Spar Supermarket Chain Agrees Franchise Deal

Spar Supermarket Chain Agrees Franchise Deal

Published: July 6, 2011 (Issue # 1664)

St. Petersburg’s retailer Intertorg is to open a chain of Spar supermarkets in the northwest region.

Dutch retailer Spar International has signed a licensing agreement with the Intertorg trading company (which manages the Narodnaya Semya and Ideya supermarkets). This agreement guarantees Intertorg an exclusive right to use the Spar brand in the northwest, said Spar representatives. Intertorg is a key player on the local market, said Alexei Pavlov, general director of Spar Russia BV.

“We plan on opening 20 new stores, including two Spar supermarkets with retail areas of 700 to 900 square meters by the end of the summer,” said Anton Belovetsky, Intertorgs’s coordinator for the Spar project. Spar’s future development will be dependent on the results achieved by the first St. Petersburg supermarkets to be opened. It is possible that 10 to 12 Spar stores will be opened within the first year, said Pavlov.

The opening of a single supermarket could cost between $400,000 and $500,000, estimates Dmitry Potapenko, managing partner of Management Development Group.

The partners are not revealing the terms of the deal, although Pavlov said the agreement doesn’t provide Spar with a percentage of turnover. Spar will provide consultation services to its partner on the supermarket’s construction, marketing and logistics, participation in federal contracts and development of the Spar brand and trademarks on the local market.

The contract allows for the sub-franchising of the brand, though that is not planned for the near future, Belovetsky said. He added that the development of Spar’s brand and trademarks is one of the strategic spheres of operation.

Primarily, local retailers require logistics schemes, rather than consultative support, and that is why franchising projects in this sector are rare, said Potapenko.

Mikhail Burmistrov, the general director of Infoline-Analitika, doubts that Intertorg will replace its own widely recognized brands with the Spar brand. In his opinion, Spar supermarkets are a good opportunity for entry in new regions and for developing the effectiveness of disputed trade outlets.

Spar has received the largest franchisee in Russia and an opportunity to develop in the northwest, Burmistrov said. He estimated Intertorg’s turnover in 2010 at 15 billion rubles ($538 million).

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