Spar is an international merchandising and marketing services group. The group offers services such as mass merchandising, office supplies, groceries, drug stores, home improvements, and convenience, toy and electronics stores. For the purpose of this report, the focus will be on its food services. SPAR, in recent years has entered a number of new markets. The company has used the strategy of partnership with established players to enter these markets and as a result has increased its footprint across Europe, Asia Pacific, the Middle East and Africa.
Europe is struggling with debt crisis and the uncertainty surrounding Brexit has deterred many companies that are now looking for growth opportunities in markets such as India. Therefore, expanding to India is a strategic move and Spar’s continuous investment in India appears entirely logical, as a way to achieve critical mass and benefit the economies of scale enjoyed in this market. Whilst Spar is expanding operations internationally, the company is still largely concentrated in European countries. As a result the economic and political uncertainty surrounding Brexit poses a direct risk to the company.
Over 70% of its global sales for Spar are still generated from matured European markets. The issue here is the uncertainty surrounding Brexit could have an adverse effect on the company. If the UK leaves the EU, this could mean taxes on imported goods. This will have financial implications on retailers such as Spar. As a result the company needs to continue to investing in international expansion in order to generate growth and compensate for potential losses it may experience in European markets.
Moreover, tough economic conditions particularly in the UK have resulted in the migration of customers towards private label offerings on an unprecedented scale; and as a result have allowed Spar to tap into this growing market. By entering the private label market will allow Spar to not only diversify its offerings but also extend its target market. Spar has narrowed the gap between private labels and branded labels by not only improving the packaging but by also using similar packaging to well known, renowned branded manufacturers. The company’s products look premium and this not only entices consumers but also allows Spar to compete head to head with established brands.