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As Spain-based Mercadona prepares to open its first store in Portugal, it is investing in its ecommerce operations to boost its delivery capacity and coverage.

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As Mercadona announces its partnership with Bringg and Eroski and its cooperatives announce their full year results, we round up news from the country.

Mercadona to work with Bringg for online orders

Mercadona is set to collaborate with Bringg to help improve the efficiency of its online delivery. Using Bringg’s platform is aimed at helping Mercadona organise deliveries from its online-focused warehouses to shoppers more efficiently. Bringg’s software aims to help drivers make deliveries faster by optimising the routes they take and how orders’ loading and unloading can be optimised.

Discussing the implementation of the software, Mercadona’s online product manager, José Ramón Pérez, said: “We are producing results with both on-time delivery and greater efficiency in all of our operations. And all this will continue to improve as we continue to take advantage of our data.”

DIA to close 219 stores in June

According to reports in Europa Press, DIA is planning to close 219 stores in June. The closures following DIA not receiving any bids for them. 38 stores will be closed in Catalonia, 31 in the Valencian Community, 24 in Galicia, 22 in the province of Asturias, 21 in Castilla y León, 16 in Castilla-La Mancha and 15 in Andalucía, amongst others. The reports suggest that DIA was aiming to dispose of 297 stores in total, which implies that it has been able to sell some.

Eroski saw sales fall, but profits rise in 2018

Eroski said group sales in the year ending 31 January 2019 fell 2% to €5.4bn. The decrease in sales came despite the addition of 58 new stores, including 31 opened by franchisees. During the year Eroski invested €95m in the opening of new stores and the renovation of others. Where stores had been updated to the new Contigo format, sales rose by 1.3%. The new stores included the opening of five supermarkets, four petrol stations and a mix of other non-grocery-focused formats.

Although Eroski reported a fall in sales, it said its EBITDA and operating profits both rose, by 3.8% to €250.7m and by 19.1% to €163.6m respectively. The cooperative said the increase in profit was aided by improved efficiencies and its investment in its stores.

Caprabo saw sales fall by 8%

Meanwhile, Caprabo said its sales fell 8% in the same timeframe, to €912m. Caprabo said the fall in sales was due to the reorganisation of its store network and its ongoing store investment programme. During the year Caprabo opened 10 new stores, taking its network to 320. The cooperative also invested in improving its stores, with this aimed at driving in-store efficiencies and improving their competitiveness. Caprabo said it updated 20% of its network in 2018, taking the total share that have been improved to 40%.

The store investment programme has seen Caprabo upweight its fresh offer, raise the visibility of health products and expand its convenience-focused ranges. In 2019 Caprabo has said it will begin building its new logistics platform, which will become fully operational in 2020. The new distribution centre will support Caprabo’s investment in its fresh ranges, while also being set up to manage its online sales.

Vegalsa-Eroski sees sales rise 3% in 2018

Vegalsa-Eroski said its sales rose 3.01% to €1.1bn in 2018. Its ecommerce operations were a strong growth area, with sales rising more than 50%, supported by the addition of further collections points. At the end of 2018 Vegalsa-Eroski operated 18 online collection points, of which 14 were in Eroski Centres and four in its hypermarkets.

It said it ended the year with 263 stores, of which 61 are operated by franchisees, with a total sales area of 230,337 sq. m. At a banner level, the cooperative said it operated five hypermarkets, 96 Eroski Center, 4 Eroski Gas Stations, 78 Family Self Service, 19 Cash Record and an Economato. In 2018 Vegalsa-Eroski invested €18.2m on the updating of its stores.

Spain-based Mercadona is to invest €120m in automated systems at its four new distribution centres (DC) in the country.

System to aid efficiency at Mercadona

Mercadona’s need to drive efficiency throughout its supply chain is likely to continue given the competitive pressures in the country. Also, as the retailer looks to expand its range across fresh categories so the investment will support this aim too.

Commenting on the investment, Mercadona’s warehouse purchasing coordinator, Javier Blasco, said: “The main objective of these four centres will be to meet the demands of our stores, secure growth in perishable product sales and eliminate the overexertion that results from the manual handling of orders.

Cimcorp to provide the automated systems

Mercadona has chosen Cimcorp as its automated systems provider at its new DC’s, which will serve more than 600 stores. The new agreement builds on an existing relationship between Mercadona and Cimcorp following the latter supplying the retailer, in 2013, with an automated order picking system for fresh food at its Guadix DC, near Granada. Under the new agreement Cimcorp will act as a system integrator in Mercadona’s new four DC’s.

Spain-based Mercadona said it grew sales by 6% in 2018, generating €24.305bn in the year. Profits rose by 84% to €593m, which came despite the retailer investing €1.5bn in its network and operations.

Mercadona said it had invested €962m in store openings and renovations, €257m in the automation of its logistics platform, €225m in its digital transformation and €60m in its expansion into Portugal. Commenting on the results, Mercadona’s president, Juan Roig, said: “Mercadona is doing very well and this year will be even better”.

Investment in stores continues to pay off

Roig said the focus on the customer and improvements to its store estate were helping Mercadona to win. Given the success of its efficient store concept, with 400 updated during 2018, Mercadona will continue to roll out the design until 2023. During the timeframe the retailer will invest €10.0bn in its store network to improve and digitise them. In 2019 this will also see the opening of a further 60 stores, the closure of 100 more and the relocation of 400.

The investment is aimed at helping support Mercadona’s target of growing sales by 3.7% to €25.2bn in 2019. The retailer said it would invest €2.3bn in the year ahead, while its net profit was forecast to fall by 27% to €435m.

Expansion of ‘Ready to Eat’ sections

Following a successful launch and roll out, Mercadona will add its ready to eat ranges at 250 supermarkets. The range, which is made up of 35 dishes, has been rolled out to 17 stores in Valencia, Madrid and Barcelona. Mercadona has invested €5.0m in the range to date. Roig said the step was necessary as ‘the food of the 20th century will not exist in the middle of the 21st century’. The retailer is actively looking for suppliers to support the range’s expansion as it does not have the scale to meet expected demand.

While online investment will be sustained

Following investment in the channel, Mercadona said it generated a monthly turnover of €2.2m online, an increase of 120%. Despite the growth in sales, Roig admitted the retailer ‘does not make a profit [from the channel]’.

The service, which is available in 134 postal codes in the province of Valencia, has seen the volume of orders double since its launch and expansion. Roig said in 2019 The retailer will launch a new model for grocery ecommerce in Barcelona, while this will be added in Madrid at the end of the year or in early 2020. After that the system will be extended to Zaragoza, Alicante, La Coruña, Bilbao, Murcia, Seville, Las Palmas and Palma de Mallorca.

Regional expansion is next on the list

Starting in 2019, Mercadona will begin to expand outside Spain. The first of 10 stores will be opened in Portugal, in Porto initially, and expanded to Lisbon later. Mercadona has already acquired sites for a further 10 stores and is aiming to operate around 150 in the next seven or eight years.

Without giving a timeframe, Roig said the retailer was interested in expanding into Italy. In both cases, Portugal and Italy, the retailer ruled out buying any local chains to quicken the pace of expansion.

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