SPAR executives teach Cohort 8 how efficiency keeps the company competitive

Cohort 8 students visited wholesaler SPAR in Cape Town on June 23.

Members of Cohort 8 from Stetson University’s Executive MBA program visited wholesaler SPAR Western Cape for their second business tour of the day, June 23. The executives who guided the students through SPAR were Solly Engelbrecht, distribution director; Brenton van Breda, finance director; and John Warren, IT director.

“The entire SPAR company was gracious during our entire visit,” said Wendy Lowe, Executive MBA program coordinator. “We walked the distribution floor. We saw first-hand how inventory is stacked five stories high, and how produce is kept at temperatures to ensure freshness and quality. Brrr … the below-25-degree Celsius cooler was frigid, but it does keep the perishables in the best condition for the stores.” After the tour, the directors treated the students to a light lunch and a bottle of Cape Town red wine.

SPAR’s core business is wholesale and distribution, with the buying power directly at the store level. SPAR has had a successful run in the retail market for more than 45 years. It has 850 stores across South Africa and beyond, servicing more than 60 million customers per month.

SPAR purchases goods in bulk and uses state-of-the-art technology to distribute these items to various store locations based on specific requests. SPAR is driven by relationships; therefore the distribution centers have a vested interest in delivering first class service and products. SPAR store owners remain 85 to 90 percent loyal to SPAR distribution centers for the acquisition of items to sell.

One of SPAR’s competitive advantages is that one truck delivers both frozen and dry goods, rather than various trucks delivering based on product type. Each SPAR store allocates 70 percent of its retail space to product displays and only 30 percent to storage of extra stock.

Student Raul Herrera asked if new items are picked up based on geographic or cultural needs. “Absolutely,” said van Breda. “We track items carefully, and once the thresholds reach a level that sensibly we can buy for multiple stores, we do.”

“Technology is a critical piece,” added Warren. “The stores use the SPAR technology systems to place orders, track progress and communicate with the distribution center actively.”

Students learned about SPAR's efficient product delivery system, which sets it apart from its competitors.

SPAR invests in its stores’ success, including helping finance new stores, assisting with store design, employing and training workers, and collaborating on marketing efforts. SPAR does not set franchise fees; instead, store owners select their pre-approved location and join the SPAR “family” like a one would join a golf club, explained Engelbrecht.

SPAR is listed on the Johannesburg Stock Exchange and has six regions in South Africa. The Western Cape distribution center, the site of Cohort 8’s visit, is the company’s third-largest. SPAR offers different types of stores, such as the Super SPAR (Kroger) with aggressive pricing, SPAR (neighborhood-based) with competitive pricing, Kwik SPAR (convenience-based), TOPS (liquor-focused), Build-It (building materials-focused) and Pharmacy at SPAR (in or near SPAR stores).

Although SPAR can start out in a less populated area, SPAR remains competitive even when the area’s density grows, and it is not being pushed out by its larger rivals. In the West Cape region, Checkers/Shop Rite has 34 percent market share, Pick & Pay has 32 percent market share, and SPAR comes in at 29 percent, which is an astounding figure compared to overall corporate size.

Student Denise Edelmaier asked the executives if they were concerned about Wal-Mart coming to South Africa. “We don’t anticipate a major effect,” answered Engelbrecht. “We don’t underestimate Wal-Mart’s overall power; however, we are far ahead logistically in South Africa, and our focus again is being a wholesaler and delivering to the retail market.”

When student Wesley DuBose inquired about SPAR’s efforts in reducing its carbon footprint, Warren said SPAR has quietly participated in many cost-saving and environmentally friendly initiatives, such as starting a school recycling program, which has recycled 500 tons of plastic combined from all SPAR stores in the past year, recycling cartons used in their distribution center, and obtaining oil from all store locations to reuse in trucks for future deliveries.

Stetson students asked about the corporation's relationship with its employees. The executives said the employees love working at SPAR, and SPAR makes it worth their while.

Engelbrecht said his goals for 2011 and the near future are to enhance the skills of SPAR’s employees, increase the use of technology, obtain a closer cooperative with suppliers, reduce lag time across the total supply chain, and build trust in processes and controls that focus on cost-drivers. Student Lofton Barnes asked if these goals support the South African “human-model” of a life-work balance. Engelbrecht commented that SPAR employees have great pride and ownership in the company’s success. “Employees who stay two years retire here,” he said. SPAR provides competitive salaries, training and excellent working conditions for its employees.

