Spain: The Spanish “phenomenon” succeeding during the pandemic

Regional supermarket chains have multiplied their sales in the last weeks, strengthening their market share in a sector where they compete head-to-head with the big operators. The weight these companies have is a very particular “phenomenon” which makes Spain practically an exception at a European level.

Compra con mascarilla

According to Kantar, these regional chains are the ones which are gaining the most sales by the warm of the corona outbreak: their joint share has shot up to around 15%, three points more than at the end of 2019, only behind Mercadona (close to 25%), and well ahead of Carrefour or DIA (6-8% each one).

The figure, however, excludes some supermarkets, such as Eroski, because it considers that the Basque group already operates nation-wide. If it were to include this and other companies in a similar situation, their share would be around 25%. In terms of sales area, their share is even higher, reaching 40%.

Many examples

Names like Consum in Valencia Region, Ahorramás and Sánchez Romero in Madrid, Condis in Cataluña, the Andalusian Covirán and Mas, Gadisa and Froiz in Galicia or Hiperdino in the Canary Islands are examples of groups with a strong position in their regions.

In fact, many of them are in the top 3 in their respective regions and have already established in other regions.

Their strategy to sell so much?

Most of them share some characteristics: proximity, fresh produce and a commitment to local products are three of them, although they differ above all in the greater presence on the shelves of manufactures’ brands, in contrast to other retailers who have made the private label their specialty.

“In no other European country do regional chains have such a large share (…) The concentration in the Spanish sector is much lower than in France or the UK”, sources in this industry insist, who remind us that there are also operational reasons behind their success.

Plataforma logística
Logistics platform of a regional supermarket

Years of experience

Specifically, they point to the two existing purchasing centers in Spain, IFA and Euromadi, which bring together part of these regional groups to make purchases jointly.

“In another market, there would have been a consolidation, and many of these chains would have been bought already. But their top personnel is very committed and continue to gain share”, Juan Morales, IFA’s director general says. “The other more regional market could be Italy, but there they are very much associated with two large cooperatives”, he specifies.

The sharp sales’ growth in times of the coronavirus is mainly explained by the proximity of their shops to the consumer, but not only.

More online sales and a more restrictive consumer spending

“To physical proximity you add an emotional charge as well. Besides, in times of shopping spree like the ones we have been through, we have a large selection, so it is easier to restock with another brand if some products are missing”, Morales argues.

However, there are challenges in the horizon too. One of them is the need to strengthen Internet sales, a channel that has gain weight in recent weeks, but which is still “a complicated business” and of “doubtful profitability”.

Morales points out that the increase in costs has also led to significant falls in margins, and predicts a post-COVID scenario of “great competitiveness”, with a consumer concerned about reducing spending and retailers trying to “protect” their market shares at all costs.