Spar Group faces up to R170 million lawsuit over delayed SAP implementation

The Spar Group was served with legal papers Wednesday from Giannacopoulos Group-owned franchises, who are suing for damages for the botched implementation of SAP enterprise resources planning software in the group's KwaZulu-Natal distribution centre.

The claim from these companies comes more than two years after the retailer implemented the software. Spar started rolling out the software from January, 2023, but delays impacted distribution and resulted in stock delivery interruptions to franchise stores, and lost sales.

Spar said in  statement its legal team is currently reviewing the papers. Reports suggest the Giannacopoulos Group is suing for at least R170 million in damages. Spar meanwhile indicated in its 2023 financial year that the SAP implementation problems had resulted in R1.6 billion in lost turnover to the group. The centre returned to full operation in September that year.

Spar said in response to Business Report questions on Wednesday that as the matter was now subject to legal process, the group was unfortunately unable to engage on the specifics of the case and would respond through the appropriate legal channels.

"At present, SPAR is not engaged in any other legal action related to the SAP implementation, nor is it pursuing legal action against the technology provider. In 2023, SPAR proactively engaged with all retailers affected by the SAP implementation, which resulted in the successful resolution of all issues raised at the time, with the exception of the Giannacopoulos Group," it said in the statement.

The group said the SAP system currently reflected a revised approach that prioritises stability over speed, with the kick-off scheduled for the first half of the 2026 financial year. The group said that for the past 18 months, the SPAR KZN Distribution Centre (DC) service levels had been comparable with industry norms.

"The SPAR Group remains focused on delivering reliable service to retailers and customers, while maintaining transparency, integrity and sound governance across its operations," it said.

The Giannacopoulos family is no stranger to legal battles with Spar. It had since 2019 won every one of the 14 court cases - 11 in the High Court and 3 in the Supreme Court of Appeal - against Spar. The disputes centered on Spar's attempts to seize control of 41 Giannacopoulos-operated Spar outlets, allegations of misconduct, and a big damages claim.

Early last year the Supreme Court of Appeal rejected Spar's special leave application, affirming that Spar acted in bad faith when cutting off its largest franchisee.

Chairman Mike Bosman said in the 2025 annual report their priorities for the new financial year were to build the relationship with retailers and work together to improve mutual financial performance, advance succession planning, achieve a 3% operating profit margin in South Africa by 2028, return capital to shareholders, and drive efficiencies in supply chain and procurement activities.

Spar's share price gained 0.25% to R91.83 on the JSE Wednesday afternoon, a price that was well down from R140.13 a year ago.

BUSINESS REPORT