Sparring partner

Spar, a name which most people associate with the corner grocer and, more recently, as a late-opening convenience store, is in fact a £20.5 billion (€26 billion) international business with more than 18,000 outlets in 28 countries including ones as diverse as Japan, Estonia and Zimbabwe.

It also happens to be headed up by an Irishman, Mr Gordon Campbell, a biochemist by training, whose next project is to introduce Spar to Russia, a market which the financial community, in particular, has eschewed because of its uncertainty.

Mr Campbell argues that it is the strength of the Spar concept which allows it to enter developing markets. No capital is invested by Spar International in new outlets. Instead, a national wholesaler takes on the brand on a franchise basis and forms an exclusive purchasing relationship with the Spar outlets. By entering the arrangement, the wholesaler will become a shareholder in Spar International. Spar will provide support and expertise, and information on logistics. The approach can also be a weakness if Spar is pitted against a competitor with spending power in a developed market.

But in Eastern Europe and Russia, it allows for rapid expansion while other companies fiddle. Spar Austria has moved into Slovenia, Hungary and the Czech Republic. The international trading group, headquartered in Amsterdam where Mr Campbell now lives, has opened outlets in Estonia, Lithuania and Poland.

"The strength that we have is our ability to go into markets and to work and develop the infrastructure that is already there," he says. He says that it is typically Dutch that the founders used the words "De Spar", which have a number of meanings. They translate as "fir tree" and "savings". The six letters also stand for a phrase which translates as, "By working together in partnership, we all profit". "I would argue that Spar is the human face of retailers, operated by professional entrepreneurs from the community," he says.

In the cutthroat world of food retailing, it all sounds very wholesome and friendly. But Spar, which operates big supermarkets called Interspar in some European countries competes against the likes of British retail group, Tesco, the German company, Aldi, and the US operator, Wal-Mart. Its largest European competitor will be Carrefour-Promodes if the merger negotiations between the French hypermarket groups succeed.

So how does Spar stand up against consolidation and the prospect of larger, more powerful competitors out-pricing it?

He says Spar is offering a full range of products and a full range of fresh foods, unlike Aldi which often occupies the same niche but has just 800 products. It also operates in contrast to hypermarkets, huge food stores which have staff going around in roller skates so they can negotiate the lengthy aisles. In the Republic, it is more a niche player, targeting the convenience consumer who wants a sandwich, a quick food purchase or a hot snack. The company is also developing international brands and has awarded the first Irish contract to supply such a product to Goldstar Meats, the Dublin-based subsidiary of Kepak.

Goldstar will provide pargrilled chicken and beef burgers to Spar outlets in the Republic, Britain, Holland and Germany in a deal brokered by An Bord Bia. "We are also looking to introduce it to Australia and Denmark."

But the problem for Irish suppliers in general is one of scale. "There are manufacturers in Germany who have their business in the biggest food market in Europe, achieving enormous economies of scale."

The challenge for Irish food manufacturers is to produce private label goods, but there are also opportunities in producing for catering and food services where they do not have to brand build. He says, internationally, suppliers are rationalising their product portfolios to drive costs down.

He says the introduction of self-service was Spar's "first innovation". "It came to Ireland in 1963, and during the late sixties, seventies and early eighties, Spar would have been a chain of self-service grocery stores."

The franchise in the Republic is held by BWG Foods, part of Irish Distillers which is, in turn, owned by Pernod Ricard. There are 330 stores including five Eurospars, supermarkets of more than 10,000 sq ft. He has been surprised at the success of the rural stores in changing to convenience outlets and finding a ready market for hot food, ready-prepared meals and sandwiches. "I think that people's lifestyles and their attitude towards eating is much more homogenous than is sometimes thought."

He expects to see the number of Eurospars, operated directly by BWG, to increase to 20 outlets over the next five years.

By comparison, there are 300 Spars in the North, where the franchise is held by the John Henderson group, which also operates the Vivo convenience stores. In 1987, when Campbell was director of Spar Ireland, the stores remodelled themselves as upmarket convenience stores, occupying "a complementary position in the market" to the bigger stores. Spars began staying open for longer and started to provide delicatessen products. "The independent retailer in the small store cannot compete head on on price with the large supermarket chains."

Mr Campbell, from Glasnevin, Dublin, has a PhD in biochemistry from Trinity. He began his career in 1978 working in quality control and research and development for Rank's, the flour miller. Moving to BWG, he began working in business development and strategic marketing and became the director of Spar Ireland.

In 1993, he and his family moved to Amsterdam when he was asked by the board to take up the position of group managing director. His three children were aged 16, 14 and six at the time but the move went well. "I think what appealed to them - they went to an international school in Holland - was the tremendous experience they got, the huge variety of people they met from different cultures, the experience of learning languages and learning languages well."

He cycles and reads literature and history in his spare time. He admires the Dutch cycle paths and their stress on keeping rural areas open to the public.

Back in Dublin, he finds a contrast between the public transport system and the taxi scarcity here, and the smoothness of Dutch life. "I cannot convince myself it is the number of cars. I think it is the quality of roads. There are 15 million people in Holland, but it is no bigger than Munster." He describes the retail food industry as "cutting edge", with supermarkets building complete pictures of consumers likes and dislikes, and knowing immediately what stocks are low. "Retailing is changing fundamentally as a result of new technologies. We talk now of a seamless, paperless flow of information."

But he does not believe Internet shopping will seriously affect food retailing. While it might have some impact on dried goods, he thinks fresh food will remain the preserve of the shop peruser.

The strength that we have is our ability to go into markets and to work and develop the infrastructure that is already there. Retailing is changing fundamentally as a result of new technologies. We talk now of a seamless, paperless flow of information