THIS REPORT CONTAINS ASSESSMENTS OF COMMODITY AND TRADE ISSUES MADE BY USDA STAFF AND NOT NECESSARILY STATEMENTS OF OFFICIAL U.S. GOVERNMENT POLICY Voluntary - Public Date: 4/24/2015 GAIN Report Number: SP1505 Spain Post: Madrid Spain Supermarket Chain Profiles Report Categories: Retail Foods Approved By: Rachel Bickford, Agricultural Attaché Prepared By: Carmen Toledo, Agricultural Clerk Report Highlights: This report is a Market Brief providing information about the leading supermarket chains in Spain. This report gives an overview of the trading styles and their target customers, as well as contact details of their head office. Table of Contents: INDEX SECTION I. INTRODUCTION SECTION II. TOP GROCERY RETAILERS IN SPAIN Mercadona Carrefour Dia Eroski Group Auchan Group o Alcampo o Simply Lidl El Corte Ingles Consum Ahorramas SECTION III. POST CONTACT AND FURTHER INFORMATION I. INTRODUCTION Spain Supermarket Chain Profiles 2 The purpose of this report is to give an overview of the most important food retailers in Spain. We will see how and when they started their business as well as their current position in the market. We will look at their structure and business strategy. The majority of these large retailers also offer products for home and personal care, beauty products and other sort of non-food products, but they do not fall under the scope of this report. II. TOP GROCERY RETAILERS IN SPAIN MERCADONA Mercadona S.A. Calle Valencia, 5 46016 Tavernes Blaques Valencia Tel. No.: +34 96 388 3333 Consumer website: www.mercadona.es Mercadona is the leading supermarket chain in Spain, a remarkable achievement for a family owned company. Mercadona was founded in 1977 in the Valencia region and had only 8 grocery shops when Juan Roig took over as Chairman in 1981, a position that he has maintained since then. Under his leadership Mercadona became the leading supermarket in the Valencia region through the acquisition of small supermarkets. In 1996 the company launched their own private labels. In 2014, Mercadona expanded their operations to the Basque Country, the only region in Spain where they did not operate before, therefore, completing the presence of this supermarket throughout the country. Their strategy to overcome the growing pressure of competition from international chains that were opening new stores in Spain, was to focus on offering quality products at “Always low prices” (“Siempre precios bajos”), instead of investing in expensive advertising campaigns and promotional offers. The company’s private label “Hacendado” is perceived as a quality brand, and this was a key factor for their impressive success. Previously, private labels were not perceived by the consumer as a quality product; however Mercadona changed that perception for their private label “Hacendado”. Another important element in their success is that they have established a close relationship with their suppliers, who produce good quality products for Mercadona’s own label. These suppliers offer good prices to Mercadona in return of a long relationship with the supermarket. The success of Mercadona is based in offering good value for money and, as a result of this, the loyalty of their customer base is high. Mercadona’s total sales in 2014 were 20,161 million euros, which is a 2 percent increase over the previous year. Their profits account for 543 million Euros, 5 percent more than in 2013. They employ 74,000 people and have 1,527 local supermarkets. They have opened 60 of them in the last year. We can see the evolution of Mercadona’s sales throughout the years of the economic crisis, which interestingly has not had a negative impact in their results, quite the opposite. Spain Supermarket Chain Profiles 3 Source: Data gathered from Mercadona’s Press note Mercadona operates under only one format, a local supermarket of 1,500 m2 average, where they offer a selection of food, pet food, home and beauty care products. Mercadona has become leader in many aspects of the food distribution in Spain, not only has the highest market share (22.1 percent), but it is also the most profitable and the one with most selling space with a total of 1,962,835 m2. Although Mercadona have also a private label for Home care and Beauty products, we will focus on the food labels, which are the following: Hacendado All sort of food including gluten-free and added value products Compy Pet Food Harrisons Cereals Mercadona has 120 intersuppliers (companies that produce products for their own private label) and 2,000 additional suppliers. However, the company has been reducing the range of brands they offer in favor of their own private label. In 2009 Mercadona took the decision to reduce quite drastically the amount of manufacturer’s brands offered in their stores, and has become the supermarket that has reduced most the number of