This visit provided the cohort a clear understanding that unique business models can be extremely successful and that creativity and openness to provide service and support to a company’s “internal” members and “external” customers can reap rewards both in the short-term and the long-term.

Billion Group teaches Cohort 8 that relationships yield success

Mike Rodel, Chief Operating Officer for Rebosis Property Fund and Billion Group, greeted Stetson Executive MBA students in Cohort 8 to a lavish boardroom Tuesday afternoon. Rodel shared information about his company’s prosperous business in South Africa, specifically regarding the recent merger with Rebosis Property Fund.

The combined company has two main lines of business, the Property Development Group, which is private, and the Rebosis Property Fund, which is traded on the Johannesburg Stock Exchange. The Property Development Group is the development pipeline for Rebosis Property Fund. Rebosis’ business is based in Johannesburg with an eye on the rest of the South African market.

On May 17, 2011, Billion Group merged with Rebosis for $1.66 billion. The rationale for the listing was to “prepare to scale,” explained Rodel. Rebosis Properties officials wanted to be positioned for growth and to be flexible enough to capture sensible opportunities.

Rebosis Properties is the largest and first black-managed, black-owned company on the stock exchange, even though the government approvals have been in place for such an act for more than 16 years. A black company with black ownership gives the company distinctive advantages, such as partnering with other smaller firms that don’t have black representation and hence can’t be a player on their own. By joining Rebosis Properties, smaller companies can participate and have opportunities, too.

Rebosis owns eight properties, which are valued at an estimated at 3.6 billion Rand (about $500 million U.S.). This organizational structure is 60 percent retail and 40 percent office space, in which Rebosis currently holds a 97 percent occupancy rate.

Student Shariq Khan asked Rodel what makes Rebosis Properties appealing to buyers. “We are attractive because our income stream is tied to strong fundamentals.” answered Rodel, “We have a current 8 percent growth rate and are quickly reaching double digits in the next few years with an expectation to stay increasingly strong for a minimum of seven years. We got ahead and now are positioned for great opportunities and success should we stay focused and determined on our core values.”

Rodel said one reason Rebosis’ payments are consistent and efficient is that government and large retail entities occupy the space. Another reason, said Rodel, was the combined experience of the company’s senior leadership, including CEO Sisa Ngebulna. The combined talents and resources of the managers have improved the success of the company’s decision making and innovation.

Rodel said Rebosis is poised to become even more successful with more than $14 billion worth of projects in the pipeline ready to develop and deliver.

Cohort 8 student Larry Flory asked Rodel if the global economic crisis had a detrimental effect on the company’s strategic plans. “Retail was in its final stages,” said Rodel, “and national chains took the burden.” He added that South Africa was fortunate to not have the challenges that the United States faced. The failures that Rebosis experienced were locally based, he said, and would have happened regardless of the economic challenges the world faced.

Securing local talent and professional contractors is not an issue, according to Rodel. Johannesburg offers plenty of available resources, and Rebosis’ leadership can play to the strengths of investors because the company has earned the investors’ trust repeatedly since 2003. “Investors feel comfortable with us,” said Rodel, “and if there is anything we know from our U.S. experiences, it is that relationships, security, comfort, expertise and dedication undoubtedly yield success.”

Cohort 8 learns commodities, stocks and bonds in South Africa

Cohort 8 students learned the differences between U.S. and South African stock exchanges when they visited JSE.

The Stetson University Executive MBA program’s Cohort 8 visited the Johannesburg Stock Exchange today and got great insight into how the JSE’s operation works in the global economy.

South Africa is a major agriculture export earner of maize, wine, fruit and wool, said Chris Sturgess, Director of Commodity Derivatives. Infrastructure plays a major role in getting the goods from their origin to their final destination. Agriculture is so important in the country that 40% of South Africa’s population is dependent on it and its economic impact.

Dealing with stocks and bonds is always managing risk. Graham Smale, Director of Interest Rate Products, shared the bond market operation and strategy with members of Cohort 8. He explained that working with agents, dealers and interdealer brokers is very complex. “Personal relationships and direct contact with users is still a fundamental aspect of doing business in South Africa,” said Smale.

The cohort learned that South Africa is not a market for retail. However, after viewing several statistics, Dr. Stuart Michelson, director of the Stetson Executive MBA program, pointed out the buyer has changed in recent years and the pie is getting larger. Smale explained that, fundamentally, the job of exchanging and facilitating the price point between buyer and seller hasn’t changed.

