in Poland, Switzerland and the UK – were jettisoned at a hefty cost.
In 2023, with a new chair at the helm, details were added to the contingent liability note – the Giannacopoulos’s name and the R2.1bn. There was also a reference to extensive engagements between Spar and the family.
“While many issues have been successfully resolved, a few major dispute matters could not be finalised.” The parties agreed that the dispute would be dealt with through a legal or formal arbitration process. “The company remains satisfied that, based on legal counsel opinion, it has a strong defence and does not recognise any liability for damages.”
It’s hard to imagine what issues were resolved, given that the R2.1bn was not reduced. Indeed, Harry Giannacopoulos tells Currency the family’s law firm is preparing to add several hundred million rand to that initial claim. He acknowledges there were discussions, but says little was resolved.
Looking for a ‘fair settlement’
Spar CEO Angelo Swart confirms legal action now seems inevitable. “All we want is a fair settlement, unfortunately we are too far apart in our views, it will have to be settled in court.”
And the hostilities don’t end there. The family now intends to sue Spar for losses it suffered as a result of the botched attempt to roll out the SAP system across KwaZulu-Natal (KZN) in 2023.
In papers filed with the Durban high court last week, the family claims they suffered losses of R168.7m due to the disastrous rollout, which led to severe supply chain breakdowns.
According to the Giannacopoulos family, “as a result of the introduction of the SAP software at the KwaZulu-Natal distribution centre, there was an immediate breakdown in order picking, dispatch scheduling, inventory visibility and pricing accuracy”.
Further, it said, these failures persisted from January 2023 until at least September 2025. During this time, shelves stood empty, promotions could not run, perishable stock went to waste, and customers were lost to competitors.
All of this contravened the obligations Spar and its independent retailers owe each other. In its papers, the family explains that, as Spar Guild members, independent retailers are contractually required to purchase almost all their stock exclusively from Spar’s regional distribution centres and to use Spar-mandated software systems. For its part, Spar is obliged to provide a functional ordering system, reliable supply and competitive pricing.
Here’s where it gets messy
The bulk of the Giannacopoulos claim (R142.9m) comprises loss of profit arising from the inability to make sales or the need to incur additional costs to source goods elsewhere. An additional R25.8m is due to rebate and over-rider schemes being missed because the KZN warehouse could not provide the merchandise.
Perhaps unsurprisingly, Spar rejects the size of the claim. Spar’s Swart, who spoke to Currency on the day the summons was received, says Spar needs to study the substance of the claim before it decides what to do. But on first reading, he reckons: “The figures are hard to compute.”
Of the approximate 300 stores in KZN, only 114 qualified for any compensation. “Spar looked at store performance immediately prior to Go-Live [the SAP launch] and then post the launch,” says Swart. Of those, 113 stores had settled on this basis by the end of 2024, and the amount paid out was included in the R720m recorded by Spar as lost profit due to the SAP rollout. (Spar also recorded lost turnover of R1.6bn.)
Swart also disputes the claim that the SAP rollout was continuing to cause operational problems until late 2025. “Our service levels are now comparable with industry norms, KZN has been delivering 90%-95% of orders for at least 18 months,” says Swart.
But guess what. The 114th retailer – the one that didn’t accept the deal – was the Giannacopoulos family, who were evidently in no mood to play nicely with Spar.
Here, things get a little messy. In a note to its clients, Avior Capital Markets analyst Michael de Nobrega says Spar management “indicated that it engaged with and settled claims from all affected retailers at the time of the SAP disruption but did not receive a response from the Giannacopoulos Group despite attempts to engage”.
A risible figure
However, Harry Giannacopoulos tells Currency that while they had serious reservations about the formula being used by Spar and lodged objections to it, they did follow the process. He indicates that the amount offered by Spar (and rejected by the family) was risible, and says that he has the full figures to substantiate their much larger claim. And, as a user of the system, he is adamant that the problems persisted until late 2025.
Perhaps now that the worst of its international problems have been sorted, the Spar board could get around to sorting out this long-festering hostility, because without decisive action this will drag on for years. Of course such action also requires the Giannacopoulos family to co-operate. Any resolution would help shareholders who, in recent years, have taken hefty knocks from this investment.
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Top image: Rawpixel/Currency collage.
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