Spain's leading grocery retailer, Mercadona, continues to produce enviable results with turnover growth above 5% for the last three years. Its president, Juan Roig, has been voted third in a list of Spain's most influential businessmen.* We look at Mercadona's success in the past year and its priorities for 2013.
2012: "focus on what we do best: be shopkeepers"
In his message at the front of the annual report, Juan Roig said the year had been full of challenges and opportunities, and these allowed Mercadona to improve and strengthen its business model. Expansion across Spain resulted in the addition of 55 new stores and over 71,000 sq m of sales area.
Proximity is a very important factor in Mercadona's store development strategy and it continues to open stores in local, municipal markets, where they complement the existing offer. The co-innovation project was a highlight of 2012 - this year-long initiative, in which customers were involved in testing products and giving feedback, resulted in the introduction, modification or innovation of almost 100 products.
Consistent strategy puts customer at the centre of decisions
The Spanish economy contracted for the seventh quarter in a row at the end of 2012 and is likely to remain under pressure this year. In April, the government is expected to update forecasts to reflect a 0.5% contraction in GDP for 2013.
However, despite the wider troubles, Mercadona continues to perform well. Its simple, consistent formula puts the customer at the top of the tree; he or she is known internally as 'the boss', and is at the centre of all decisions. The investment Mercadona puts into staff training and customer service appears to be paying off. Its EDLP policy and strong private label programme are also vital ingredients to its success, and should remain so as economic difficulties continue.
Three core priorities for 2013
Mercadona believes there is still room for improvement. Its priorities for the current year centre around three core areas: expansion; range development; and the agri-food chain.
- In Spain, around 60 stores are set to open. International expansion, long rumoured to be on the cards, has now officially been put on hold as Mercadona wishes to concentrate on its project to develop a sustainable agri-food chain
- The co-innovation range development project is ongoing, and Mercadona will work with customers and suppliers, particularly its core group of intersuppliers, to ensure that product lines are up to date and reflect customers' needs
- Although not a vertically-integrated retailer, Mercadona increased collaboration with primary producers in 2012, reaching agreements with more than 7,400 fishermen, farmers and growers. Focus will increase this year as the retailer sees a clear opportunity for growth and investment in this area
Check out our Mercadona snapshot for a summary of trading priorities, latest developments and key commercial insights. You can keep up to date with developments in Spain on our hub page.
* Source Ipsos Kar study, reported in Spanish press