Denise Edelmaier, a Stetson Executive MBA student, asked Smale if the recent economic crisis had an impact in South Africa the same way real estate took a tremendous hit in the United States. Smale said the GDP is spread across the board, so nothing hit a toxic zone, but some securities just dried up. “My role,” said Smale, “is to help keep the Johannesburg Stock Exchange locally relevant in a global game.”

Students Jason Plas, Juliana Trujilio and Shariq Khan worked in tandem to address questions they had after reading about JSE in recent media reports and in the company’s financials.

The cohort embraced the differences between the stock exchange system in the United States and in South Africa. Students will compile their findings for class upon their return.

Cohort 8 goes on safari

Students doubled the amount of time they spent on their safari because they were enjoying the sights and sounds so much.

Today, members of Stetson Executive MBA’s Cohort 8 went to Pilanesburg on a safari. The cohort’s guide, Gunther, acclimated the students to the region and all the interesting aspects of the volcano that has now collapsed and created one of the most natural habitats in the world, featuring thousands of the rarest species.

“We were traveling down the savannah and were within reach or close eyesight of elephants, a giraffe, a leopard, various indigenous birds, rhinoceros, ostrich, impala, hippos, and much, much more,” said Wendy Lowe, Stetson Executive MBA program coordinator. “One of the most exciting times was parking our 4×4 vehicle within a pack of elephants.”

Zimbabwe native Lewis Chidziva, the guide from MBA Vista who will be with the group throughout their trip, said he was beyond thrilled when he saw a leopard within feet of the group’s viewing area. He said it was a first for him, even though he’s been on hundreds of safari rides since he was a boy. The safari guide, Gunther, explained this is only the third spotting of a leopard this year. “It’s extremely rare!” he said.

“If you have to be away on Father’s Day, this is a memorable way to do it,” said Raul Herrera, a student who lives in Hunter’s Creek, Fla. “We are experiencing the sights and sounds of Africa within steps of our 4×4.”

After a morning on the safari, the group feasted on a delicious buffet meal at the safari Sun Resort and then unanimously requested to stay on for the afternoon with Gunther to spot all the animals they hadn’t seen.

“Instead of staying in the savannah for three hours, we ended up staying for six and enjoyed every moment of it,” said student Wesley DuBose of Salt Springs, Fla. “There is nothing like hearing a lion’s roar in the distance or learn how the animals such as an elephant or impala communicate and send messages from a far distance to their pack. Astounding!”

Tomorrow, the cohort begins the scheduled business visits. In the morning, the students will meet executives from Vodacom, and tomorrow afternoon, the group will visit the Johannesburg Stock Exchange.

Cohort 8 gets South Africa itinerary

Lewis Chidziva, center, met with Stetson EMBA Cohort 8 to discuss the group's plans for the international trip to South Africa.

On Saturday, April 2, members of Stetson University’s Executive MBA Cohort 8 met Lewis Chidziva, who will lead the students on their international experience this June in South Africa. The managing director of MBA Vista visited the classroom to tell the students what to expect culturally and business-wise, and to give them their first look at the itinerary. Chidziva has secured executive level meetings with various businesses in Johannesburg and Cape Town.

“I was jazzed before, but I didn’t really know what all would be included,” said Jacob Walters, a member of Cohort 8 who works for Walt Disney World. “Now, I can tell that the whole experience is going to be phenomenal!”

Members of the cohort will begin their trip in Johannesburg, where they will meet with executives from Nissan, Vodacom, Billion Group, Johannesburg Stock Exchange and Cullinan Diamond. They will also go on a safari, visit the Apartheid Museum and ride through Soweto on bicycles.

Torrance Johnson, a classmate of Walters’ and a manager at Celebration-based B.A.S.S. LLC, said he is most excited about visiting the stock exchange, the largest exchange in Africa and among the Top 10 largest in the world. “I’m also excited about going to the Apartheid Museum, where we’ll get to learn about the history of the country and walk in someone else’s shoes for a day.”

In Cape Town, the students will meet with Investec, Spar and Warwick Winery. They will experience Cape Point, Cape of Good Hope, and Robben Island as well.

The Executive MBA students will experience South Africa to its fullest — the culture, cuisine, music, business practices and the astounding beauty.