2007 - Shopic.com

Dr. Gordon Campbell,Managing Director.Innovation investing in our future ...INNOVATEfor successSPAR had anothergood year in 2007. Thetop ten SPAR countriesachieved average growthof 6% in retail sales.SPAR had another good year in 2007. The top ten SPAR countries achievedaverage growth of 6% in retail sales. Modernisation and expansion of all SPARretail formats continued throughout the worldwide SPAR organisation. SPARstores are exciting and innovative and many new product categories have beenintroduced to meet the changing lifestyles of our shoppers. SPAR also continuedits rapid expansion into Eastern Europe and Asia.This is a decade of turbulence, when uncertainty is increasing and when ourcustomers’ needs are changing ever more rapidly. In 2007 SPAR responded withmany exciting innovations in store concepts and designs, in new productcategories and in the introduction of new technology. We also continued ourdrive into new markets. Innovation will be the key to the future success of SPAR.Our industry faced many new challenges in 2007. Oil prices continued toincrease and reached $100 a barrel. The rapid economic expansion of Chinaand India placed growing pressure on global commodity stocks. This togetherwith the growing demand for biofuel resulted in a doubling of grain prices. Theimpact of biofuel production on food prices will escalate as production isexpected to triple within 3 years. All of these developments have resulted in asharp increase in food cost inflation. The age of cheap food has abruptly cometo an end and food prices are likely to remain high for some time.Climate change is already being observed in many parts of the world. Theunpredictable weather patterns impacted on our business with the wettest andcoldest summer on record in Northern Europe and an extreme heat wave in theSouth which caused extensive fire damage in Greece.SPAR International Annual Report 2007 1

The year 2007 ended with the financial downturn brought about by thesub-prime mortgage crisis. This resulted in a credit squeeze and difficulteconomic conditions as we entered 2008. The era of easily available cheapmoney had come to an end and this will have a negative impact on consumerspending. The reduction in consumer confidence, the instability in stock marketprices and the rise in food prices will result in a very unpredictable tradingenvironment in 2008.SPAR has responded well to all of these challenges. The opening of many newSPAR stores particularly the larger format INTERSPAR hypermarkets andEUROSPAR supermarkets in both new and core SPAR markets enabled SPARto reach many more customers. The modernisation and upgrading of existingSPAR stores made SPAR shopping more enjoyable and convenient. The largersales surfaces also allowed the addition of many new products and services.The introduction of new product categories, especially in the Food to Go sector,responded to the changing lifestyles of our customers. These new categoriesresulted in sales and margin growth. The implementation of new technologyincreased efficiency of operations and achieved cost savings at both retail anddistribution centre level. All of these developments ensured that SPAR had agreat year in 2007 and entered 2008 with considerable confidence andmomentum.Independent SPAR RetailersThe unique strength of SPAR is the partnership with independent SPAR retailers.In 2007 the SPAR retailers, supported by their national and regional SPARorganisations, continued to invest in the modernisation and expansion of theirstores. They introduced many innovations to provide new products and servicesfor their customers; they extended their opening hours when changes innational legislation permitted and introduced new technology to enhance theshopping experience.Page 2The introduction of CensaFairtrade coffee into the UK.Page 3The Hajimarkos brothers -independent retailers inSouth Africa.It is the SPAR retailers who remain the core of the SPAR voluntary tradingsystem. SPAR is present in 33 countries and it is the independent SPAR retailerswho continuously ensure that SPAR stores provide a very personal and localservice to their customers. Our SPAR retailers support local businesses and localfood producers. SPAR adds value to local communities; SPAR does not takevalue out.We are very proud of our SPAR retailers who in the last year, time after time, havewon national awards which prove that they are the best food retailers in theirmarkets. It is the many thousands of SPAR retailers working through ourvoluntary chain system who ensure that SPAR remains Global yet Local.2 Annual Report 2007 SPAR International

SPAR WorldwideSPAR performed well in 2007 with worldwide retail sales of €27.22 billion from13,604 stores in 33 countries. However this increase must be set against thebackground of major industry consolidation in a number of SPAR markets: inGermany, Japan and Finland SPAR lost €1.3 billion in retail sales resulting fromthe acquisition of SPAR partners by competitors. Excluding these threecountries, the remaining SPAR countries grew retail sales by 6.3% in 2007. Thiswas a remarkable achievement in the current highly competitive environment.Many individual SPAR countries achieved outstanding results in 2007:SPAR Austria grew retail sales by 4.5% to €4.5 billion and increased itsmarket share to 35%. Aspiag (Austria SPAR International AG) continued itsrapid expansion in Croatia, Czech Republic, Hungary and Slovenia growingby 16% to achieve €2.3 billion in retail sales. The SPAR Austria Group,including Hervis and Shopping Centers, had total sales of €9.89 billion in2007 underlining the transformation of SPAR Austria from an Austrianwholesale company to a major Central European retailer.SPAR Italy has achieved consistent strong growth in this decade andcontinued to gain market share. A policy of opening larger INTERSPAR andEUROSPAR stores resulted in a sales increase of 4% in 2007.SPAR South Africa opened 32 new stores and together with an excellentretail performance, aggressive marketing and strong consumer spendingachieved a 20% sales growth in Rands.Page 4Strong branding atSPAR in Hungary.Page 5The introduction ofThe TreehouseJuice & Smoothie barto Burgos, Spain.With 2,557 stores SPAR UK remains number 1 in the UK convenience sectorand operates more stores than any other SPAR country. The UK conveniencemarket remained intensely competitive with multiple retailers and the Co-Optargeting this sector. In this highly competitive environment SPAR UKincreased total store numbers and retail selling space.SPAR Spain focused on store development, opening SPAR and EUROSPARflagship stores. A growth of 4.5% in a highly competitive market is anexcellent result. SPAR Ireland grew by 7.7% by opening highly innovativeSPAR and SPAR Express convenience stores and EUROSPARsupermarkets. SPAR Norway is now placing a strong focus on EUROSPARand achieved 5.4% sales growth in 2007. SPAR France also continued itsrapid expansion resulting from a robust policy of new store openings. Retailsales exceeded €930 million, an increase of 12%.These are the results of the top 8 SPAR countries. The results of each SPARcountry operation are profiled on pages 38 to 49 and the complete results arecompiled on the table on page 53.4 Annual Report 2007 SPAR International

INNOVATION – in retail concepts and designsThe story of SPAR retail in 2007 is not only a story of modernisation andexpansion but also one of innovation in store concepts and designs. SPARInternational completed an extensive Flagship store programme in partnershipwith SPAR members. These included SPAR convenience stores in a number ofcountries, SPAR supermarkets in Spain and Portugal, the initiation of a project todevelop two EUROSPAR stores in Norway and SPAR hypermarkets in China andRussia.There were many examples of SPAR countries introducing very innovativedesigns. SPAR Austria has won a number of top international awards for theirvery unique architectural designs which create a very distinctive and easilyrecognisable market position for SPAR, a position which conveys leadership,modernity, quality and openness. The implementation of the innovativeSUPERSPAR concept of SPAR South Africa has driven consistent year on yeargrowth. The development of INTERSPAR and EUROSPAR in Italy has resulted ina doubling of market share in the last five years.SPAR International in joint projects with SPAR Ireland has developed both SPARand SPAR Express Flagship convenience stores. These stores incorporate a newfood strategy which meets the modern lifestyle needs of consumers. Many newinnovative product categories have been introduced which result in increasedretail sales and higher gross margins. These concepts have been adapted forimplementation in Japan, Italy, the Netherlands and Belgium.A EUROSPAR Flagship in Dublin introduced many of the innovative ideas fromthe convenience Flagship stores. We are honoured to report that EUROSPAR,Barrow Street, won the Global Convenience Format of the Year Award at theBritish Retail Industry Awards in London. This award was sponsored by theNorth American Convenience Store Association (NACS) which underlined theimportance of this achievement.The SPAR Express concept was also updated during 2007 and nowincorporates the full ‘Enjoy Now’ range including Full Coffee bar, Juice andSmoothie bar, Signature Selection pre-packed sandwiches, fresh soup and anItalian Pizza and Pasta offer. The success of this store can be judged by itsoutstanding weekly retail sales.SPAR International has also assisted SPAR UK in 2007 with the development oftheir ‘Stores of the Future’ project. This involves the development of 6 newconvenience concepts stores for SPAR, with one in each area of the SPAR UKRegional Wholesale Companies. The first store will open early in 2008.SPAR International supported SPAR Spain in the development of a SPARFlagship store in Burgos. This project involved the redevelopment of an existingtraditional SPAR supermarket. The fresh area was extended and modernised,innovative concepts such as The Treehouse Juice and Smoothie bar wereintroduced. The store sales have increased and SPAR Spain will roll outthis concept.The results of the Flagship store work has been published in new SPARmanuals. These support the communication of new design, retail layout andmerchandising concepts throughout SPAR.INNOVATION – in how we do businessThe Passion for Food programme underlines our commitment for freshness, forquality and for addressing consumer concerns regarding food safety. Food is ourbusiness and we in SPAR are dedicated to communicating our passion andemotional commitment to excellence in food. Our vision is to create a SPAR foodexperience that differentiates SPAR from our competitors.Over the last five years, the Passion for Food programme had four key elements:-• Studying best international practice through travelling retail seminars.• Trial and train through a series of activities such as the MerchandisingMasterclasses and Store Development Seminars.• Implementing international best practice through the Flagship Storeprogramme.• Communicating the results through manuals and our intranet sitewww.sparconnect.comWe seek to work with more member countries to develop our Passion for Foodprogramme with innovation continuing to drive new initiatives in the areas ofstore design, product categories and shopping experience. In 2007 we held aTravelling Retail Seminar in London and a Store Development Seminar washosted by Philips in the Netherlands. The programme continued in 2008 with aStore Development Seminar in Düsseldorf and a Travelling Retail Seminar to theUSA. Both events enjoyed a record attendance.Page 6SPAR Austria continues toinnovate in store design.The ‘Enjoy Now’ zoneof Barrow street, Dublin.Page 7Fresh producedepartment, Spain.6 Annual Report 2007 SPAR InternationalSPAR International Annual Report 2007 7

