Mercadona

History

Since its days as a butcher shop in 1977, Mercadona expanded to eight stores in 1981 and 1,148 stores as of October 2013 with more on the way. Today it holds 13.5% of Spain’s total food retail space and brought in more than €508 million in profits for the 2012 fiscal year.

Despite Spain’s recent economic crisis beginning in 2008, Mercadona hired more than 4,000 workers in 2012 and is one of the few Spanish companies to profit during this period. CEO Juan Roig plans to bring Mercadona to Italy or France in 2014, but may modify his Spanish model of business to compete in the new markets. He was quoted in the Economist saying, “We must learn everything from everyone,” an idea which promotes an innovative, yet adaptive culture to the current business environment.

Ownership

Juan Roig, is the CEO and major shareholder, his wife Hortensia Herrero owns 28% , and his brother Fernando Roig owns, 9%. They are all billionaires.

Modern changes

Mercadona was the first Spanish company to implement the barcode scanning system in its stores. The system has since permitted increased monitoring of product movement, in addition to an increase in the speed of customer checkout times in stores. Mercadona also has an automated distribution center, located in the outskirts of Madrid, where computer monitors keep track of orders, while robot arms do all the work. The modern adaptability of Mercadona has been a positive model for increasing productivity, and growing with the needs of the consumer.

Business model

The main goals of Mercadona are to meet the “food, cleaning, hygiene and pet care needs” and keep product costs low in the process. Mercadona ensures this by buying directly from sellers, and eliminating the additional costs of working through a middleman. Mercadona also works to develop trusting relationships with its suppliers in order to regulate low pricing. The supermarket chain works closely with 100 suppliers of its own-brand products, such as Hacendado, Bosque Verde, Deliplus, and Compy, to ensure product selection and quality that can compete with name brands yet cost less.

Mercadona dedicates much of its resources to eliminating unnecessary costs in its packaging. According to the Economist, the chain has saved €2.2 billion by reducing packaging materials. This included opting out of a glossy finish on packaging which company leaders deemed unnecessary, and adding a plastic lid to a can of tuna, making it easier to open and more appealing to purchase.

Mercadona has a marketing model that does not spend capital resources on advertising or market campaigns and adds yet another method of cutting costs. It instead relies on word of mouth and free social media to promote and maintain its brand. The official Mercadona Twitter feed, @Mercadona, shares pictures and videos of products and company practices with thousands of followers to entice consumers to choose their brands and services. The same occurs on their Facebook and YouTube accounts. The company has been quick to accept to the trend of social media which reaches out directly to the increasing number of technologically connected consumers.

Employees

Mercadona employs more than 70,000 workers, all of whom are under permanent contracts. Upon hire, workers are required to complete four weeks of training, costing the company an average of $6,500 per employee. Employees must also go through twenty additional hours of training each year. Employees receive salaries above the national average of workers in the grocery store industry and the majority of employees receive a bonus each year. Leaders of Mercadona believe this combination of training and payment creates employees who are dedicated and flexible when it comes to meeting customer needs. It is also believed to have helped the company to maintain a relatively low level of only 5% employee turnover in 2012.

Stores

Mercadona supermarket stores offer a variety of products and services. The company strategically buys products at the best possible time to ensure freshness and to supply all of its “environments,” a term used to refer to each department, with the best quality products at the lowest possible price. Stores also provide a multitude of services including home delivery service, bag lockers, climate control, telephone orders, bank cards, a free customer service line, online shopping, and bakeries.

Customer service

The chain provides multiple outlets for customers to provide their input and voice their opinions. The official Twitter feed, Facebook page and YouTube channel are monitored daily and allow customer needs to be addresses in a timely fashion. The company also provides a free customer service hotline, in addition to options for submitting comments electronically, or via post. The website caters to speakers of Spanish, Valencian, Catalan, Galician, Euskara, English and German, further demonstrating its dedication to its diverse customers.