Spar China Award Entry: Spar China combines the Best of Global and Local

September 1, 2009

Spar’s new convenience format in China brings global retailing expertise together with local know-how.

To vote in the International Convenience Retailer of the Year Award, sponsored by Imperial Tobacco and Airplay, click here. Voting closes at 2pm GMT on 11 September 2009.

Spar Hongtu store in Dongguan City, Guangdong Province, is a prime example of how Spar successfully competes in China.

This store is independently owned by the Hu family who are hypermarket retailers from Dongguan. The Hu family established their business in 1992 with a 60sq m store and three staff. In November 2006, they joined Spar. Today, they operate 26 hypermarkets, occupying a total of 300,000sq m of selling space and employ 7,000 staff.

In the face of growing competition from international retailers including Wal-Mart, Carrefour and Metro, Spar launched the global convenience store concept in December 2008. Spar is confident that the new convenience format meets consumers’ changing needs.

The Spar Hongtu store occupies 900sq m and has a store layout designed around shopping missions with a strong emphasis on food-to-go. This area is located on an island at the front of the store and features an Italian coffee bar, Treehouse™ juice and smoothie bar, Kitsu™ noodles and Dim Sum to go. Consumers can eat either in the extensive in-store dining area, complete with a food-to-go electronic order point, or take food away.

The new Spar Hongtu store at night

Market atmosphere for fresh produce

New food-to-go island serves Kitsu noodles

Spar has created a fresh market atmosphere in the store with a wide choice of pre-packed or loose produce and promotions across all fresh areas. To meet local needs, Spar Hongtu sells fresh fish from fish tanks to enable customers to select their fish in a similar way to the traditional wet markets in China.

Technological enhancements go hand in hand with the improved product range. There is a wine scanner for information and meal suggestions, a self-ordering system, self-checkout, Wi-Fi internet access and self-serve weighing scales.

Customer service and facilities are further enhanced with a seating area at the front of the store and a customer loyalty programme, which encourages customers to collect points and redeem rewards. The store also provides free rental umbrellas, spectacle cleaning, utility payment and photo copying.

The average basket spend in hypermarkets in China is low as people shop little and often, especially for fresh. Spar, conversely, provides fresh food and value on the doorstep and removes the need to travel to out-of-town hypermarkets. That helps time-pressed shoppers and introduces new categories and concepts too. The new concept store is growing sales and margin and seeing an increase in the number of transactions on a monthly basis. The average basket spend is equivalent to 50% of basket spend in a hypermarket and on the opening day 7,000 customer transactions were processed.

Using the Spar business model as a base for future growth, Mr Hu is currently building a modern food distribution centre of 53,000sq m and plans to diversify from retailing into wholesaling, serving independent Spar retailers in the Guangdong Province.

From a community perspective, Spar is heavily involved in the local market via a number of initiatives. Spar emphasises the local aspect from an environmental standpoint too. It supports local small-scale growers and suppliers and buys directly from them. Employees have also initiated events to pick up litter in various public locations. A drawing competition for younger customers has been instigated and the winning artwork will be printed on environmentally-friendly shopping bags, a practice carried out in other countries and an example of global knowledge locally applied. Spar Hongtu organises workshops for children and cooking demonstrations and hosts adventure tours plus customer and staff reward tours.

Being different and innovating in a competitive retail environment is paying dividends for Spar in China. Success is spearheading the future roll out. Spar plans to open 10 more convenience stores in Guangdong Province by the end of 2009. In the medium term it is targeting 80 in the Guangdong province within three years and 300 in the next five years.

Expansion is focused on second and third tier cities in inland China. Here, Spar International is currently working with five local retail partners, situated in seven provinces within China. As with the Hu family, the support to all local partners covers areas such as store design, layout and new category innovations to ensure all stores have international standards. However, at the same time, it tailors the concept and product assortment to the needs of the Chinese customers.

This global and local strategy is successful for Spar convenience stores in China.