INNOVATION – in the supply chainThe support of local manufacturers and suppliers is an essential part of the SPARbusiness strategy and our commitment to support local producers. This is animportant element in our supply chain strategy. Many SPAR countries haveintroduced initiatives to purchase and market products from local suppliers. Indeveloping countries support for local growers is essential in establishingchannels for farmers to get their products to modern retail outlets.In 2007 SPAR International proposed a project to contribute to the developmentof the rural economy in less developed inner regions of China. The result ofour work is the development of a co-operative project funded by the DutchGovernment sponsored agency, EVD, for international business andcooperation. This project brings together two important agricultural researchinstitutes in the Netherlands and China together with the Hubei provinceCo-operative Organisation and SPAR International.The first project objective is to generate and exchange knowledge on supplychain management and integration. SPAR International will initiate this projectwith a meeting of all the parties early in 2008. The funding available for thisproject is €400,000 over the next 18 months.INNOVATION – in new product categoriesSPAR International through its buying group BIGS have a successful range of450 international SPAR Brands. These include excellent ranges of products suchas soft drinks, biscuits, breakfast and the international ranges. Iconic productsinclude SPAR American Cola and more recently the Blue Bear energy drink.INNOVATION – in communicating the brandSPAR experimented with a new media promotion in 2007. An innovative pilotpromotion ‘Get Ready for Rugby’ was run alongside the Rugby World Cup. Thepromotion was very successful with a high hit rate which generated excellentvisibility and awareness with the 5.7 million viewers from a relatively smallexpenditure. This type of cost-effective advertising attracts a younger audience,creates a youthful image for the SPAR brand whilst generating increased footfalland uplift in sales.The main platform for building SPAR brand awareness on an international scaleis the sponsorship of the European Athletics Championships Series. Theprincipal event in 2007 was the European Indoor Championships in Birmingham.SPAR UK launched their 50 th anniversary celebrations at this event which wasattended by a large number of SPAR retailers. There was a strong SPAR brandpresence in Birmingham throughout the event.In 2007, the athletics sponsorship received 478 hours of terrestrial TV coverageand attracted more than 300 million viewers.INNOVATION – in operationsFollowing the publication of the STOREIT report in 2006 the STOREIT WorkingParty continues to monitor and support the implementation of retail technology.We have seen the implementation of self scanning, electronic shelf edge labels,intelligent weighing scales and in-store TV in a number of SPAR countries. Thesetechnological advances not only increase operational efficiency and reducecosts but also increase customer satisfaction.Page 950 countries competedin 27 disciplines in theEuropean IndoorChampionships inBirmingham.Automated warehousetechnology in Austria.Page 8Voice picking in actionat C.J. Langs, SPAR UK.The Censa Fairtradecoffee brand.SPAR International developed a range of innovative product categories inassociation with the Flagship store projects. These innovative categories arebranded and are exclusively available for implementation in SPAR. They includeThe Treehouse Juice and Smoothie bar, the Censa Coffee bar, the KitsuNoodle bar, Pazza, a Pasta and Pizza offer, and The Burger Club.The Treehouse and Censa are already being successfully rolled outinternationally. Kitsu and Pazza are so far only available in Ireland butinternational roll out is expected in 2008.These innovative product categories increase store sales and offer high margins.They particularly respond to the changing lifestyle needs of our shoppers.A SPAR Warehouse Action Group has been established to identify best practicein the design, layout and operation of Distribution Centres. The first meeting ofthe Warehouse Action Group took place in China early in 2008. The WarehouseAction Group will support SPAR International in the development of FlagshipDistribution Centres.SPAR is currently developing new Distribution Centre projects with two partnersin China and two partners in Russia. These large modern Distribution Centres willcater for the growing business needs of retail outlets and facilitate building andservicing a network of independent retailers. Operational excellence is anessential part of our business and we will continue to support our partners toguarantee their future success.8 Annual Report 2007 SPAR InternationalSPAR International Annual Report 2007 9

“SPAR now operates two differentstore types in China, hypermarketsand supermarkets.”SPAR International Annual Report 2007 11

Page 12SPAR supermarket inChina.Page 13SPAR hypermarketlaunched in Bangalore,India.Excellent freshmerchandising key tosuccess in NizhnyNovgorod, Russia.INNOVATION - in new marketsThe SPAR business model of partnership has proved sufficiently innovative andflexible to be highly successful over 75 years in 33 countries. SPAR has gainedextensive experience in emerging and developing countries and will continue toshare this experience with new partners. In our Strategy Towards 2010 thefocus of SPAR international is on the large emerging markets of China, Indiaand Russia.ChinaSPAR offers great opportunities for regional Chinese retail chains to enjoy thebenefits of independence whilst co-operating in the world’s largest retailvoluntary chain. Due to the geographic size and scale of China, it was agreedthat SPAR would operate with one partner in each province. The partners will beretail or wholesale chains who are keen to maintain their growth in the face ofincreasing competition and changing consumer demands. A license agreementhas been granted to one partner in each of the four provinces in which SPARcurrently operates, namely Shandong, Henan, Hubei and Guangdong.SPAR International has established a SPAR China Central office in Shanghai in aJoint Venture with our SPAR partners. The central office will provide assistance inretail development, marketing, purchasing, logistics and training to the partners.SPAR now operates two different store types in China, hypermarkets andsupermarkets. SPAR operates in major affluent cities such as Dongguan andin more remote rural areas, such as Changyang. The stores focus firstly onfresh produce with the emphasis on providing a market atmosphere. Thehypermarkets have a wide range and depth of non-food products.SPAR experienced strong growth in 2007 and operated 46 stores with atotal selling area of 153,000m 2 . SPAR now operates 20 hypermarkets and 26supermarkets in the four provinces. The 350 million consumers who live in thesefour provinces will be introduced to the SPAR retail experience as more storesare opened. The target for 2008 is 80 stores and retail sales area of 250,000m 2 .The introduction of SPAR American Cola as the first private label product wasa major success, with over 1 million litres sold in 6 months. This wassucceeded by the launch of SPAR American Lemon‘n’Lime, which has alsobeen positively received, selling 300,000 litres in just over 2 months. The target isto launch 100 SPAR private label products in 2008.IndiaIndia, which continues to enjoy rapid economic growth, is a strategic market forSPAR. The food retail market remains very traditional with literally millions of smalllocal stores. In 2007 SPAR International signed a License Agreement with MaxHypermarkets for a number of provinces in India.Max Hypermarkets is a subsidiary of the UAE based Landmark Group whichis a 100% Indian owned company. Therefore, the introduction of SPARhypermarkets is not affected by the government regulations on Foreign DirectInvestments. These regulations significantly impede the entry of otherinternational retailers into India.The first SPAR hypermarket opened in Bangalore in October 2007. It has a6,500m 2 sales surface on three floors. Food departments occupy one floor whilethe other key departments are general merchandise, textiles and electronics. The2 nd SPAR hypermarket with 2,500m 2 sales surface opened early in 2008.The plan is to have a total of 7 SPAR hypermarkets by the end of 2009.RussiaThe six SPAR Partners in Russia have made outstanding progress in thedevelopment of SPAR supermarkets. Store numbers reached 126 in 2007with retail sales of €545 million. This has created a platform for strong long termgrowth and will ensure that SPAR becomes a major player in this large foodretail market.The development plans of the SPAR partners required a significant review of theorganisational structure and as a consequence SPAR International isestablishing a new SPAR Russia Central company in a Joint Venture with theSPAR Partners. The Central Office will provide a range of support services andrecruit new partners.The SPAR supermarkets in Russia have very high quality fresh food departmentsincluding Food to Go. They also carry a very extensive range of both fresh anddry products. The have high levels of productivity with sales frequently in excessof €10,000 a year per square metre.The first SPAR hypermarket will open in Electrostal near Moscow in 2008 andfurther hypermarket projects are under planning in Tula and Zhukovsky.12 Annual Report 2007 SPAR InternationalSPAR International Annual Report 2007 13

