Spar UK is to invest £4m in seven new flagship stores as it rolls out the second phase of its format development programme.

The stores will be based on seven formats designed to suit different locations and customer demographics. The first is to open in September.

MD Jerry Marwood said Spar was working with convenience retailing consultant SRCG on the best ranges for the different formats, which include Neighbourhood Affluent, Urban Lifestyle and Community Supermarket.

The company, which developed the formats last year, intended to market them aggressively, he said.

Spar recorded a 7% increase in sales for the year to 30 April, with like-for-like sales up 4.5%. Food-to-go sales, which have been a major focus for the chain recently, grew by 119%.

Many smaller, under-performing stores had been replaced by larger outlets, said Marwood. The average size of a store under the Spar banner had grown by 10% in the last year.

Meanwhile, a buying alliance with the Co-operative Group launched last August was working well and was set to continue, said Marwood. He insisted the relationship would not result in any kind of merger, however.

"The nature of the Spar business model, with 1,600 independent businesses, means that a merger is not on the agenda," he said. "At the end of the day we are still competitors."