Spar wants to ‘test the waters with Shell’ – what an unfortunate turn of phrase


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Spar opens first forecourt store

BY NICK HEDLEY, 13 AUGUST 2013, 17:10
A Spar store in Rosemount, South Africa

A Spar store in Rosemount, South Africa

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LISTED retailer Spar Group has joined the foray into the forecourt stores business with the opening of its first Spar Express store in Germiston on Wednesday.

The forecourt retail market has become increasingly competitive, and while Spar’s debut is seen as positive for the group, analysts do not expect it to be “a game changer” for the retailer.

Through a partnership with service station operator Shell, Spar is testing the waters of the forecourt business with the roll-out of about three or four Spar Express stores in Gauteng over about nine months.

This is according to Spar group business development manager Bill Brown, who said on Tuesday the partnership with Shell — which mirrors similar Shell-Spar agreements in offshore countries such as Austria and Germany — would first “test the water in this market”.

Should the venture prove successful, Spar Express stores would be rolled out further, Mr Brown said.

Spar joins other major retailers in the forecourt market, including Pick n Pay, Woolworths and Fruit & Veg City, as well as service station operators with their own retail offerings such as Sasol Delight! and Total’s Bonjour.

In April 2012, Pick n Pay announced the roll-out of Pick n Pay Express stores at BP service stations.

Fruit & Veg City, the owners of Food Lover’s Market and Freshstop forecourt stores, has a partnership with Caltex, while Woolworths has a similar partnership with Engen.

The first Spar Express store, to open on Wednesday, is at the Shell station on the corner of Webber Road and Karen Avenue in Germiston, Gauteng.

Shell also has its own Shell Select stores.

Mr Brown said the Spar Express stores would be smaller than Spar’s Kwikspar outlets, and the 24-hour stores would be designed for convenience.

Avior Research analyst Michael McLeod said on Tuesday that Spar’s forecourt roll-out “is broadly positive but is not a game changer” for the group.

Mr McLeod said while forecourt operations contributed to the likes of Pick n Pay and Woolworths’ earnings, “it’s never going to be a big contributor, and I think it will be the same for Spar”.

However, “it is another platform and from that perspective it does increase the ability to drive top-line growth”.

Mr McLeod said the move would also contribute “to a certain degree” to brand awareness, and could contribute — albeit in a small way — to Spar’s brand platform in Gauteng. The retailer was better represented in rural areas than in major cities, he said.

Shell South Africa GM for retail services Farouk Farista said the forecourt convenience retail market in the country was a fast-changing and highly competitive environment.

COMMENT:

Not too sure if I would align my business with Shell having regard for the looming public battle against shale gas mining in this country, and for Shell’s reputation as a polluter in other countries.

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