Central and Eastern EuropeAs mentioned earlier in this report Aspiag operate SPAR in the Czech Republic,Hungary and Slovenia and for the last two years in Croatia. Their market entrystrategy has been to open large INTERSPAR hypermarkets, both stand aloneand in shopping centres, followed by SPAR supermarkets. By the end of 2008there were 71 hypermarkets and 201 supermarkets in these four countries. Wecan anticipate dramatic growth in 2008 as a result of the acquisition by Aspiag of178 Plus stores from Tengelman in Hungary.SPAR International works directly with entrepreneurial companies in Poland,Romania and the Ukraine. We are pleased to report that all three companiesmade good progress in 2007.AfricaSPAR South Africa continued its remarkable growth pattern in 2007 with a 20%retail sales growth in local currency and reached a market share of 26.9%. SPARBotswana and SPAR Namibia are sponsored by SPAR South Africa and receivetheir deliveries from SPAR North Rand. SPAR Zambia developed strongly in2007 and is positioned for further growth in 2008. SPAR Zimbabwe is the largestand most effective food retailer in the market and despite the almost impossibleeconomic situation continues to survive.Responsible RetailingThe issues of climate change and sustainability rose to the top of the foodretailing agenda during 2007. This was confirmed by the CIES Top of MindSurvey of 400 leading retail and consumer goods executives from 52 countrieswho identified sustainable retailing as the top issue for 2008.Reducing the environmental impact of retailing and logistics activities has been aconcern of SPAR members during the last year. We have seen SPAR memberstake initiatives in the area of local sourcing of goods, which not only reduce foodmiles but by supporting local producers they have a positive impact on foodsafety, quality and traceability. Many SPAR countries have also introducedenergy conservation programmes and extended recycling initiatives andencouraged healthy eating.During 2007 SPAR International focused on building awareness of climatechange and sustainability by introducing the topic within the SPAR WorkingParties and Conferences.In the feedback from all the Conferences we identified many initiatives whichSPAR countries have already undertaken. We also identified the need for SPARInternational to prepare a framework which will provide an overview ofinternational developments in sustainability. We have commenced work on theidentification of initiatives by retailers worldwide and are developing aprogramme for SPAR countries to implement across all parts of the business.This SPAR ‘roadmap’ is termed Responsible Retailing and the plan will becompleted during 2008.Some immediate actions are already underway. These initiatives include:Page 14Aspiag continuedevelopment ofINTERSPAR in Croatia.Opening of INTERSPARin Czech Republic.Powerful communicationsin Newton Park, SouthAfrica.• Two environmentally friendly Flagship Store projects: a SPAR Express Ecofriendly store in Hodson Bay, Ireland and an Eco friendly EUROSPAR inTromso, Norway.• Fairtrade products such as Censa coffee will be promoted and the SPARhealthy range extended.• Local sourcing of products and support of local growers will be promoted.• Sustainability principles will be introduced in Distribution Centres to measureand reduce the use of energy and to increase the use of daylight.Page 15Computer visuals of theEco friendly EUROSPAR inTromso, Norway.• Promote ‘easy wins’ such as low energy lighting, LED lighting in refrigerationand the use of light sensors.14 Annual Report 2007 SPAR InternationalSPAR International Annual Report 2007 15

SPAR International BoardINNOVATION - new SPAR strategyA new SPAR strategy ‘Towards 2010’ was adopted by the International Boardand will be implemented through a series of Action Plans which set out theannual programme of SPAR International. These plans are reviewed each year bythe International Board, which ensures that significant and measurable progressis achieved each year in reaching the overall objectives of the strategy.This is a time of great uncertainty and change in society and in our industry. Thisis a time for innovation, for risk and for vision. I believe that this is also a time ofopportunity for SPAR. We must change and adapt in response to theseopportunities.It is necessary to understand our market, to be constantly attentive to thechanging needs of our customers and to be creative and entrepreneurial in howwe develop our business. We must be willing to have a vision of the future andembrace new ideas, but also test these ideas rigorously.Page 16SPAR ‘Towards 2010’strategic report.Page 17Members of the InterSPARExecutive Committee atthe annual meeting inRussia in 2008.We have a heritage of risk taking and entrepreneurship in SPAR. We have beenfortunate to have many great leaders who have driven the successfuldevelopment of SPAR over 75 years. We are equally fortunate today to havemany great retailers and entrepreneurs in SPAR who ensure that we remain atthe forefront of global food retailing.In conclusion, our SPAR Strategy ‘Towards 2010’ is very much based on thethinking of embracing change, acting entrepreneurially and being decisive. Weidentified the issues, the challenges and the opportunities that face us as weseek to grow our business. We will work with the SPAR countries to implementthis strategy to ensure the future success of SPAR towards 2010 and beyond!Dr. Gordon R CampbellManaging Director, SPAR InternationalSPAR International BoardChairman: Leo CrawfordMembers:Gerhard DrexelAVilly RasmussenDKStephan ScheloDLeo CrawfordIRLClaudio Giannetti ITAKnut Johannson NORWayne HookSAPeter Blakemore UKGordon Campbell SPAR INTTobias Wasmuht SPAR INTInterSPAR Executive CommitteeChairman: Leo CrawfordMembers:Karl FeurhuberAGerhard DrexelAFinn Degn Ovesen DKVilly RasmussenDKStephan ScheloDStefan KnäbkeDLeo CrawfordIRLJohn ClohiseyIRLClaudio Giannetti ITAMartin PircherITAKnut Johannson NORPaul OliversenNORWayne HookSAAndrew Leontarides SAPeter Blakemore UKKevin HuntUKGordon Campbell SPAR INTTobias Wasmuht SPAR INTManaging Directors Working PartyChairman: Gordon CampbellMembers:Fritz PoppmeierAFrans ColruytBMichael Østergaard DKAngel de la Torre ESPPierre RizzoFRAPeter KealyIRLHarrie ten HaveNLNils Moesødegård NORStefan LeutholdSUIJerry MarwoodUKGordon Campbell SPAR INT16 Annual Report 2007 SPAR International SPAR International Annual Report 2007 17

At SPAR we have a Passion forFood, which is communicatedin the way we merchandise ourstores.“”18 Annual Report 2007 SPAR International

