South Africa’s (SA) SPAR Group said this Monday its wholesale turnover rose in the first 18 weeks of the financial year, as it stepped up promotions in a fiercely competitive trading environment marked by low food inflation and deflation in several categories.

The grocery retailer reported a 2.1% rise in wholesale turnover from continuing operations in the 18 weeks to January 30. Wholesale sales in Southern Africa recorded muted growth of 0.9%, with grocery and liquor’s growth of 0.8% impacted by a softer October.

Retail sales for the period rose 1.7%, with SA posting 1.9% growth.

SPAR said it had “deliberately intensified” promotional activity to support retailers and protect volumes as consumers remain under strain and as price competition among grocers deepens.

But the strategy, together with unfavourable sales mix, and continued investment in loyalty and margin‑recovery initiatives in KwaZulu‑Natal province, weighed on gross profit margins in Southern Africa.

By 11:41 CAT, shares were 4.80% lower at R79.79.

SA’s grocery retailers are engaged in intense promotional activity as they compete to draw in cash‑strapped consumers.

Market leader Shoprite continues to outperform the broader sector, with its value-oriented pricing bringing more shoppers into both its premium and budget formats.

By contrast, third‑largest retailer Pick n Pay, still in the midst of a turnaround, is struggling to deliver meaningful sales growth as it shutters underperforming stores or converts some to other brand formats.

SPAR also confirmed on Monday that it had been served with a summons relating to alleged claims arising from the SAP implementation. The current amount claimed significantly exceeds the initial claim of R5 million ($312,924).

SPAR said it was still managing the effects of its troubled SAP implementation at its KwaZulu‑Natal distribution centre, which caused major disruptions and contributed to substantial turnover and profit declines in prior years.

–Reuters–