Supermarket retailer Spar Group is looking to broaden its produce range, expand its on-demand delivery service and sell more own-brand goods after first-half results showed flat revenue and a small decline in earnings.

South Africa’s grocery sector has become increasingly competitive as price-conscious consumers look for value, convenience and distinctive products. Market leader Shoprite and premium food leader Woolworths are keeping rivals on their toes as they continue to grab market share.

Spar Group CEO Angelo Swartz told investors that the group’s growth prospects in Southern Africa were grounded in boosting its product range, leveraging its partnership with Uber Eats and selling more private-label goods, offering customers quality and affordability, while building brand loyalty.

The group is also stepping up investment in customer convenience, with the continued roll-out of on-demand grocery deliver digital platforms.

Investments in pharmacist training facilities are under way as well to support the growth of Spar Health, with the aim of doubling the pharmacy network by 2028, it added.

“Our focus is firmly on returning to growth but doing so without sacrificing margin or sustainability,” Swartz said, adding that the retailer was “operating in an undeniably challenging environment”.

Headline earnings per share from continuing operations fell 0.4% to 450.1 cents in the 26 weeks ended 28 March. Group revenue from continuing operations remained steady at R66.1-billion. Group operating profit increased 1.6% to R1.5-billion, supported by improved cost discipline, with its operating margin stable at 2.2%.

Ongoing pressure

In Southern Africa, wholesale turnover increased 1.7% to R49.9-billion, reflecting the ongoing pressure on consumer spending. Combined grocery and liquor wholesale revenue rose 1.1%, while retail revenue increased 1.9%, with like-for-like sales up 1.6%.

Growth was underpinned by strong momentum in the lower-income customer segment, the retailer said.