Spain: new strategies, expansion and franchising

Date : 11 March 2015

As Vegalsa’s chief executive highlights the retailer’s multichannel strategy, Eroski says it aims to grow its franchise network and Covirán’s chief executive reflects on the company’s strategy, we round up news from the market.

Vegalsa-Eroski to drive store modernisation programme

Vegalsa-Eroski’s chief executive, Joaquín González Iglesias, has discussed the retailer’s medium to long term strategy, pinpointing its multiformat strategy, which is enabling a single brand to be conveyed to shoppers across channels, as being key to growth. As part of this, Joaquín González said that a store modernisation programme would help create a new, more modern, comfortable and sustainable business model for shoppers and suppliers alike. In addition to this, Joaquín González said that Vegalsa-Eroski would be looking to pass on savings to shoppers as costs came down. However, he stressed that quality would not suffer as efficiencies were generated and that Vegalsa-Eroski was committed to maintain its support of local suppliers and manufacturers able to offer innovative and/or sustainable products.

Eroski to invest €400 million over next four years

Agustín Markaide, Eroski’s president, has set out the retailer’s medium to long term strategy saying that it will invest €400 million over the course of the next four years. Markaide said that the retailer will focus on the expansion of its ‘contigo’ – ‘with you’ – format and aim to drive profitability across its operations. The investment will see the ‘contigo’ format extended to 200 stores, from the 66 – eight hypermarkets and 58 supermarkets – that have been converted so far. Eroski said that the ‘contigo’ conversion has aided stores’ performance, improving sales at converted hypermarkets by 6% and by 9% at the supermarkets overall and even higher growth rates for fresh produce: up 18% in supermarkets and by 13% at hypermarkets. Despite store conversions, Eroski said that it would also aim to open more than 100 new stores annually in the medium term, with both company owned and franchised stores to be added.

Eroski set to aid store growth with franchisees

Eroski has announced that sales through franchised stores grew 6% in 2014, aided by the addition of new stores and the conversion of existing outlets to the ‘contigo’ format. Eroski said that franchisees opened 58 stores in 2014, up from 46 in 2013, and 148 overall as part of its Strategic Plan 2013. The central place for franchisees has been included in Eroski’s Strategic Plan to 2016, where it has said it will be looking to add franchised stores in Andalusia, Madrid, Castilla La Mancha, Catalonia, Extremadura and Levante. Franchising will be used in cities or small towns with more than 1,500 inhabitants and see the retailer add stores measuring between 300 sq. m and 500 sq. m. Eroski, though, will be competing with a number of other retailers for franchisees – such as DIA and Auchan-operated Simply – and so it will have to drive differentiation in its offer to maximise its attractiveness to prospective store owners.

Dinosol continues to grow forecourt presence with BP

Canary Islands-based Dinosol has expanded its presence with the addition of another store on a BP forecourt. The new store – in San Lorenzo – extends its forecourt presence to 58 and enables shoppers to use its loyalty card programme at the BP forecourts and extends the retailer’s products – focused on mission based ranging – and consumer foodservice offer to new areas of the island.

Covirán chief executive reflects on positive 2014 growth

Covirán’s chief executive, Luis Osuna, has said that the foundations of recent sales and store growth enable the retailer to be confident about its outlook for 2015. To maintain the retailer’s growth, Osuna said that it would be expanding in and around Madrid, which is being supported by the opening of a distribution centre (DC) near the city. The DC served 100 stores at the end of 2014, but Osuna envisages that number reaching 200 by the end of 2015.

Expansion is not solely to be centred on Madrid, though, with Osuna discussing the need to build a critical mass of stores in Catalonia and the Canary Islands as part of a longer term plan to target growth in those areas and territories such as Galicia and Castilla y León. Osuna noted that new stores would also be added in Portugal – where he expects Covirán to reach a target of 400 stores by the end of 2015 as part of an aim to grow store numbers by double digits over the next two years – and Morocco – which is part of a longer term strategy.

The process of digitising Covirán was also discussed, with Osuna noting that a growing number of store owners have been integrated into its app and that it is moving forward with a longer term plan to investigate the online opportunity.