Spar independents push for board overhaul

A day after calling for Spar’s chair’s head, a group of 1,300 independent retailers now say they want a wider-ranging change in leadership, urgently.

In a statement released on Tuesday, the Spar Guild, which represents them, says it “believes that leadership with deep, relevant retail experience and a clear understanding of the Spar model is essential to stabilise performance, restore profitability, and ensure the continued relevance of the brand in a highly competitive market”.

The comment is likely a reference to the fact that just one of the directors on the Spar board has retail experience. Though current CEO Reeza Isaacs spent a decade – up to 2023 – as CFO of Woolworths, he has regularly confirmed his area of expertise is finance rather than retail.

The retailers’ statement is a reminder that it’s not only shareholders who have suffered from the trials that have washed over the Spar Group for the past 10 years.

While shareholders have seen the value of their investment plunge from R218 in May 2016 to a current R60.45, it’s now evident the retailers’ livelihoods have been hit hard, too.

“Over a sustained period, retailers have experienced significant and continued pressure on profitability and declining returns on invested capital,” says the guild’s statement.

Threatening their survival

The retailers say the pressure has coincided with a growing misalignment between the needs of the retail network and the strategic direction of the group.

Essentially, it seems the sensitive symbiotic relationship between independent retailers and the group is way out of kilter and threatening the survival of both parties.

The Spar Group is unlike a traditional retailer and is more like a wholesaler and distributor, which buys in bulk and distributes to its 1 ,300 independent store owners.

This relationship is managed by the guild, which, in theory, is there to ensure that both parties thrive.

Right now, Spar is doing anything but. This is attributable to an economy that is barely ticking over, extremely tough competition and screeds of self-imposed legacy problems such as costly, unprofitable foreign acquisitions, a botched SAP rollout and the necessary removal of some senior executives.

But for the retailers, a weak economy and tough competition provide only a partial explanation. It seems that in a bid to shore up its own profits, the Spar Group is squeezing too much out of these independents.

Perhaps even worse, according to some of them, the head office is increasingly acting unilaterally when it implements changes to the relationship – whether it’s new employees, new IT systems or new rewards programmes. They’ve finally had enough.

‘Clear and unified’ 

“For several years, the guild and the national council representing the group’s largest retailers have engaged constructively through formal governance channels, consistently raising concerns and calling for greater retail expertise and alignment at board level,” say the retailers. But these calls have not resulted in the level of change required.

Far from being a rebel faction, the guild says its calls reflect “a clear and unified position among retailers that decisive intervention is required to restore confidence, re-establish alignment, and safeguard the long-term viability of the business”.

But it doesn’t look as though the board is in the mood to make any changes to its membership, and says it has full confidence in chair Mike Bosman. And though there is only one of eight non-executive directors with retail experience (Pedro da Silva), lead independent director Shirley Zinn told Currency “the current board has deep and varied retail experience”. However, she did acknowledge that since the departure of former CEO Anglo Swartz, “there is a shortage of deep Spar-specific experience on the board, which we are mindful of”.

In a statement released on Tuesday, Zinn said a board subcommittee would be established “to urgently address the issues raised by the retailers, as well as the systemic issues in retailer engagement”.

The board has invited the representatives of the Spar retailers to a meeting with the sub-committee. “The board is committed to strengthening the relationship and engagement structures between itself and the Spar retailer network,” said Zinn, who also alluded to a review of the current Spar group structure.

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_{Top image: www.spar.co.za.}