When independent retailers join the Spar stable they do not sign up to a loose affiliation or a casual brand licence.
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. 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.
According to the summons, Spar “had the exclusive right as a wholesaler of merchandise to supply the first to fourth plaintiffs with all its merchandise”.
The agreements also bind retailers to the group’s technology choices.
Clause 7.1.2 requires retailers to “only make use of nominated point of sale and back office software, as well as point of sale equipment suppliers, as determined by his affiliated distribution centre member from time to time”.
Retailers must also supply scanned sales data to the distribution centre as required.
In practice, the Giannocopoulos family alleges that this meant retailers did not control their own ordering or back-office systems but relied entirely on Spar’s centrally mandated platform.
In exchange for exclusivity and compliance, Spar undertook key obligations.
According to the summons, Spar was required to provide an efficient and functional ordering service, enable retailers to place and execute orders and supply appropriate merchandise at competitive prices
According to the court papers, these obligations were not only explicit but also tacit and implied. The agreements were entered into on the understanding that Spar’s centralised buying power would deliver economies of scale, reliable supply and competitive pricing.
Crucially, the agreements also recognised the risk inherent in this structure. The summons states that it was contemplated that if Spar failed to supply stock properly, retailers would be unable to stock their shelves, would lose sales and profits and would struggle to source alternatives at scale.
Alternative suppliers, the court papers read, were likely to require cash payments, charge premium prices and be unable to meet the volumes required by Spar retailers.
SAP rollout
According to the lawsuit, that risk materialised on January 30 2023 when Spar “unilaterally implemented” a new SAP enterprise resource planning system at the KwaZulu-Natal distribution centre.
The result, the family alleges, was an immediate breakdown in order picking, dispatch scheduling, inventory visibility and pricing accuracy. Retailers said the system failure crippled their ability to trade.
The retailers claim that from that date until September 2025, Spar failed to carry out even its most basic contractual obligations, alleging in court papers that the group did not provide a functional ordering system, did not allow retailers to place or execute orders and failed to supply suitable merchandise at competitive prices.
Because they were contractually required to use Spar’s systems and source stock through the distribution centre, the family said they had no effective workaround. While alternative suppliers technically existed the retailers were unable to source sufficient stock at scale.
Where alternatives were available, they were often at premium prices and on a cash basis, placing further strain on already pressured finances. According to the court papers, alternative suppliers could not meet the required volumes, leaving the retailers unable to adequately stock their shelves.
Retailers allege they lost customers due to product shortages, were unable to run promotions and suffered long-term reputational damage. They also cite increased write-offs of perishable goods, rising logistics costs and higher administrative burdens.
The lawsuit details extensive financial losses, including lost turnover, eroded margins and increased operating costs.
Business Day previously reported that the family has now sued the group for nearly R170m. It is tens of millions of rand in lost gross profits over the 2023, 2024 and 2025 financial years, with damages calculated using historical performance and projected growth trends.
The dispute also extends to Spar’s rebate and overrider schemes, with the retailers saying that they were denied rebate benefits because their purchases fell below growth thresholds, even though the shortfall was allegedly caused by Spar’s failure to supply stock.
According to the summons, some retailers ought to have qualified for a 1% overrider benefit but instead received a reduced benefit, resulting in claimed losses exceeding R23m on actual purchases alone.
Voluntary trading model
Spar disputes the retailers’ characterisation of the relationship. In response to Business Day’s questions, the group said it operates on a voluntary trading model that preserves retailers’ independence.
“Spar operates on a voluntary trading model, which gives independent retailers access to Spar’s brands, distribution network and support structures, while preserving their full commercial and operational independence,” the group said.
The wholesaler said retailers are free to stock their stores from any supplier, including local producers, and that there is no contractual exclusivity requirement.
“Importantly, there is no contractual exclusivity requirement. Retailers are not obligated to purchase stock from Spar distribution centres. While many choose to source the majority of their goods from Spar because of convenience, pricing and buying power, this is a commercial decision — not a rule or contractual condition.”
Spar added that retailers determine their own product mix and how their stores are run, and that participation is based on “partnership and choice, not contractual enforcement”.
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