The downturn may have prompted some to rein in expansion plans but one retailer with high hopes is Spar, the global symbol group. Dr Gordon Campbell, the MD of Spar International, has been vocal in his ambitions for the business in markets from Africa to Russia and China. Dean Best met the Spar boss at the company’s Amsterdam HQ to discuss his vision for the business.
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Given the relationship between Spar and athletics in Europe, perhaps it’s unsurprising that the man in charge of the global retailer needs a good deal of stamina.
Dr Gordon Campbell, the Irish managing director of Spar International, spends less than half the month at the company’s headquarters in Amsterdam, hot-footing it instead from Austria to Australia and from Spain to South Africa to oversee the retailer’s international network.
And, despite the global recession, Spar’s network is growing. At the end of 2008, Spar had 12,680 stores, across 33 countries, generating sales of EUR27bn (US$38.26bn). Stripping out the strength of the euro, the company’s sales grew a healthy 6.3%, thanks in part to acquisitions in Hungary and the Netherlands but also to organic growth in South Africa and the buoyancy of Spar’s newer territories like Australia and Croatia.
Dr Campbell sees his job as one of co-ordination, one in which the Spar HQ helps local retailers bring in best practice from other stores elsewhere in the network, while, at the same time, building the Spar brand. It is a system, then, that calls for clear lines of communication and a great deal of agility to build a global brand largely on the back of local businesses and consumers.
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By GlobalDataSpeaking to just-food at Spar International’s HQ in the centre of the Dutch capital, Dr Campbell insists it is a model that works.
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“We’re kind of the opposite of companies where one of the problems in innovation is that people are very worried about something that is not invented here,” he explains. “Nothing is invented here. Our team here is very open to going outside and seeing in each of our countries who is doing what best. Who has the best sales per square metre and why? Who’s doing fresh foods best? Who’s doing private label best? What we’re trying to do is to encourage the countries to focus unrelentingly on implementing best international practice.”
Dr Campbell’s business calendar includes speaking engagements at industry conferences in cities like London, Barcelona and Moscow and it is at these events that, this year, the Spar boss has outlined some ambitious plans that have caught the eye.
In March, Dr Campbell told an audience in London that Spar wanted to expand further across southern Africa. The retailer has recently signed a deal to enter Nigeria but the group also wants to beef up its presence in a region that has yet to attract many of the world’s largest multinational retailers.
The Spar chief also has his eyes on China, a market he visits three times a year and now one of the company’s top seven markets in terms of floor space. It is, however, a market that has lured the likes of Wal-Mart, Tesco and Carrefour and competition is fierce.
However, in May, an industry audience in Barcelona heard Spar’s bullish plans for the fast-growing economy. Spar, Dr Campbell said, wants to treble its store network (currently standing at 88 outlets) in the next few years. The symbol group has joined forces with five local retailers in China and, in tandem with distribution hubs under construction, Dr Campbell said he wanted Spar to be “among the largest retailers – if not the largest – retailer in China.” The notion, he told this year’s World Retail Congress, that the world’s retail giants had “captured” the Chinese market was “nonsense”.
Two months later, Dr Campbell remains confident in Spar’s ability to grow and stand up to the competition in China. “We’ve now got to the stage where we have five partners – the sixth is coming on board shortly – and they’re all capable of opening double-figure numbers of hypermarkets a year. We have a capability in China of opening as many hypermarkets a year as the major players,” he says.
Dr Campbell is upbeat about the makings of further growth throughout Spar’s international network. The retailer, he reveals, is on the look-out for more franchise partners to add to its business in Russia. He acknowledges that India is more of a long-term play and is a “difficult” market but he insists that Spar and its local partner have developed a profitable business on the sub-continent. And, Nigeria, Spar’s newest market, has a lot of potential, he argues.
“China has huge potential – I can only see it growing. Russia is a very good market for food retailers today. India is very much going to be a market in which we are all going to have to work in and experiment and develop over a period of five to ten years,” Dr Campbell says.
Spar launched its latest assault on the Indian market in 2007, when it signed a licensing deal with local retailer Max Hypermarkets. After opening outlets in Bangalore, Dr Campbell said the partners hope to take their store-count to seven by next summer.
“A lot of what we have done so far is experimentation, which has been more about getting the non-food range right. We’ve got the food range and the food sections have done very well since they opened,” he insists. “We have now worked out a profitable retailing concept, which, as far as I can see, if you read the press, is not necessarily what the others are doing.”
With the global economy ravaged by recession in recent months, it was always likely, however, that some of Spar’s expansion plans in some parts of the world would be scuppered. Dr Campbell points to Ukraine, where Spar had 31 stores at the end of 2008 but had planned to more than double its network this year.
“In Ukraine, we had been on a dynamic growth path. We’d grown from 12 stores in 2007 to 32 in 2008 and we had expected to go to 60, or 70 this year, but it won’t be as good as that. We’ll probably only get to about 45,” he says. “Consumer confidence has been shattered, consumer expenditure is down and their currency has fallen by about 30%. That’s a market where you have a severe brake on development.”
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More broadly, however, Dr Campbell, remains upbeat about Spar’s future. He insists that, in markets like the UK, where the retailer focuses on the fast-growing but ever-more competitive convenience channel, a symbol group like Spar can help independent retailers stave off competition from the likes of Sainsbury and The Co-operative Group, two larger players that are continuing to make in-roads in the channel.
“There are independent retailers who know that they can’t meet this kind of competition on their own. They need to be part of a group that will give them better purchasing prices, a better retail concept and that will help them grow their sales and compete strongly. Effectively, once you’re in Spar, you can focus on your retailing,” he says.
Warming to his theme, Dr Campbell reels off the advantages of joining the Spar network in developing markets like China. “We’re working with small, local or regional chains who are also experiencing international chains coming in. If you are part of us, we would be able to give you the know-how to develop your stores, so that they have the same modernity, range, layout and standards,” he says.
He adds: “And then, it’s more than that. It’s bringing four or five or six of these [retailers] together to start producing their own private label, to start negotiating together with suppliers to improve terms and conditions. There are so many things they can’t do on their own. It’s a whole system of working together. It’s a kind of window to the world as well. If you’re sitting in China and you speak Chinese, how do you continue to run your business and see what is going on outside?”
For Dr Campbell, the challenge will be to provide that vision and meet his ambitions for Spar, while keeping pace with his international rivals.