Retail FormatsINNOVATEto differentiateInternationally triedand tested formats locallyadapted.Page 20Belgium launches SPARExpress format in Antwerprailway station.SPAR Ireland continuedevelopment of SPARExpress into petrolforecourt at Spawell,Dublin.Page 21SPAR UK embarks ona programme of storedevelopment.SPAR ExpressThe modern SPAR Express format is successful in high customer footfalllocations such as city centre, transient and forecourt locations. Internationaltrends of lower household numbers, higher number of single households and thepropensity for consumers to trade time for ready tailored solutions has allowedthe SPAR Express concept to be adapted with ease internationally. In responseto an increasingly mobile customer group seeking solutions varying through theday, SPAR Express continues to develop in more and more countries.During 2007, SPAR International worked in co-operation with a number of SPARcountries to develop the concept including a store in Antwerp railway stationwith SPAR Belgium. With the addition of an increasing number of markets, a totalof 10 countries now operate 795 SPAR Express stores.The latest SPAR Express International Flagship Store is in Spawell in a suburb ofDublin. The store located within a forecourt is the most up-to-date developmentwhich sees the advent of a modern convenience store focusing on food service.The ‘Enjoy Now’ food service area is the heart of the store. In addition to the TheTreehouse and Kitsu concepts, which are exclusive at SPAR, we haveadded an authentic Italian Pizza and Pasta offering entitled Pazza.The new store has proven an overwhelming success. The new food serviceoffers have received a highly positive response from consumers and contributesignificantly to the overall profitability of the store.SPARThe SPAR format is the most widespread ofthe 4 SPAR retail formats with 11,783 storesto be found worldwide.The continued retail strategy of modernisationof this extensive store network centres uponimproving the productivity of the storesthrough the ongoing modernisation andredevelopment of SPAR stores worldwide.SPAR International working in co-operationwith SPAR member countries has initiatedan international Flagship store programme inwhich shared best practice and learningcombined with innovation ensures thatSPAR stays at the cutting edge of retail.A key strength of SPAR is the ability to tailora global brand to a format that locally centres onconsumer needs in the immediate catchmentarea. This is because our stores areentrenched in their local community and resultsin a store that meets our customers’ needs.A significant number of countries haveaccelerated their store developmentprogrammes. During 2007 SPAR Internationalworked with SPAR Spain and SPAR UK onthe implementation of a modernised SPARstore format.A new flagship store was jointly developed inBurgos in central Spain. The 1,000m 2 SPARSupermarket was completely rebuilt andrelaunched with the new positioning ofSPAR: Circa de ti (SPAR: Close to you). Thestore puts a passion for food and a passionfor people at the heart of its strategy,emphasising the strong role SPAR plays inthe region.The store has a strong focus on fresh andin particular locally sourced regionalspecialities. This differentiates the store andunderpins the strategy of being best locally.The introduction of an extensive range ofready meals and food to go including theintroduction of The Treehouse Juice andSmoothie bar exclusively at SPAR hasproven highly successful.The results have been extremely successfulwith a 55% participation of total store salescoming from fresh foods. This project is anexcellent example of the return oninvestment potential from the redevelopmentof traditional stores to the modern SPARstore format strongly tailored to each localconsumer catchment area.During 2007, SPAR UK and SPARInternational began the development of atotal of 6 new flagship stores. Thisprogramme will see the development ofSPAR stores from urban centres toneighbourhood supermarkets.The first of these stores opened inLoughview, in Northern Ireland. The store,located within a busy petrol forecourt is anexample of best practice in convenience.In addition to the extensive food to gorange, the store also features a CensaFairtrade coffee.SPAR International has worked closelywith new SPAR members such as SPARPortugal in implementing the full conceptthrough the development of the first SPARstores in that country.The benefit to new members is thatthe SPAR manual in conjunction with thesupport services of SPAR Internationalallows the member to leap frog local industrydevelopments through the implementationof a proven internationally tried and testedretail format.20 Annual Report 2007 SPAR InternationalSPAR International Annual Report 2007 21

INTERSPARINTERSPAR is a hypermarket format of over 3,000m 2 and up to 10,000m 2 . Thisformat is especially widespread in Austria, Croatia, Czech Republic, Hungary,Italy and Slovenia. A total of 210 SPAR hypermarkets worldwide account forapproximately €3.62 billion in retail sales and are thus a key contributor to theoverall turnover of SPAR worldwide.EUROSPARThe EUROSPAR format, called SUPERSPARin Southern Africa, is aimed at the weeklyfamily shop and has seen increasedpopularity and growth in numerous markets.The growth of these large stores of between1,000m 2 to 2,500m 2 has been a major aspectof the retail growth strategy for a numberof SPAR countries. There are now 811EUROSPAR supermarkets in 19 countries.In South Africa this format accounts for morethan 40% of retail sales and continues togrow in terms of store numbers and salescontribution. With 250 outlets in Italy and161 in Austria this format contributessignificantly to the success of SPAR in bothcountries.EUROSPAR has in recent years witnessedconsiderable growth in Belgium, Greece,Ireland, Norway and Switzerland. In 2007,SPAR International received internationalrecognition for the development of theEUROSPAR Flagship store in Dublin, Irelandas it was awarded the Global ConvenientFormat by the British Retail Industry Awardssponsored by NACS, the North AmericanConvenience Stores.SPAR International in co-operation withSPAR Norway, has embarked on a 2 yearprogramme of developing two EUROSPARflagship stores.The first of these has opened in Blomsterdalen,on the outskirts of Bergen. The store, a newbuild, shares the site with a competingdiscount chain.The flagship store is an example ofdifferentiation in the face of discount retailcompetition. The store boasts a large freshmarket space offering an abundance of freshproduct including an expanded organicrange and a strong focus on local productssourced from the surrounding community.Strong and aggressive ‘real deal’ promotionsare located in the central value zone. Thethird element of the store sees the inclusionof an extensive number of services includingpost, dry cleaning and delivery. Thecombination and balance of Fresh, Valueand Service is proving to be a winningformula and the Flagship store is laying thefoundation for the rapid development ofEUROSPAR in Norway.During 2008, SPAR International will developanother EUROSPAR flagship store inNorthern Norway, as well as in Italy, andGreece. Increasingly, the design anddevelopment of these stores will also setstandards in sustainability and responsibleretailing within SPAR.INTERSPAR continues to flourish in the highly competitive retail landscape ofcentral Europe with new stores being added in the region. SPAR Austria openedaward winning new INTERSPAR hypermarkets in conjunction with companyowned shopping centres.Page 22Customers enjoy fresh‘Food to Go’ in SloveniaSPAR hypermarket inBangalore, India.Market feel in China.Page 23Strong emphasis on localproducts in Blomsterdalen,Norway.Barrow Street award winningEUROSPAR Flagship.The emerging markets of Russia, China and India offer significant opportunitiesfor the growth of SPAR market share through the development of hypermarkets.In India the first hypermarket opened in Bangalore totalling 6,700m 2 in sellingsurface. The multi-level store is a significant development as SPAR in partnershipwith Landmark group is the first to develop an international retail brandedhypermarket in India. Plans are in place for the roll out of SPAR hypermarkets.In China 12 hypermarkets and 90,000m 2 were added during 2007. SPARInternational is directly responsible for the concept and design development ofretail formats in Russia, China and India providing a transfer of internationalknow-how in design, operations and marketing of an internationally successfultried and tested SPAR hypermarket format to these rapidly growing markets.22 Annual Report 2007 SPAR InternationalSPAR International Annual Report 2007 23

The exposure of the SPAR brandwas significant at the EuropeanIndoor Championships held from2 - 4 March 2007 in the city ofBirmingham in the United Kingdom.The city was transformed into‘SPAR city’ for the duration of theevent.“”24 Annual Report 2007 SPAR International

