Spar retailers revolt, call for chair’s head

Guild members representing 1,300 Spar retailers have called on the board to request the resignation of chair Mike Bosman.

The unprecedented move reflects growing dissatisfaction with the running of Spar and with what the retailers call a “period of decline”. In a letter addressed to the Spar board, the guild members refer to a “serious and collective loss of confidence in the leadership of the current chairman of the board, Mr Mike Bosman” and say his continued tenure as chair “has become untenable”.

Asked if he was surprised by the dramatic development, Bosman tells Currency: “Yes and no.”

“I didn’t expect to receive a letter like that today but ever since Angelo’s [Swartz, former CEO] departure things have been building up; the guild was very upset he left,” he says, noting that Swartz had been with the group for 20 years and had built up wonderful relationships.

Swartz’s abrupt departure was the latest in a long list of changes that have buffeted Spar’s independent retailers over the past four years. “Over time, their disappointment turns to anger,” says Bosman.

The guild members have stressed the request is not being made lightly or in a spirit of personal animosity. Rather, “it is … because we believe Spar urgently requires credible renewal, visible accountability, and a decisive signal that the board is listening to the retailers who sustain this business”.

However, whether Bosman stays or goes is not a decision to be made by the guild. Though their views are extremely important, the decision to fire a chair can only be made by the board. Bosman tells Currency the board needs to listen to the retailers’ concerns.

“The right thing to do now is set up an independent board, which excludes me, to meet and discuss if the best thing is for me to leave.”

Spar’s lead independent director, Shirley Zinn, tells Currency the chair has the full confidence of the board. “We take these matters very seriously and will spend a lot of effort in determining what is the best way to respond,” says Zinn, adding: “We have a lot of work to do in the coming months to build relationships.”

Reputational damage

In their letter, the retailers say there is deep concern about the current state of Spar and refer to the deterioration in the relationship between the board and the retailer body, as well as continuing damage to the Spar brand and business.

“We trade in the Spar name every day, we carry the brand in our communities, and we experience directly the consequences of decisions taken at group level.

“Whether fairly or unfairly, Mr Bosman has become closely associated with the period of decline, reputational damage, strategic uncertainty, shareholder value destruction, and breakdown in trust between the group and the retailer network,” they write, calling his continued presence as chair “an obstacle to renewal, confidence-building, and the restoration of constructive relations across the Spar system”.

For his part, Bosman describes his period at Spar as “a brutal assignment” but seems keen to remain for another two years to complete what he regards as a five-year project. He reckons a lot has been achieved in the past three years, but there’s more to do. “Spar is a great brand, but it needs to be reinvented.”

He’d also like to update the guild system, which he believes is a bit unwieldy and disjointed.

Independents vs Shoprite, Pick n Pay

As it stands, the guild system is crucial to the Spar Group, which is not structured like a traditional supermarket chain such as Shoprite and Pick n Pay. It is more like a wholesaler and distributor, buying in bulk from suppliers and distributing goods to its approximately 1,300 independent retailers. These retailers voluntarily sign a membership agreement with the Spar guild, which governs the relationship between them and head office. In exchange for a fee, the individual retailers get access to Spar branding, wholesale pricing, distribution, promotions, IT systems, training, supplier negotiations and loyalty programmes.

In theory, the structure allows comparatively small independent retailers to compete with large retail groups like Shoprite and Pick n Pay through competitive pricing, easy logistics and strong buying power.

Retail members of the guild aren’t obliged to buy from Spar but historically more than 80% of goods in Spar stores are purchased from HQ. (The percentage of purchases is described as the loyalty level – and this percentage has dropped in recent years.)

It matters because the percentage purchased is critical to Spar’s own profitability and is a handy guide to the level of service being provided to the retailers. Recall back in 2023 when the failure of the SAP implementation in KwaZulu-Natal wiped out hundreds of millions of group profits. Retailers were unable to purchase from Spar and had to turn elsewhere. Loyalty levels plummeted to about 50% in some areas of the province.

The guild also comprises members of Spar management who are appointed by the Spar executive, unlike the retail members of the guild, who are elected by the independent retailers.

Torrid three years

Guild members representing management did not sign the petition for Bosman’s resignation, though they did attend last Thursday’s (seventh) national council meeting, at which it was discussed.

The call for his resignation comes three and a half years after Bosman was appointed to replace Graham O’Connor, who was forced to step down after allegations of impropriety. It has been a particularly torrid time for Bosman, who was required to remove a number of top key executives early on in his tenure. He was also immediately faced with existential pressure from poorly performing acquisitions in Poland and Switzerland.

The inevitable decision to offload the two businesses was done at a hefty cost to the group, but helped slash debt from R9bn to R6bn. At the same time, the board had to grapple with the bungled SAP rollout – a disaster that implicated senior executives and spotlighted inappropriate governance systems. Many had pinned their hopes on Swartz – the replacement to Brett Botten, who left under uncertain circumstances after just two and a half years at the helm, in 2023.

And all the while, Spar has had to contend with a flagging South African economy and the growing power of the Shoprite juggernaut. No wonder the calls for renewal are now so strident.

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_{Top image: Spar chair Mike Bosman. Picture: Spar Group.}