According to court papers now before the KwaZulu-Natal High Court, they enter a tightly controlled contractual system that governs how they buy stock, how they place orders, what software they use and, ultimately, who they can do business with. At the heart of a lawsuit brought by 13 Spar retailers is the claim that this system, designed to centralise supply and give Spar scale, became a trap when it stopped working. The retailers allege they were contractually locked into Spar’s regional distribution centres and Spar-mandated software systems but were left without functioning supply when a major SAP software rollout failed in 2023.
With no practical alternatives, they say, shelves emptied, customers left and profits collapsed. Spar operates as a “voluntary trading group,” but the court papers make clear that once retailers join the rules are binding. The Spar Guild’s stated objective is “to implement and enforce the agreement in terms of which members of the Spar Guild were granted the right to participate in a voluntary trading group using the names ‘Spar’, ‘Tops’ or ‘Pharmacy at Spar’ and the trademarks relative thereto”.
Membership gives retailers the right to trade under the Spar brand. In return, they must comply with detailed obligations set out in the Spar Guild’s memorandum of incorporation and individual Spar membership agreements. Each retailer is affiliated with a single regional Spar distribution centre.
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In KwaZulu-Natal that is the Spar Group’s provincial distribution centre. “No retailer member shall be affiliated at one and the same time to more than one distribution centre member,” reads the agreement, which Business Day has seen. According to the Spar membership agreement attached to the court papers, exclusive supply is a central obligation.
Clause 7.1.1 of The Spar Guild of South Africa NPC Spar membership agreement states that each retailer member shall: “Support the distribution centre member to which he is affiliated and purchase from it all his requirements in respect of all merchandise which is available from such distribution centre member at prices not exceeding 1.5% higher than obtainable from a regular alternative source.” The agreement further requires retailers to place orders through Spar’s systems and processes. Clause 7.1.5 states that retailers must “place orders for merchandise with his affiliated distribution centre member using order methods and scheduling arrangements laid down from time to time by such distribution centre member”. In addition, retailers are prohibited from belonging to any other voluntary trading or franchise group without consent and may not operate any retail store other than a Spar store, except with prior written approval.
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