INNOVATEto celebrate‘ Get Ready for Rugby’was our first panEuropean new mediapromotion incorporatingthe internet, running for6 weeks in autumn 2007.Page 26Engaging the fans with our‘Get Ready for Rugby’promotion.Successful SPAR brandingat the European IndoorChampionships, Birmingham.SPAR BrandIn responding to changing customer needs, SPAR International continues toinnovate in its marketing approach. This is achieved through developing newSPAR branded product category innovations as well as testing and trialling newways to communicate and reach our customers.Following the success of exclusive SPAR developed new category innovationssuch as The Treehouse Juice and Smoothie bar and Kitsu Noodles, SPARinternational launched a new and exclusive to SPAR 100% Fairtrade coffeeconcept branded Censa. By sourcing coffee from the growers of Central andSouthern America, SPAR International chose to utilise only 100% Fairtradecoffee when developing Censa. The result is a great tasting coffee thatprovides a sustainable income for the independent growers of the developingworld, whilst providing a point of differentiation for the independent retailers of thedeveloped world. The brand and design were exclusively developed by SPARInternational and the concept is winning international acceptance and successas both a self serve and barista operated offer.A further innovation has been the first pan European new media promotion toincorporate the internet as a medium to reach out to our customers. Apromotion entitled ‘Get Ready for Rugby’ ran for 6 weeks in the autumn of 2007.The promotion centred on advertising ‘Fan Deals’ of popular brands thatconsumers could enjoy while watching the extensive rugby coverage. SPARInternational centrally co-ordinated the media buying and designed anddeveloped all marketing material supporting the promotion. The versatility of themedia meant that individual country product and price changes could be carriedout. Media had been bought centrally including MSN/Hotmail and Yahoo. Theadvertising banners were linked to a special promotion website created by SPARInternational for this event. The promotion was highly successful in generatingbrand awareness with the campaign reaching over 5 million customers.SPAR Brand case studyAthleticsSPORTS SPONSORSHIPSPAR has become increasingly identifiedwith sport as a result of the long standingsponsorship of European Athletics.The strength of the association of SPAR andsport was re-enforced during the EuropeanIndoor Championships held from 2 – 4 March2007 in the city of Birmingham in the UnitedKingdom. The city was transformed into‘SPAR city’ for the duration of the event. TheSPAR logo was prominent throughout thecity, appearing on outdoor hoardings, publicbuildings and also on every lamp post.This event involves the top athletes fromup to fifty countries around Europe strivingfor the ultimate title of European IndoorChampion in each of 27 disciplines. The5,000 seat stadium was sold out for each ofthe three days of the Championships. The556 athletes were supported by 380officials, trainers and coaches.SPAR UK, who have a distinguished trackrecord in sport sponsorship through the SPARSprints Initiative, became the sponsor of the‘SPARk Athletics Park’ in Birmingham which wasan official part of the 2007 European IndoorChampionships. SPARk targeted young children,aged six to sixteen and was located in a marqueein the city centre, prominently branded with theSPAR logo.The SPARk Athletics Park was both an informationcentre and an activity centre where there was anopportunity to try out for a wide range of sports.The Media Centre for the Championshipsreported that accreditation was given to533 executives from the TV broadcastingstations present and 522 press accreditations,including photographers and journalists. TheTV broadcasts went out to sixty countriesworldwide. The coverage included the entireEuropean continent, but also India, Dubai,Japan and China with a total of 327 hours oftelevision coverage being broadcast. The155 programmes that featured the EuropeanChampionships were watched by over 200million television viewers.The impact of this exposure for the SPARbrand is significant, particularly whencombined with the audiences for the othertwo SPAR sponsored events in 2007. In totalan audience of 300 million was attracted tothe three events, with a high visibility of theSPAR brand at all times. SPAR also linked tothe audience through SPAR American Cola,the official cola of the events.Children were shown the importance of goodnutrition. World-class athletes dropped by to talkabout their experiences and to answer questionsfrom the children about health and sport.A mini-track with real start blocks was another ofthe attractions of SPARk, with professional timingequipment to show how performances are monitored.Children were also informed of the need tounderstand the correct approach for eachdiscipline in athletics. Hundreds of children visitedthe SPARk Athletics Park and took away valuableinformation.SPAR in the United Kingdom celebratedtheir 50 th anniversary in 2007 and the launchof the celebration of this milestonewas centred on Birmingham and theIndoor Championships. This featured acomprehensive marketing campaign, anintensive programme of activities involvingretailers, the wholesaler companies and alsoconsumers from the Birmingham region.There was also a wide range of instoreactivities, including in-store promotions andpersonal appearances by athletes.The sponsorship of European Athleticscontinues until December 2011 with threemajor Championship events over thenext few years. The European IndoorChampionships will be held in Turin in 2009and Paris in 2011.The European Championships, which is thehighlight of the four year programme, will behosted by Barcelona in 2010.26 Annual Report 2007 SPAR InternationalSPAR International Annual Report 2007 27

INNOVATEto motivateDuring 2007 SPAR peopleworldwide again excelledin their passion andcommitment to deliveringoutstanding servicethrough all parts of ourbusiness.Page 28Staff with a ‘Passion forPeople’ in Hungary.Our PeopleSPAR is a worldwide partnership of wholesalers, retailers and staff workingtogether to meet the ever changing needs of more than 10 million customerseach day in 33 countries worldwide. SPAR is unique that in 75 years of avoluntary trading organisation, it has retained at its core the founding principle ofAdriaan Van Well - ‘By working together in partnership all benefit’. Thiscommitment to working in partnership was reflected in our theme for 2007-Working Together for The Future.Partnership occurs at many levels within SPAR. There is a partnership of theindependent SPAR retailer and staff with a local community. There is also apartnership at the guild level of SPAR retailers and the SPAR wholesaler. At aninternational level partnership is formalised and facilitated through the work ofSPAR International, which was established in 1953 to support and develop theSPAR concept internationally.Each year SPAR International organises an extensive programme of InternationalConferences, Action Groups, Study Visits and Seminars to support SPARcountries working together for the future. The SPAR International programme for2007 was very extensive as was appropriate for the celebration of 75 years ofSPAR. There was a particular focus on new initiatives during the year. TheInternational Congress placed a particular emphasis on innovation through the‘Innovation Zone’ which was organised in association with the Congress.During 2007 SPAR people worldwide again excelled in their passion andcommitment to delivering outstanding service through all parts of our business.The International Congress is the majorinternational event in the SPAR worldwidecalendar. It provides an annual opportunityfor the leaders of the SPAR nationalorganisations to renew friendships andexchange ideas.The Congress was held in Amsterdam to joinwith SPAR Netherlands in celebrating the75 th Anniversary of the founding of SPAR.This, the 52 nd International SPAR Congress,was given a uniquely Dutch flavour when the260 international delegates were presentedwith a specially commissioned SPAR tulip.The SPAR Congress is the major event forDirectors and Senior Executives of SPARorganisations. There are also specialistconferences addressing Marketing, Logisticand IT and Human Resources. Theseconferences enable senior managers in eacharea to update SPAR colleagues on newinitiatives, exchange new concepts and alsoidentify areas for collaborative work to beOur People case studyFuture Leadersco-ordinated by SPAR International. Thiswork is undertaken with the support of ActionGroups drawn from the SPAR countries.The Marketing Conference was hosted bySPAR France in Nice, where delegates hadan opportunity to review retail and marketinginitiatives. The LOGIT Conference, whichwas hosted by SPAR South Africa, returnedafter 10 years to the location of the firstLOGIT conference.The third major conference, the HumanResources Conference, was hosted bySPAR Norway in Oslo. This Conference inOslo reviewed the advances made by anumber of countries in the development ofSPAR Academies as a critical investment inthe training and developing of SPARmanagement and staff.Each of the Conferences in 2007 enjoyedrecord participation in terms of delegatesand also SPAR Partners. A common themeDeveloping Future Leaders for SPARThe Flagship Young Managers Programme isorganised annually by SPAR International. Thisprogramme is widely admired for its combinationof people and skills development in an internationalcontext. The week long programme is for juniormanagers, aged between 20 and 30, who areworking in SPAR - retail, wholesale or head office.The programme is designed to benefit theindividual, by increasing their skills, and mostimportantly developing leadership and team skillsand a Passion for SPAR. The sponsoring SPARto all of the Conferences was the need forSPAR to respond to the challenges posedby the need for sustainability. The SPARresponse is formalised in the ResponsibleRetailing Strategy in ‘Towards 2010’.Through the ’Passion for Food Programme’SPAR International seeks to promote bestpractice retailing through benchmarkinginternational best practice. 70 delegatesparticipated in the Travelling Retail Seminarto London in March 2007, which was hostedby SPAR UK. The focus of the programmewas on innovation by leading UK foodretailers.SPAR International also undertakes anextensive programme of communicationwith a series of publications each year andthrough The SPAR intranet. The principalpublications are the Annual Report, which iswidely circulated both within and outside ofSPAR, Contact International magazine andthe SPAR Handbook.Company also benefits, through the individualapplying the new skills and ideas with passion.The 2007 programme attracted an attendance of40 participants from 20 SPAR Partners to Graz,Austria. The enthusiastic welcome of the SPARStyria team gave the group a first hand experienceof the Spirit of SPAR.The programme included presentations by seniormanagers from SPAR International and SPARStyria, team building activities, strategic workshopsand practical workshops in retailing and distribution.28 Annual Report 2007 SPAR InternationalSPAR International Annual Report 2007 29

Delivering outstanding customerservice instore requires a sustainedcommitment to operationalexcellence.“”30 Annual Report 2007 SPAR International

