Mercadona, a grocer with a winning model since its early days:
A customer centric gorcery offer
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Mercadona is positioned nowadays as one of the leading retailers in Spain. It was created in 1977 and from that moment on it has been evolving and growing towards a client-focused model. This strategy has been proved by the company to be its key to success.
Mercadona is a Spain based supermarket chain that has deeply studied and understood the country culture and that has always shown a remarkable ability to adapt itself to the customer needs. The company offers five categories of products which are food, beverages, personal hygiene, household cleaning and pet care under its own brands: Hacendado, Bosque Verde, Deliplus and Compy.
The brand also gathers products that come from other commercial brands, but to a lesser extent. The important presence of its own brands represents an average of 38% of the total products.
Mercadona positioned itself in the market as a chain with three attributes that have been key in the history of its evolution and success: low prices, the creation of its own brand that the Spanish consumer has welcomed with great trust and being a “proximity supermarket”: it has shops in many parts of the Spanish cities, making it very easy for consumers to have a Mercadona store relatively close to them wherever they are.
- 1980: INNOVATION TO OVERTHROW THE ENTRANCE OF EUROPEAN SUPERMARKETS
Some years after Mercadona’s creation, large European distribution chains started to introduce themselves in the Spanish market. The strategy of these companies was to offer big discounts sustained by constant advertising.
In response to this situation, Mercadona decided to eliminate offers and advertising and to launch a strong and clear message to the market regarding the price of products in its supermarkets: “Always Low Prices”.
The aim was to differentiate itself from the competitors and to keep its initial promise: always look for the wellness of the consumer.
- 2009: CLIENT-FOCUSED STRATEGY TO HELP CUSTOMERS OVERCOME THE ECONOMIC CRISIS
Even though the brand was created in 1977, it experienced its real growth in the country in 2009. At that time Spain was suffering from a tremendous economic crisis and the financial strength of the country was coming to low standards.
Mercadona started to notice customers were beginning to consider the company as “an expensive supermarket”, so it started to analyse the social and economic situation and the environment that surrounded it and indeed affected it. The reached conclusion was that the crisis was hitting the company’s stability.
This analyse ended up with a general price decrease. To achieve a truly effective price reduction strategy, the firm had to reorganise itself: It redesigned the packaging, reduced its weight, simplified the labels…
- 2017: MERCADONA GOES DIGITAL
Mercadona became market leader with a share of 24%, compared to around 8.5% for its closest competitors.
By this time, and once the crisis was over, consumption was again revitalised. The offering of new supermarkets and food platforms started to grow incessantly to the point that it did not match the demand. What is more, the omni-channel was growing at the time among the sector and tons of new formats were starting to settle in the market. The e-commerce was about to land and there was a slight feeling of a forthcoming market saturation.
Mercadona decided to start its digital transformation in 2017, whereas it was not the norm in Spain given the logistical and technological complexities involved at that time. The country was lagging behind other countries in West-Europe: E-commerce in supermarket chains represented just over 1% of sales in Spain in 2017.
But the company found indeed its way to digitalization and offered a “new way of buying groceries”. One of the innovations that the company carried out to improve its digital channels was the creation of “colmenas”, big warehouses located in Madrid and Barcelona designed to cope with the online orders.
Mercadona’s digital transformation encountered technical complications in its first three years that led to a loss of profit. It was not until 2020 that the company saw gains in its ecommerce platform. From that moment on, Mercadona began to experience an exponential growth that has reached 40% in 2022. Today the retailer is the leader in online sales in the food sector in Spain.
- 2019: GLOBALIZATION AFTER 10 YEARS IN THE COMPANY’S AGENDA
Although Mercadona was planning to go international since 2009, it was not until 2019 when the company achieved to expand its business. The chosen country was Portugal: an adjoining country with a similar culture and a willingness to buy at low prices. The firm has 29 shops in Portugal.
How is Mercadona innovating today to grow its business?
- “MODELO DE CALIDAD TOTAL”
This model seeks to satisfy equally and with the same intensity the five components of the company: “The Boss”, as it internally calls the customer, The Worker, The Supplier, The Company and The Capital.
The traditional model in the distribution channel is based on sequencing the supplier-distributor-customer, whereas the MCT (Modelo de calidad total) started backwards, being customer-distributor-supplier. Which means, in other words, that the customer is the centre of every decision made by the company.
In addition, Mercadona works with its suppliers following a model it calls “totaler”, which means that it does not have a product agreement with each supplier, but it collaborates with the supplier that offers the best quality product. This is another strategy followed by the company to achieve an unbeatable relationship with the customer.
This company overcame every situation, became a leader in Spain and a reference at an international level because of the implementation of a strategy based on listening to consumers and seeking their well-being first and foremost.
Food safety, maximum quality, maximum service, minimum time, minimum budget, and efficient assortment are the six principles on which the chain develops its orientation.
- QUICK COMMERCE: GLOVO+ LOLA MARKET
Mercadona contemplated the rise of Quick Commerce as a rival due to the advantageous benefits that the quick commerce platforms offered: Similar offer with a fast delivery service.
Instead of trying to beat it, Mercadona decided to join the trend by including its products in the “Lola Market” quick commerce platform, a space recently acquired by “Glovo”.
Consumers choose the supermarket where they want to do their shopping, and someone comes to collect the products and deliver them to the consumer’s home.
The Quick Commerce world is growing fast, and being part of it, rather than acting as a rival, is a strategy that brings more profit than loss to platforms such as Mercadona, as more and more consumers are making small purchases of food online that they want to receive in a few minutes.
Why is it interesting?
Mercadona is the brand that leads the supermarket segment in Spain, for the third consecutive year, as it is the highest-rated brand in a ranking released by Dunnhumby’s Retail Preference Index Barómetro España 2021 report, for which more than 10,000 retailer evaluations of Spanish customers were carried out by means of an online survey.
In addition, Mercadona is the supermarket chain with the best Emotional Connection with users in 2021.
This brand image Mercadona has built all along the years comes from the pursuit of the same strategy from the moment of its creation to today, which has been to always put the consumer at the heart of the business.
On the other hand, the continuous search for innovation has led it to become a leader in online sales in the context of a country that had not yet adapted to the digital leap.
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