Spar mini mag

COMPANY PROFILE

2013

SPAR ZAMBIA

10 years, 13 stores and counting

COMPANY REPORT

10 years, 13 stores and counting Editorial – Roland Douglas Production – Chris Bolderstone Spar Zambia celebrates its tenth anniversary in December this year.

There will be promotions in store and online and a lot of coverage of the company’s CSR projects, projects which are held in high regard by the company. Marketing Manager, Ville Saikku, explains that a partnership with Childline is something on which the company has placed a large emphasis.

When starting out in business in a new region, it is usually not the best idea to pit yourself against one of the industry giants who have dominated a certain market for the best part of two decades.

In 2003, Spar Zambia did just that, setting up in Lusaka and aiming to become the preferred shopping experience for customers but facing a challenge right from the outset with South African heavyweight Shoprite already boasting successful operations in the country.

When Spar Zambia opened its first store, Arcades, Shoprite had a significant market share and the FMCG (Fast Moving Consumer Goods) industry was still comparatively unsophisticated with Shoprite becoming recognised as the industry leader. The market had few ‘chain stores’ and was home to many single outlet businesses.

When Spar Zambia entered the market in 2003, the move was viewed, by outsiders, as slightly risky because of the uncertainty of the market place but that original pessimism quickly fell away as the business took off and rapidly gained a strong position in the country’s retail sector.

PAGE 2 AUG 13

In this year, the year of Spar Zambia’s tenth birthday, the company is celebrating its success over the last decade and proudly holding promotional events throughout its 13 stores which now cover over 20,000m².

Marketing Manager, Ville Saikku, says that back when the company started, insiders had nothing but confidence thanks to the success of the brand in neighbouring nations. “We had a lot of experience from across the border in South Africa and Zimbabwe so it was not a step into the dark; it was based on how things had gone in other countries, especially Zimbabwe. We had a lot of communication and cooperation with them in the beginning.

“Shoprite has been in this market for quite a long time, it was one of the only major players in the market.

Now there is Shoprite, ourselves and Pick n Pay, who are reasonably new to the market. Before we arrived there was only Shoprite and a selection of privately owned stores, there wasn’t any big chains,” he says.

Plans for tenth year anniversary celebrations are already being made and Saikku suggests that all 13 stores will have special promotions to mark the occasion. “We are planning

Spar Zambia

to do a media campaign around the tenth anniversary,” he says. “It falls on the 4th of December, when Spar Arcades started and Spar Zambia came into being. I oversee marketing for the whole group and this will be one of the main marketing campaigns of the year.

“We will have promotions in store and look at working with the press to promote the history of the company. We will focus especially on giving plenty of air-time to the corporate social responsibility (CSR) projects that we are working with. We will have promotions on the radio, instore and on our website and social media pages.”

not on the ground, areas in the copper-belt and Northern Province.

“Of course we are looking into expansion but we are also looking at how we can improve what we already have. It’s a constant learning curve.”

GROWING BUSINESS The Zambian retail market has come a long way over the past decade and Spar has grown in parallel to the sector. However, Saikku suggests that further growth is an important target for the company, alongside continuous improvement of its existing 13 stores.

“The newest store was opened recently in April in the Chilenje area of Lusaka and was the seventh store in Lusaka.

“We will be looking at areas where we are currently

AUG 13 PAGE 3

COMPANY REPORT

Ten years of successful operations is a fantastic achievement for any business in any industry and Saikku says that although the competition is strong, the company tries to contest on more than just price.

“In terms of competition, we are the second largest. We have a lot more stores than Pick n Pay but there are new entrants coming into the market, we now have FoodCorp and Food Lovers Market coming onto the scene. We are all moving forward and opening new stores.

“In terms of price comparison, we are very much on a par with the rest. Shoprite have so many stores so they can order things in huge bulk and their prices can be cheaper.

We don’t focus on price too much. If it’s only the price that you’re trying to beat your competition on, it’s not a model you will be successful in.

“Our core values surround the idea of being the preferred shopping experience by being the best in fresh and having quality and range at affordable prices. We also focus on giving our customers a good shopping experince through customer service second to none.We bring in a lot of Spar products from around the world as well as things from the UK and South Africa which our competitors do not have.”

These international ties are one component of a range of different factors that helps to bolster the Spar Zambia offering but while they related to an international group, the company is very much a Zambian outfit, designed with the local market in mind.

“Our board is here, it’s a Zambian company, it’s part of a global supermarket chain but it’s locally run,” says Saikku.

PAGE 4 AUG 13

“What we do, which is different from our competitors, is make purchases in South Africa for the stores here to receive by truck. We are part of the Spar family in one of 34 countries but we try to buy locally. Fruit and veg, chickens and other fresh produce is all purchased locally,” he says.

DEVELOPING NATION It may come as no surprise that staple products are the most popular in Spar Zambia stores. “For the entire group, we’re looking at the basic everyday lines such as cooking oil, chicken, sugar, mealie meal flour and bread,” says Saikku.

Zambia still has a high percentage of people living below the poverty line but its development since 1991 has been noticeable in the retail sector and Saikku suggests that the establishment of a middle class has been significant for Spar Zambia and helped the company to achieve continuity even during the tough economic climate.

“Of course there are fluctuations but we have not seen too much of a problem. This is one of the emerging economies where people are getting better education, having more chances of a job and they have more buying power. People now know what they want; 20-30 years ago people only bought what there was, now you have a choice.