INNOVATEto stimulateSPAR Internationalsupports SPAR countriesin meeting the changingneeds of customers by usingthe combined purchasingpower of SPAR.Page 34Strong ‘Value’ aisle in SPARRomania.ValueThe global economy is facing a period of increasing economic uncertainty. Thebanking crisis, which had its roots in the United States, has prompted economicuncertainty and currency fluctuations. We have seen unprecedented increases infood prices, while oil prices have continued to rise. Faced with these uncertainties,consumers will increasingly focus on value in making purchasing decisions.For today’s consumer value is about price, quality and provenance of products.While price will become increasingly important, consumers also want to be informedon where and how the product is produced before they decide to make a purchase.Thus local sourcing, organic and Fairtrade will remain important concerns.SPAR continues to deliver value to customers through offering competitive pricesacross the grocery range, in particular through extensive national and internationalprivate label ranges and through product promotions. Individual SPAR countrieshave undertaken a wide range of local sourcing initiatives, which deepen theconnection of SPAR to its local community.SPAR International supports SPAR countries in meeting the changing needs ofcustomers by using the combined purchasing power of SPAR. This work in buyingtogether is undertaken through Buying International Group SPAR (BIGS) andIntergroup Trading (IGT). Developing and extending the International SPAR Brandsrange is the responsibility of BIGS, while IGT provides both a buying and a logisticsservice to SPAR countries.SPAR International also supports lower costs in SPAR businesses by achievingreduced costs for non-resalable goods. This is achieved through IFAG which is thethird buying group operated by SPAR International. The range of non-resalablesextends from shop fitting equipment and lighting to transport equipment.Value case studyLocal Sourcing - Quality assured by SPAR AustriaThe BIGS buying group is responsible for thedevelopment of the International SPARBrands which totalled 416 at the end of2007. In the course of 2007, 40 newInternational SPAR Brands were developed,while 20 other products saw their packagingredesigned.The EU will implement new packagingregulations to include nutritional informationbut this is not finalised. The BIGS ActionGroup is actively planning to adapt thepacking on the International SPAR brands toshow guideline daily amounts [GDA] andalso meet current legal requirements. Thechallenge is all the more complex in the caseof multi-lingual packaging.An important new initiative in 2007 was thedevelopment of the ‘Taste the World’concept. The concept is to develop apremium international range selected fromoutstanding local products. The products willbe nominated by SPAR buyers on the basis ofSPAR Austria places a particular focus on localsourcing of food products. While SPAR offersquality products from all over the world, a specialfocus is placed on quality local production. Thephilosophy of SPAR Austria on local sourcing is tooffer quality, healthy regional products, producedin an environmentally friendly way at fair prices.To ensure that the necessary quality standards arein place SPAR has implemented a SPAR QualityProgramme which goes much further thantraditional quality assurance to also address thedevelopment of sustainable production methods.their top selling products with internationalpotential. The BIGS Action Group will coordinatethe selection of the range based onthe volume potential.The ‘Taste the World’ concept was endorsedat the Wine Masterclass, which was hostedby SPAR Spain in Barcelona. It was believedthat the range would make an importantcontribution to total sales and margin.Intergroup Trading [IGT] enjoyed a recordyear in 2007 in terms of sales and financialperformance. There is an increasing interestby new SPAR countries in using the servicesof IGT to take advantage of the collectivebuying power of SPAR. A feasibility study ofextending the range of services provided byIGT is currently underway. This developmentwill broaden the scope of the service offeredby IGT to include offering a consolidationservice to SPAR countries and also widenthe product range to include non-food lines.SPAR has also seen a record year in theThis is seen as part of SPAR Austria’s CorporateSocial Responsibility programmeUnder the Apple Quality Programme SPAR Austriaare working with 50 growers in the Steiermarkregion on all aspects of production, handling andpackaging and quality control. Pesticides arereplaced by the use of techniques arising fromorganic agriculture to control parasites.The commitment to supporting quality localproducts supports the on-going commitment ofSPAR to wellness and healthy eating.purchases of non-resalable goods throughIFAG. This reflects the increasing confidenceof SPAR partners to invest in new SPARstores and also refurbishing existing storestogether with investment in increasingsupply chain capacity.IFAG is actively recruiting new preferredsuppliers, particularly in the area of retailtechnology as a result of the work of theSTOREIT Action Group. Opportunities forcollective buying in the financial area will alsobe examined. The IFAG buying Initiative inrelation to the collective purchasing of rollcontainers was repeated in 2007. On thisoccasion two additional SPAR Partnersparticipated.SPAR International is committed to working inpartnership with all its suppliers. Theimportance of this partnership is recognisedat the Annual Suppliers Roundtable.34 Annual Report 2007 SPAR InternationalSPAR International Annual Report 2007 35

SPAR WorldwideNorwayFinlandRussiaSPAR now operates 13,604 stores in 33 countriesworldwide.Poland Czech Republic Hungary UkraineIreland United Kingdom The Netherlands Belgium DenmarkSlovenia Croatia Romania ChinaJapanPortugal Spain France Germany Austria SwitzerlandItalyGreeceIndiaNamibia Botswana Zambia ZimbabweSouth AfricaMauritiusAustralia36 Annual Report 2007 SPAR InternationalSPAR International Annual Report 2007 37

SPAR WorldwideDenmarkFranceGermanyGreeceHungaryIndiaIn what is an increasingly competitivemarket, sales in SPAR Denmark grew to€872 million in the last year.This represents an increase in turnover of1.1% despite the fact that SPAR continuedto close smaller stores. As a result, storenumbers declined by 29 which represents adecline of 6%. However, retail selling spaceonly fell by 3% and average store sizeincreased by 3% to 301m 2 .SPAR France continued its rapid expansionin the last year with its sustained commitmentto new store openings. Retail salesexceeded €930 million, representing anincrease of 12%. Some 14% of retail salesare achieved in company owned stores.Total store numbers at the end of 2007 was908. The average store size was 254m 2 . It isexpected that the growth in store numberswill continue in 2008.The restructuring of the SPAR business wascompleted in 2007, with SPAR now focusedon the convenience market. SPAR Germanynow operates 490 stores and is focused ondriving the development of SPAR Express.FinlandRetail sales in 2007 grew by 6% to €608million. SPAR Greece refurbished 7 storesand opened 6 new stores, including itslargest EUROSPAR store, with a salessurface of 2,200m 2 . SPAR Greece nowoperates 31 EUROSPAR supermarkets.SPAR Greece acquired two supermarketchains with 16 stores in the Athens region.These stores will be converted to SPARand EUROSPAR in the next few years.The strong performance of SPAR in Hungarywas continued in 2007 with the opening of 3INTERSPAR hypermarkets and 14 SPARsupermarkets.SPAR now operates a total of 204 stores,including 29 INTERSPAR hypermarkets. Inaddition to the new stores, a further 13 weremodernised. The best SPAR andINTERSPAR stores have been awarded withthe ‘Golden fir tree’.Max Hypermarkets, the SPAR partneropened its first SPAR hypermarket in 2007.This 6,700m 2 store is located in Bangaloreand it is planned to develop a network of 7SPAR hypermarkets by the end of 2009.JapanSPAR Denmark continues to invest intechnology to support the developmentof the business.It has pioneered the installation of instoremedia in larger SPAR supermarkets and isalso testing the feasibility of installingelectronic shelf labelsWork is also advanced on the construction ofa new DC which will be partially automated.SPAR continues to invest in retail technology,with the roll out of self checkout andelectronic shelf labels in selectedstores resulting in increased customersatisfaction and also achieving improvedlabour efficiency.During 2007, a new website was launched,which allowed individual retailers to createtheir own website and promote localproducts and services to their customers.The S Group continued the rebranding ofSPAR stores in 2007, which will lead to thecessation of SPAR activities in 2009.For 2008, the company is planning torenovate 9 stores and to open 5 new stores,one of which will have a sales area of2.600m 2 . It is also planned to advance thePatras flagship project.The marketing theme for 2007, continuedwith the ‘Smart Move’ campaign. Thiscampaign focused on health and nutritionand will be extended in 2008 to also includeweight balance.With nearly 12,000 employees SPARHungary is one of the largest privateemployers in the country. It is also the firstcompany in the country to train staff asorganic food experts.The pattern of strong growth by SPAR inHungary will be maintained by a combinationof organic growth and acquisition. In early2008 Aspiag purchased 178 Plus storesfrom Tengelman in Hungary.The restructuring of the SPAR businesscontinued in 2007, with a further decline inretail sales to €478 million. Total storenumbers now amount to 570.40 Annual Report 2007 SPAR InternationalSPAR International Annual Report 2007 41

SPAR Austria has won a number ofawards for their very uniquearchitectural designs which createa very distinctive and easilyrecognisable market position forSPAR, a position which conveysleadership, modernity, quality andopenness.“”42 Annual Report 2007 SPAR InternationalSPAR International Annual Report 2007 43

