Mercadona, the champion of Spanish supermarkets who annoys the radical left

Family-owned, but gigantic, the Mercadona group has established itself as the number one supermarket in Spain, betting on cost-cutting and the rise of own brands. Until becoming a target of the radical left, in the midst of soaring prices.

Nearly 1,670 points of sale, 99,000 employees and 3,000 suppliers running at full speed to supply its stores: little known outside the Iberian Peninsula, the chain from Valencia (east) is essential in Spain, where its “success story” figures symbol.

“It’s an institution”, benefiting from a “very good brand image”, details Luis Simoes, consultant specializing in mass distribution, who recalls that Mercadona is at the top of the favorite companies of the Spaniards with the clothing chain Zara.

Founded in 1977 in a village in the Valencia region, the retail group took off four years later when its current CEO, Juan Roig, took over with his brothers and his wife the parent company then made up of eight mini-markets. .

It has since experienced rapid expansion, becoming the leader in food distribution in the country, with 31 billion euros in turnover in 2022 and 25.2% market share, far ahead of Carrefour (10 .1%), Lidl (6.6%) and Dia (4.5%), according to the firm Kantar World Panel.

– “Chief” customer –

This success, the Valencia firm owes it to its economic strategy, based on the search for reduced prices for products that want to be of good quality. “It’s not the cheapest chain” but many Spaniards “say they find good value for money there”, notes Luis Simoes.

Conceptualized by Juan Roig, a figure of Spanish employers often present in the media, this model claims to make the customer the “leader” (“el jefe”), by pushing teams to get involved in the company via profit-sharing bonuses and measures intended to retain employees.

Free company crèches, widespread use of permanent contracts, stable hours… This strategy is based on “unusually high investment” in “training and employee satisfaction”, detailed the economist Zeynep Ton a few years ago in an article by the Harvard Business Review.

Mercadona’s success is also due to its own brands, which are ubiquitous in its stores. “They are produced by dedicated suppliers, often small companies to which Mercadona offers contracts of five to ten years (…) For them, it is an opportunity”, explains Luis Simoes.

An opportunity that is not without consideration: reputed to be tough in business, the chain sets drastic rules for its suppliers, which are sometimes difficult to maintain: “manufacturers remain in theory free, because Mercadona rarely invests in their capital. But the constraints are very heavy “, he insists.

– “Food oligopoly” –

This model, like its dominant position on the Spanish market, has earned Mercadona criticism – particularly from Podemos, a radical left party partner of Prime Minister Pedro Sanchez’s Socialists in the government, which has taken a dislike to the latter. months the distribution giant.

Mercadona follows a logic of “unbridled capitalism”, thus denounced at the end of January the leader of the party and Minister of Social Rights, Ione Belarra, after the refusal expressed by the sign to freeze the prices of a basket of everyday products, demanded by the government in the face of soaring prices.

At the beginning of May, the head of Podemos drove the point home by attacking during a meeting Juan Roig, fourth fortune of Spain with 3.8 billion dollars of heritage according to Forbes magazine. He is “at the head of a food oligopoly” and “speculates on food”, she hammered.

These attacks prompted the boss of Spanish bosses, Antonio Garamendi, to denounce “harassment” towards Juan Roig and his chain of supermarkets, appreciated by the unions. It is “important to be measured in one’s remarks”, had estimated for his part this winter the Minister of Education and spokesperson for the Socialist Party, Pilar Alegría.

Contacted by AFP, Mercadona for his part highlights his decision finally taken in early April to lower the price of 500 everyday consumer products, at a cost of 200 million euros. And refers to the laconic reaction of its CEO following the first criticisms of Podemos: “everyone has their opinion”.