“Technology moves so fast so we don’t know what impact that will have on the business over the next ten years. In Zambia there is still a lot of manual work compared to Europe where there is a lot of automation.

“People are leaving their trusted brands and trying new things and that is good for us, especially when we introduce

Spar Zambia new things from South Africa or the UK or anywhere around the world. The middle class here is now starting to emerge,” he says.

13 AND COUNTING As discussed above, Spar Zambia is looking to continue its growth and roll out more new stores in areas where they do not currently have a strong presence. The copper belt is the obvious destination for expansion within Zambia. The towns of Kitwe and Ndola have modern shopping malls in various stages of development and are beginning to cater for the emerging middle class more effectively. This type of development, resulting in changing shopping behaviour, is the real driving force behind the change in the country’s retail sector.

When building and opening new stores, Spar Zambia often utilises the franchise model and this has drawbacks as well as benefits.

“Building anything comes with its challenges” says Saikku. “We’re getting better at it with every store that we do. In the last couple of years it’s been mostly franchise stores that have opened, for example, Chipata, Chilenje and Livingstone.

“When you’re working with a franchisee, it depends whether the store manager is willing to take on board what

we’re saying or whether they want to go their own way. So far we’ve had good luck with working with great people.”

This has been, in part, down to the experience and market knowledge of the people at Spar Zambia. The management is well versed in what it takes to successfully open a store that is perfect for the Zambian market and stocked to suit local demand.

“Our CEO, Mike Yeatman, has spent his whole career in this business and he knows what he is talking about.

“When we’re opening new stores we have to be flexible and creative as we’re ordering fittings from abroad and we have to meet deadlines. Everything depends on what type of store it is. We will have to get the right ovens, cold rooms etc. We usually work with international companies with representatives in Zambia,” says Saikku

HAVING AN IMPACT Ten years into business in Zambia and Spar is continuing to heighten its focus on work with charitable causes. As Saikku mentioned above, the company is giving as much air time as possible to its chosen ‘good-cause’ partners and right now one of the focus areas is raising awareness for Childline in Zambia.

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“We are not the first Spar to work with Childline,” explains Saikku. “Spar Zimbabwe and Spar UK both work with Childline but it is relatively new here. They are working under a NGO called Lifeline who also run another free helpline for people who have problems, not just children. They expanded their operations and are now looking to give children a voice when they are in trouble.”

The company is using its highly recognisable brand identity and many marketing channels to promote Childline as much as possible. This association is highly beneficial for Childline and means that their message is potentially being seen by a huge number of people.

“We have about one million shoppers in our stores every month so it is a great opportunity to raise awareness in all these different areas. Regardless of our tenth anniversary, Childline is always at the top of our agenda.

“In all of our 13 stores, we have donation boxes. We advertise their 116 logo across all of our platforms from bags to leaflets to our website and anything we print. At every event we go to, we discuss Childline, trying to get

more publicity among the general public,” says Saikku.

Childline, like Spar, is an organisation looking for growth and through work with international partners the charity has so far managed to establish a strong presence in Zambia but as yet does not provide an all-encompassing service.

“What we want to do in the future is to become more involved with the other partners who are working with Childline, such as Unicef and Plan International, and look at how we can help with mobile crisis clinics which go to rural areas and discuss difficult issues,” says Saikku.

“Our board is here, it’s a Zambian company, it’s part of a global supermarket chain but it’s locally run” “Childline are also looking to expand their capacity to make sure that they can answer every call that comes through.

Sometimes, when the centre is overwhelmed, calls can go

AUG 13 PAGE 7

COMPANY REPORT

unanswered so we need to help train new people to deal with these problems and give the right help,” he adds.

“People are leaving their trusted brands and trying new things and that is good for us” When getting involved with a CSR project, Spar Zambia is careful to consider the long-term effect of their participation and the overall sustainability of the project. It is not only financial support offered by the company but more of a ‘bottom to top’ development plan. This ultimately means that CSR projects can continue without Spar assistance should the day ever come when Spar would have to step back from the partnership.

“Childline is our national CSR project but every store has their own personal initiative within their community.

Whether it’s working with a school or a prison, we try to develop projects which benefit both sides and that are not purely based on financial donations.

We want to ensure that if we were to leave a project it would remain sustainable,” says Saikku.

Often international companies who have a reach similar

PAGE 8 AUG 13

to that of Spar are involved with CSR projects for all the wrong reasons and focus on projects purely for self-gain but in Zambia the intentions of Spar are genuine and long lasting; good news for all their CSR partners.

Seeing as the company is celebrating its tenth anniversary this year we thought it was only right to ask where the company would be ten years from now, on their next major anniversary in 2023.

“In ten years’ time we would like to look back and say that we have really made an impact and not just done things for show,” says Saikku. “With regards to our stores, only time will tell. It depends on what happens to the economy; will we keep growing and developing or will we be hit by a credit crunch? Hopefully we will develop and people will gain more knowledge and power so they can buy what they want.”

With factors like the Zambian economy reportedly growing at a rate of 6.5-8% per annum, Zambia being named one of the world’s fastest economically reformed countries by the World Bank, the continuous attracting of foreign investors and development of infrastructure allowing costs of doing business to fall all playing their part in the country’s sustained growth, it looks as though Spar will have no problems when rolling out their ambitious expansion plans and becoming the preferred shopping experience across the country.

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