SPAR WorldwideIrelandItalyMauritiusThe NetherlandsNorwayPolandSPAR Ireland achieved retail sales growth of7.7% in 2007. More than €100 million wasinvested in new store development resultingin a record 52 new SPAR, SPAR Expressand EUROSPAR store openings. This broughtthe total number of stores in Ireland to 471by the end of 2007.A key development for SPAR Ireland was thesignificant growth in the SPAR Expressformat in 2007 with 58 stores now operatingin this group.An important driver of growth is the continuedroll out of exclusive food offerings. Newproducts launched during the year included‘The Burger Club’ and ‘Pazza’ which isa Pizza and Pasta offering.The year saw double success for SPAR inIreland winning the ‘Convenience Store ofthe Year’ nationally and, the ‘GlobalConvenience Format of the Year’ inpartnership with SPAR International.Retail sales approached €4 billion by theend of 2007. Total store numbers are now2,044 and the average size is 432m 2 .There were a total of 59 INTERSPARhypermarkets and 250 EUROSPARsupermarkets. SPAR also opened itsfirst convenience SPAR supermarketduring 2007.SPAR Italy has achieved consistent stronggrowth in this decade. The regional wholesalecompanies which comprise DeSPAR Italiahave established a joint purchasing groupwith Co-Op Italia and supported by a verycompetitive pricing structure have continuedto gain market share.A policy of opening larger INTERSPARand EUROSPAR stores resulted in a salesincrease of 3.8% in 2007. The developmentof INTERSPAR and EUROSPAR in Italy hasresulted in a doubling of market share in thelast five years.SPAR performed well with a sales increaseof 16% in an intensely competitive market.Store numbers remain unchanged at 6.NamibiaSPAR Namibia enjoyed a growth in retailsales of 26% in 2007. This outstanding salesresult was achieved with no increase in retailselling space and resulted in SPAR being themarket leader in Namibia. There are plans fornumerous store extensions and relaunches.SPAR enjoyed an increase in retail sales of5.2% in its 75 th Anniversary year. The totalnumber of stores amounted to 299, with anaverage size of 307m 2 .This represents an increase in store sizeof 3% resulting from the success of its‘Champions League’ store developmentprogramme. This refurbishment programmeto meet the standards set for ChampionsLeague included introducing new productsand services.SPAR currently operates three retail formats.While SPAR is the market leader in theneighbourhood sector it is also increasing itspresence in the larger supermarket sectorwith 3 EUROSPAR supermarkets.SPAR Netherlands are targeting city centrelocations with the SPAR Express format. Atthe end of 2007 it had opened 3 such storesand has continued the roll out this format toother urban locations in early 2008.A very successful year was enjoyed by SPARin Norway. Retail sales grew by 5.4%, whileretail selling space also increased. Averagestore size is now 524m 2 .A major driver of growth in Norway has beenthe focus placed on the EUROSPAR format,of which there are 21 stores. It is planned togrow this number rapidly which will enableSPAR to increase its market share to 7.7%in 2008.During 2007 SPAR Norway placed a greatfocus instore on fresh and on customerservice. SPAR Norway continued to activelysupport the SPAR brand through sportssponsorship and TV advertising.SPAR is the principal sponsor of theNorwegian National Team in men’s handballand also sponsors ‘Right to Play’ and CrosscountrySkiing. SPAR is also actively rollingout a management leadership programmeKLAR to all parts of Norway.An excellent performance was reported bySPAR in Poland with sales increasing by 25%.The last year has also seen store numbersincrease by 16%, with the businesspositioned for continued growth in 2008.SPAR Poland is actively engaged in acquiringregional wholesale companies.PortugalThe launch of the SPAR brand in Portugalwas successfully achieved in 2007, with theopening of 2 stores.44 Annual Report 2007 SPAR InternationalSPAR International Annual Report 2007 45

SPAR WorldwideRussiaThe six SPAR Partners in Russia have madeoutstanding progress in the development ofSPAR supermarkets. Store numbers reached126 in 2007 with retail sales of €544 million.This has created a platform for sustainedgrowth and will ensure that SPAR becomesa major player in this market. To support thedevelopment plans of the SPAR partners,SPAR International is establishing a newSPAR Russia Central company to providesupport services and recruit new partners.RomaniaBy the end of 2007, store numbers inRomania amounted to 14 and retail saleswere in excess of €37.5 million. The averagestore size is 1,109m 2 . All of the stores arecompany owned and operated.SPAR Romania has ambitious plans to growin 2008, in a market where consumers areresponding very positively to the opportunityto shop in modern supermarkets andhypermarkets.SloveniaThe success of SPAR Slovenia wascontinued in 2007 with retail sales growingby 11.3%. This success was achieved as aresult of organic growth and investment innew stores. The last year has seen theopening of the 10 th INTERSPAR in Sloveniaand also 5 SPAR supermarkets, which nowtotal 59.In addition to this retail investmentprogramme, SPAR opened a 5,600m 2wholesale bakery, which is one of the mostmodern in Slovenia. The bakery producesfresh dough, semi-baked products as wellas pastries.Healthy eating is a major focus for SPARSlovenia and through its ‘Nutrition Today’initiative, they organised health days in theirshopping centres. Doctors and nutritionistsinformed the customers about healthynutrition and the importance of exercise.South AfricaSPAR South Africa had an outstanding yearin 2007. Retail sales grew at 20% whilst retailselling space expanded. The ongoingprogram of upgrading existing storesresulted in 135 stores undertaking majorrevamps during the year.An excellent retail performance, aggressivemarketing and strong consumer spending,enabled SPAR South Africa to achieve amarket share of 26.9%.The implementation of the innovativeSUPERSPAR concept by SPAR South Africahas been the driver of consistent growth.184 large format SUPERSPAR supermarketsare now operated.SPAR now has a range of more than 800SPAR Brand products which offer quality atcompetitive prices. The commitment toquality is supported with a ‘double yourmoney back guarantee’. Some innovativeproducts were launched as SPAR privatebrand in the last year, namely sugar in acarton and an Iced Tea range in foil cartons.Due to the significant growth of volumethrough the South African DistributionCentres in recent years, a major programmeof expansion has been undertaken.A new DC is being built in Cape Town whichwill become operational in April 2008. Alarge expansion is being completed at theSouth Rand DC and a new Perishablesfacility is planned for Kwazulu-Natal.SPAR is committed to Broad-based BlackEconomic Empowerment and stronglybelieves that this is the tool to accelerategrowth and job creation within South Africa.During 2007 SPAR continued to focus ondriving brand awareness, improving priceperception, aspiring to being ‘best in fresh’and promoting healthier lifestyles. The latterwas strongly supported by the extensivesponsorship of women in sport.SpainRetail sales growth of 4.5% was reportedby SPAR Spain. This was an excellent resultin an increasingly competitive market. Thisstrong result was based on the increasein both store numbers and retailing sellingspace. During the last year the numberof retailers increased by 91.SPAR Spain focused on store developmentin 2007 opening Flagship SPAR andEUROSPAR stores. SPAR Internationalsupported SPAR Spain in the developmentof a SPAR Flagship store in Burgos.2007 saw the opening by SPAR GranCanaria of a 1,300m 2 store with an extensiveproduct range with some 12,000 productsavailable. Electronic shelf labels have beeninstalled in the store, with positive results.The predominant retail format operated bySPAR Spain is the SPAR local supermarket,but the EUROSPAR and SPAR Expressformats have also been developed.SwitzerlandSPAR enjoyed another excellent year inSwitzerland with retail sales growing by 5.1%.This is a strong result in a market which hasseen increased competition. The number ofstores increased to 154 in 2007. Thisincrease of more than 3% was accompaniedby an increase in store size to 397m 2 .The success of SPAR is a result of thecommitment to offer consumers morefreshness, a bigger choice and an extensiveprivate label range with more organicproducts, including the ‘Natur*Pur’ range.SPAR Switzerland is active in supportinglocal charities. 2007 was the sixth occasionthat SPAR has organised fundraising for‘Gleam of Hope’ in support of childrensuffering from cancer. The money is raisedthrough sales of SPAR private label productsduring December. SPAR Switzerlandoperates two retail formats, the SPAR formatfor local supermarkets and EUROSPAR forthe larger supermarket format.46 Annual Report 2007 SPAR International SPAR International Annual Report 2007 47

SPAR WorldwideUnited Kingdomspecial exhibition inspiring them to try someexpert sprints training themselves.ZambiaSPAR UK have embarked on a programmeto bring fresh thinking to product range andlayout and are working closely with SPARInternational on the design element of theproject to launch 6 Flagship stores.With 2,557 stores, SPAR UK remainsnumber 1 in the UK convenience sector. Inthis highly competitive environment, SPARUK has performed well with both retail salesand retail floor space increasing.SPAR UK celebrated its 50 th anniversary in2007. This event gave SPAR UK theopportunity to get involved in CSR projectssuch as Rooted in the Community and alsoimplement a great sales drive for retailers.The contribution of SPAR UK ‘to raising thestandards of convenience retailing’ wasrecognised at the 2007 Retail IndustryAwards when SPAR was awarded the‘Outstanding Achievement Award’.UkraineZambia developed strongly in 2007 withretail sales of €32 million. SPAR Zambia hasbeen in operation for 5 years and haveopened 6 company owned stores with anaverage size of 2,060m 2 .ZimbabweThe ‘Golden Deals’ package includedpromotional POS material for gondola ends,a £1 million advertising campaign on TV andin the press, special leaflets and deep cutpromotions.The European Indoor Championships 2007provided a perfect backdrop for the launchof SPAR UK’s anniversary celebrations. TheAnniversary Year started with a bang as 200retailers enjoyed the athletics VIP style andover 6,000 school children attended aSPAR stores now number 12 with sales of€22 million. Ukraine has enjoyed strongeconomic growth though there are concernsregarding inflation. The joining of the WorldTrade Organisation and the joint-hosting ofthe European Football Championships in2012 will see an increased interest in themarket from international food retailers.SPAR Zimbabwe faced an unprecedentedyear of challenges in 2007. Despite economicturmoil, SPAR retailers have shown resiliencein difficult trading conditions and arecommitted to fulfiling customer demands.SPAR International Annual Report 2007 49

