Meeting the Challenge from Wal-Mart and Regional Supermarkets
Led international market expansion, new business and M&A through a team effort.
Situation
By the end of the 2008 financial year, the SPAR: Western Cape company had experienced several years of severe economic challenges. Lower customer consumption demand due to high unemployment (recorded at 25%) had curtained customer spend and profitability was further hampered by increasing operational costs, higher Labor demands and surging Utility prices. Grocery/ Supermarket competition was on the increase, and Wal-Mart was about to enter the South African market.
To safeguard shareholder value in future years, senior leadership realized that not only had the Company to meet its top and bottom line KPI’s, but that an enterprise-wide strategy had to be developed which was both flexible and would be sustainable year-on-year. Multiple key areas of business sales growth, market penetration, M&A, product-to-market, customer service, retail store profitability, supply chain efficiencies, IT digital transformation, and cost reductions, all were required to simultaneously achieve their respective KPIs.
Action Plan
- Build and execute multi-pronged balanced scorecard strategy for a variety of key core initiatives, including sales volume (with associated retail GP & EBITDA), store-rollout, re-branding & revamps, M&A and international / domestic new business development, customer service initiatives, supply chain & logistics productivity, corporate and franchisee store profitability, support services (IT and Admin.) and financial cost control.
- Engaged / recruited/ resourced and selected core cross-functional team members – including senior leaders, divisional management and staff. Align company strategic initiatives with teams. Hosted new bespoke strategic planning training and strategy plan development workshop sessions, to build out / create business goals that were realistic, achievable and measurable. Created unique themes for each annual strategic planning session to generate excitement, build teamwork and get ‘buy-in’ e.g. World Cup Soccer hosted by South Africa in 2010, New Zealand 2011 Rugby World Cup, London 2012 Summer Olympics and other international events.
- Decentralized Project Funding and Capital / Expense budget process. Delegated accountability to individual core business units/ divisions. Each business unit / division held accountable managing budget and for delivery of their respective strategic initiatives.
- Executed all strategies / action plans, sales volume (with associated retail GP & EBITDA), store-rollout, re-branding & revamps, M&A and international / domestic new business development, customer service initiatives, supply chain & logistics productivity, corporate and franchisee store profitability, support services (IT and Admin.) and financial cost control.
- STRATEGIC PLANNING: A practical approach to developing strategic plans and achieving objectives – a bespoke balanced-scorecard strategic planning model – aligning the Company’s defined strategic position and broad range of long-term objectives with associated activities and identified drivers to ensure key SBU’s performance. (See Brenton van Breda’s Publication on solving the company’s critical challenge).
Results
- Grew EBITDA to 15.5%, maintained DC Margins at 8% and Retail Margins at 17.5% for 2010 through 2014.
- Led international market expansion, new business and M&A through a team effort. Result: added 240 stores, retail revenues up 23% year-on-year from $390M to $2.5B in nine years. Increased new store selling area by 37.5% to 1,784,096 sq. ft. in six years from 2009 through 2015.
- Angolan Market Expansion. Results: four new supermarkets opened in 2015.
- Developed combat marketing programs, new store designs and roll-out of ‘Best in Fresh’ food campaign. Result: Grew revenues by $20.5M and gained an extra 1.1% of market share.
- Finance: Concept-to-execution strategies to unlock retail business liquidity; negotiated Private Equity offerings, Debt Restructuring and Turnaround financing and Lease Buy-Back agreements.
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EBITDA Growth
Stores Added
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Retail Revenue Increase
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