The South African-based Spar Group made headlines last week with the announcement of its decision to withdraw from its operations in the UK and Switzerland, while simultaneously committing to an ambitious expansion plan in Ireland. This strategic pivot comes in response to an increasingly challenging operating environment across Europe and persistent financial pressures within South Africa, particularly affecting consumer behaviour.

Spar’s chief executive, Angelo Swartz, acknowledged the difficulties faced in both the European and South African markets, noting particularly the impact of the cost-of-living crisis across Europe and the sluggish economic growth in South Africa. The group reported a marginal decline in turnover, falling to R66.1 billion (€3.26 billion) for the first half of its financial year ending March 28. The divestment from Switzerland is expected to eliminate €800 million in sales, alongside an additional €300 million from its UK operations. In stark contrast, Spar Ireland has emerged as a beacon of growth, achieving record retail sales of €1.3 billion in 2024.

This retreat from the UK and Swiss markets reflects a broader trend among retailers to reassess their European strategies amidst fluctuating economic conditions. To bolster its presence in Ireland, Spar has unveiled a comprehensive plan aimed at enhancing its competitiveness. This includes the opening of new stores, upgrades to existing locations, and a redesign of its EuroSpar outlets. Additionally, the group intends to expand its private-label offerings, highlighting a commitment to providing greater value—a strategy deemed crucial as it faces formidable competition from established players such as SuperValu and Centra.

Swartz further pointed to the competitive retail landscape, particularly noting a shift in customer demographics. "There’s certainly truth in the observation that growth in our stores catering to the lower end of the market has been more robust than at the top end," he remarked, underscoring the challenges spar is facing in attracting higher-income shoppers. This evolving market dynamic prompts Spar to adapt by diversifying its product range, which will increasingly include organic and healthier options to meet consumer demand.

Spar operates under the aegis of its local partner, BWG Group, solidifying its status as a leading convenience brand in Ireland. Although it holds a modest market share, estimated at less than 1% according to Bord Bia, Spar enjoys a strong foothold with over 463 stores nationwide and a significant local employment impact, providing jobs for approximately 14,000 people.

The Irish grocery retail market itself is valued at around €15 billion, characterized by a highly competitive environment dominated by major chains such as Dunnes Stores, Tesco, and SuperValu, which collectively control nearly 68% of the market. Spar’s strategy to seize a bigger share of this lucrative market will involve not only infrastructure investment but also a focus on superior product offerings to attract discerning shoppers. The increasing sophistication of Irish grocery retailers, particularly in terms of store design and merchandising, poses both a challenge and an opportunity for Spar to innovate and differentiate itself.

As the retailer aims to establish its presence further, plans to open 50 new stores by 2025 reflect its optimism in the Irish market amid global economic uncertainties. With the current trajectory of inflation and evolving consumer preferences remaining large factors, the coming months will likely see Spar and its competitors navigate a landscape that necessitates agility and responsiveness to market demands.