SPAR Partners WorldwideThe unique SPAR partnership of retailers, wholesalersand entrepreneurs are investing for the future.AustraliaSPAR Australia LimitedAustriaSPAR Österreichische Warenhandels AGBelgiumSPAR Retail NV (part of Colruyt)SPAR Lambrechts NVBotswanaSPAR BotswanaThe SPAR Group Limited, South AfricaChinaShandong Jia Jia Yue Supermarkets LtdHenan Star Commercial Co., LtdHubei Yasi Chain Commercial Co., LtdGuangdong Fuyang Hualian Supermarket CoCroatiaSPAR Hrvatska d.o.o.(part of ASPIAG)Czech RepublicSPAR √eská obchodní spole≠nost s.r.o.(part of ASPIAG)SPAR ıumava s.r.o.DenmarkSPAR Danmark A/S(part of Dagrofa A/S)FinlandSPAR Finland plc(part of Axfood AB)FranceSPAR France SAS(part of Groupe Casino)GermanyDeutsche SPARSPAR Handels AGSPAR Zentrale OberpfalzGreeceVeropoulos Bros S.A.HungarySPAR Magyarország Kereskedelmi Kft.(part of ASPIAG)IrelandSPAR Ireland(part of BWG Foods Ltd.)IndiaMAX Hypermarket India Pvt. Ltd.ItalyDESPAR Italia Consorzio a r.l.SPAR Regional Companies:Aspiag Service S.r.l.GRUPPO CEDA S.p.A.FIORINO S.n.c. di R&C FiorinoG.A.M. S.r.l.Sadas S.p.A.Aligrup S.p.A.Gruppo 6 G.D.O. S.r.l.IPA SUD S.r.L.C.A.D.L.A. S.r.l.DESA S.r.l.TUO S.p.A.JapanAll Japan SPAR Central Co., LtdSPAR Regional Companies:Hiroshima Higashi District SPAR Central Co. Ltd.Maruichi Sansyo Co., LtdHokkaido SPAR Co., LtdHOTSPAR Convenience Networks Co.Tokan Co., Ltd.Michinoku Ryutsu System Co. Ltd.MauritiusSOMAGS Ltée/SPAR Mauritius(part of Groupe Bourbon)NamibiaSPAR NamibiaThe SPAR Group Limited, South AfricaNetherlandsSPAR Holding B.V.(part of Sperwer Group)NorwayKjøpmannshuset Norge AS(part of NorgesGruppen ASA)PolandSPAR Polska Sp. z.o.o.PortugalPortspar, S.A.RomaniaSPAR Romania(part of SC Astral Impex Srl)RussiaSPAR Retail MoscowSPAR ElectrostalSPAR Middle VolgaSPAR PenzaSPAR TulaSPAR ZhukovskySloveniaSPAR Slovenija d.o.o(part of ASPIAG)South AfricaThe SPAR Group LimitedSpainSPAR Española SLSPAR Regional Companies:7 Alimentación 7, S.A.Agrucan, S.L.Cencosu, S.A.Coaliment Granollers, S.A.Coaliment Valencia, S.A.Curiel y Díaz, S.A.Domingo Marqués, S.A.Excluib, S.A.Fragadis, S.L.D Hermanos Mendoza, S.A.Insular General Alimentaria, S.A.José Espinosa Pomares, S.A.José Padilla Francés, S.L.Lider Aliment, S.A.Pascual Hermanos, S.L.Romen, S.L.Supergran, S.A.Supermercados Marcial, S.L.Tomás Barreto, S.A.Valvi Alimentació I Serveis, S.L.Victoriano Moldes Ruibal, S.A.Distribuidora General Alavesa, S.A. – DIGASASwitzerlandSPAR Handels AG (Schweiz)UkraineCherkassy Trade House SPAR Ukraine(part of JSC)United KingdomSPAR UK Ltd.SPAR Regional Companies:Appleby Westward Group PlcA.F. Blakemore & Sons LtdCapper & Co. LtdJames Hall & Co. (Southport) LtdHenderson Wholesale LtdC.J. Lang & Son LtdZambiaSPAR Zambia LtdZimbabweSPAR Zimbabwe Ltd.SPAR Regional Companies:SPAR Eastern RegionSPAR Western Region50 Annual Report 2007 SPAR InternationalSPAR International Annual Report 2007 51

SPAR International Action GroupsStatistics 2007The Action Groups provide a unique platform forworking together and exchanging knowledge.Marketing Action GroupChairman: Gordon CampbellSPAR International: Tobias Wasmuht,Gary Harris, Ulrike Freudenberg, Nicole Iking,Penny van der KaarsManu SuffeleersMads LaursenThomas ˘KnäbkeSuzanne WeldonMarco OrsenigoStephan ThijssenNils MoesødegårdJesús GonzálezSusan DarbyshireBDKDEIRLITANLNORESPUKHuman Resources Action GroupChairman: Frank O’DonoghueSPAR International: Jutta KlassenPia KleinMary WallHelene Renton EidsvigHelena SubeljMiguel Á. Ortega MachínPhilip MarchantSam DavidsonRichard DadyAIRLNORSLESPUKUKConsultant SPARBIGS Action GroupChairman: Gordon CampbellBIGS: Joop Elderhorst, Michiel Zwierus,Palizza HeuvelmanRobert SchaumburgerJohannes HolzleitnerIris GrieshoferLois ChabertBjarne BakTuomo AhokantoVasilis MiliarakisJan-Hein van SpaandonkBernhard SchwendingerFabio FabiettiSimon MarriottPeter MillerWarehouse Action GroupAAspiagAspiagBDKFINGRENLSUIITAIRLUKChairman: Frank O’DonoghueSPAR International: Rob KarmanDieter DornauerPer Tellef ArningTrevor CurrieAnthony BartonPat McGarryANSAUKUKSTOREIT 2010 Action GroupChairman: Frank O’DonoghueSPAR International: Rob KarmanHannes LeobacherJernej PirçPer ErlandPreben GaardsøeFergal KinaneVeronica SullivanCorrado BigliardiCorrado SistoSvein KrakkEnno StelmaRoy FordJoanne KellyAAspiagDKDKIRLIRLITITNSAUKUKCountry Retail Sales Retail Store Retail Sales Average Store€000’s Numbers Area (m 2 ) Size (m 2 )Austria 4,500,170 1417 993,272 701Italy 3,931,358 2044 883,528 432United Kingdom 3,471,976 2557 365,600 143South Africa 2,911,680 772 745,224 965Ireland 1,278,146 471 121,484 258Norway 1,266,537 324 169,756 524Spain 1,242,179 1617 422,934 262Hungary 1,126,608 204 258,688 1,268France 930,582 908 230,248 254Denmark 872,888 456 137,043 301Belgium 693,582 354 146,053 413Slovenia 615,091 69 114,391 1,658Germany 608,771 490 116,493 238Greece 608,334 164 119,329 728Russia 544,472 126 82,162 652Japan 477,848 570 67,727 119Czech Republic 471,785 147 143,009 973The Netherlands 396,570 299 91,817 307Switzerland 301,233 154 61,104 397Finland 230,500 131 76,395 583Zimbabwe 160,426 73 37,160 509Croatia 106,931 5 22,725 4,545China 85,600 46 153,657 3,340Australia 77,205 62 29,875 482Poland 67,539 58 14,232 245Botswana 66,392 23 16,972 738Namibia 62,515 22 20,706 941Romania 37,530 14 15,531 1,109Zambia 32,154 6 12,361 2,060Ukraine 21,687 12 7,129 594Mauritius 17,309 6 5,300 883India 1,968 1 6,722 6,722Portugal * 0,000 2 800 400Total 27,217,567 13,604 5,689,427 418* Stores opened in December 2007. Retail sales will be included in the 2008 statistics.52 Annual Report 2007 SPAR International

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