As of: March 26, 2024, 6:11 a.m
By: Bleranda Shabani
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Lidl and Aldi face a major competitor in Spain.
The Mercadona chain prevails against the German discounters.
A recipe for success makes the difference.
Juan Roig, one of Spain's few self-made billionaires, has impressive control over 27 percent of the country's food trade.
This makes his family one of the richest in Europe.
Although his discount supermarket Mercadona was founded in 1977, Roig's empire only reached its true size in 2011, with the collapse of the Spanish banking and savings bank market.
As a result, the Spanish had to pay more attention to price, and Mercadona, of all companies, managed to assert itself against the dominant German chains Lidl and Aldi, which had previously dominated the markets in countries with declining purchasing power.
Big competitor for Lidl and Aldi in Spain
The discounter's success is not only due to inflation, but above all to its outstanding performance in operational business, as Alex Alegret, a former employee of a Mercadona supplier, emphasizes.
Alegret is convinced that Mercadona selects the best manufacturers for each product and outperforms the market in terms of productivity.
The company also understands the Spanish customer better than anyone else.
This is primarily due to digitalization.
Mercadona was the first Spanish company to introduce barcode readers back in 1982 and was one of the pioneers to venture into the online grocery business in 2001.
It wasn't profitable, but it was a trend, explains Alegret to
WirtschaftsWoche.
The discounters Aldi and Lidl are expanding in Spain.
© IMAGO/onemorepicture / Thorsten Wagner
This effort paid off, as Mercadona recorded enormous growth without expanding into other countries.
In 2005, sales were still 10.3 billion euros, today they are more than three times as much, and the number of branches is over 1,700. To date, Lidl and Aldi cannot compete with Mercadona in the Spanish market, their market shares are in the food retail sector well under ten percent.
With around 700 stores, Lidl takes third place in the market, behind Mercadona and Carrefour and ahead of Aldi.
Expansion course in Spain
When expanding in Spain, Aldi Nord paid a lot of attention to Mercadona, reports Andrés Nuñez, a former Aldi Nord consultant and employee of various Mercadona suppliers.
Spain was a test country, also for a fresher offering in the store.
Mercadona had pushed ahead with the expansion of the fresh produce section before Aldi and Lidl, which had long been a shortcoming of many discounters.
Aldi Nord continues to rely on Spain as a location and plans to open almost 50 new branches this year.
At the end of 2023, Spain had a total of 435 Aldi stores with a total sales area of 480,000 square meters, an increase of eleven percent compared to the previous year.
Lidl is also expanding: in 2024, the company plans to open 150 new locations and four logistics centers.
An investment of 1.5 billion euros is planned.
Since entering the Spanish market in 1994, Lidl has already built a network of 630 supermarkets and eleven distribution centers with a workforce of 17,600 employees.
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Mercadona's recipe for success
For Nuñez, Mercadona is the leading company in Spain thanks to its transparency and fair pricing policy.
Juan Roig, the managing director, is described as hard-working and humble, but also controlling.
At Mercadona there is a culture of working hard without complaining.
Nevertheless, the chain is considered one of the best employers in Spain because it pays above average and employees share in the profits.
The chain's success is due to pragmatism.
Each branch has an integrated parking garage, which makes shopping easier for customers - even when things have to be done quickly.
This enables consumers to complete their errands quickly even after work or during a break.
In addition, supermarkets in Spain are designed to make products easy to find, with the popular fresh produce department taking up a lot of space with meat, cheese and fish counters.
Although Mercadona can't quite compete with Aldi and Lidl in terms of price, customers still prefer the Spanish chain because of the advantages it offers.
And the numbers speak for themselves: Last year, Mercadona increased its profits by more than 40 percent to over one billion euros, while sales rose by 15 percent to 35.5 billion euros.