brands (30 percent in period 2007-2013), far more than any other supermarket. In 2007 the other brands represented 55 percent of products on offer while in 2013 only represented 42 percent. At the same time, Mercadona has been criticized for pressing its suppliers in order to be able to maintain low prices and sales. Whatever the reasons, Mercadona is the indisputable leader in the Spanish retail food sector with 22.1 percent of the market share, far ahead of Carrefour that only accounts for 7.7 percent. Mercadona declares that 4.8 million households shop in their stores. Their customer base can be found in the middle class, upper and lower-middle class. However, their prices are very competitive and they have managed to place their own label “Hacendado” as a quality product, therefore, they appeal to Spain Supermarket Chain Profiles 4 customers with higher income but also those who live on a tight budget. This is also consequence of the economic crisis that has changed many aspects of the way the Spanish consumers do their shopping. One of these changes has been that consumers who would have never bought private labels instead of prestigious brands are more receptive to use them, as this is seen sometimes as an intelligent shopping now. Certain private labels have lost the negative connotations that they had in the past, and certainly one of those is “Hacendado”. In recent years this supermarket is redesigning the business and their supermarkets to offer fresh products in line with a new consumer trends. They have areas for a fishmonger, a butcher and also offer fresh fruits and vegetables as well as an in-store bakery. They are proud that 85 percent of the products they offer are produced in Spain. Mercadona’s supermarkets are located in areas where their customers live or work, and every new store is celebrated by the consumers nearby. The company has proven to be innovative in many occasions, they gave a different dimension to the private label and they were also one of the first private labels to offer a wide range of gluten-free products. Mercadona does not spend on campaigns and it has never used promotions of the type “three for the price of two”, their strategy is to compete on price and uses all their resources to have competitive prices to maintain their current position in the market. For the time being, Mercadona operates only in Spain, although an expansion abroad cannot be ruled out in the future. CARREFOUR Carrefour España S.A. Calle Campezo 16 Polígono Las Mercedes 28022 Madrid Tel. No.: +34 91 3018900 Consumer website: www.carrefour.es Carrefour is the number one hypermarket chain in Spain with 7.7 percent of the market share. Carrefour is part of the French Group Carrefour that was introduced in Spain in 1976 under the name of Pryca. Carrefour operates in 34 countries; however, Spain is their main market after France. Carrefour is well established in the Spanish territory and throughout the years they have consolidated their position in Spain. Although Carrefour is primarily a hypermarket, they have adopted several formats to adapt to the new consumer trends, where proximity has become an important factor. The company’s philosophy has been based in the offer of a wide range of products and well-known brands at reasonable prices. They offer not only grocery products (69 percent of total products) but Spain Supermarket Chain Profiles 5 non-food products too, such as consumer electronics, home appliances, IT equipment, home and garden products, audiovisual products, toys, etc. As oppose to Mercadona, they currently offer the widest selection of brands in the food retail sector in Spain, comprising their own private labels and a broad variety of other brands. Although they have increased the products of their own label in order to retain customers who are price sensitive, they are still the food retailer that offers the widest selection of brands. They have about 100,000 product lines in their stores, of which other brands represent 73 percent of the total products in their shelves while the private label was only 27 percent in 2013. Carrefour, as a typical hypermarket, used to be located out of the city centers where the customer would drive his/her car to do the shopping of the week or month. However, the Spanish economic crisis has changed the way customers purchase their groceries thus, hypermarkets in general, and Carrefour in particular, has been negatively affected by this. Customers now tend to buy just the products they need immediately, making more visits to the shops. Supermarkets have benefited from this new trend as they are generally closer to the customers’ homes or work places. As a consequence of more visits to the groceries, the shopping basket is smaller, and driving to the hypermarket is not practical and expensive under these circumstances.