The Spar Group has reported lacklustre growth in South Africa over the first 18 weeks ended January 30 while confirming fresh litigation linked to its SAP implementation in KwaZulu-Natal.
The retailer confirmed it has been served with a summons relating to alleged claims arising from the SAP implementation at its KwaZulu-Natal distribution centre.
Deadlocked talks
The group said it had previously engaged the claimant in an attempt to resolve the matter, but discussions did not result in agreement.
The amount now being claimed exceeds the initial R5-million claim presented by the retailer.
Management added that all KZN retailers affected during the early SAP implementation period, except for the claimant and one additional retailer, have reached amicable settlements.
Stability returns
According to the group, service levels at the KZN distribution centre have since been stabilised and are now consistent with industry standards. The group said it will respond to the summons through the appropriate legal processes while remaining focused on supporting its independent retailers.
This comes as the group also works to rebuild trust and performance in the region following disruption linked to the system rollout. The SAP rollout strategy has been adjusted in effort to reduce operational risk.
The group said the programme initially integrated warehouse, finance and purchasing systems. The revised approach separates finance from distribution centre operations to limit disruption.
Push to improve efficiency
The finance transition to a single SAP environment, with a unified chart of accounts, will be completed in the current financial year. This is expected to create a single version of financial data and improve governance and efficiency.
After the finance go-live, the next phase will focus on enhancing drop shipment reporting, improving credit management, centralising purchases and strengthening pricing governance.
SPAR said risk mitigation remains central to the ongoing rollout, particularly after the challenges experienced in KwaZulu-Natal.
Transformation drive
The systems investment forms part of a broader transformation drive, but it has added to short-term margin pressure due to higher IT and implementation costs.
The retailer revealed that wholesale turnover from continuing operations increased 2.1% year on year. However, performance in South Africa remained subdued, with wholesale sales rising just 0.9%.
Grocery and liquor sales increased by 0.8%, liquor sales performed better, growing by 2.9%. Retail sales in South Africa increased 1.9% year on year.
The SUPERSPAR format showed resilience, with perishables outperforming dry groceries, indicating steady demand in fresh categories.
Internal selling price inflation averaged 2.6%, below the official food inflation of 4.3%, as SPAR intensified promotional activity to defend volumes and reinforce its value offering.
