Consum decides to go it alone

Eroski and Consum have worked together for several years to promote their respective hypermarket and supermarket operations, but talks over the further integration of the two businesses prompted the Valencia-based group to part company with its Basque country partner.

Eroski said that it respected Consum's decision to leave the partnership, but said that it did not agree that it was the best way forward for both parties.

"Grupo Eroski retains the firm conviction that the growing concentration in the retail sector necessitates more vertical alliances, and that a unified management approach is the only way to benefit from the potential of additional volumes created by these alliances,"​ the company said in a statement.

Consum's reasoning is that it is a specialist supermarket operator, and that the polarisation of the Spanish retail market - where hypermarket development is strictly regulated but supermarket expansion is much less so - means that the potential for growth in its main area of expertise is not insubstantial.

As a result, Consum will take back 100 per cent control of the 450 Consum and Charter supermarkets which it had previously operated in association with Eroski, leaving the latter chain with 62 hypermarkets and around 1,000 other supermarkets.

Eroski will have to find a new name for its supermarket outlets, as the Consum and Charter names are both owned by its former partner. The two companies have agreed that this process can take up to a year to be completed, but in reality the change will take place as soon as Eroski can think of a name.

Consum will now focus its efforts on its home market, Valencia, which already accounts for 80 per cent of its turnover, but is thought unlikely to seek closer ties with another, more supermarket-based operator. Instead, it will focus its efforts on creating a new central buying platform for all its stores, and on developing its own range of private label goods, since the Consumer label it previously used is owned by Eroski.

Consum accounted for around 12 per cent of Eroski's total group sales, so its decision to break with its partner will be disappointing if not completely disastrous. It will, however, leave Eroski with a lot of work to do to rebuild its presence in the Valencia, Catalonia and Murcia regions, where all its previous stores were owned by Consum.

The decision certainly seems to be a strange one, especially in light of the rapid concentration of the European retail sector, and the fierce competition in the Spanish market dominated by foreign groups such as Carrefour and Auchan.

Both Spanish companies are now likely to look very closely indeed at the supermarket operations of Dutch group Ahold, put up for sale last year, as a means of rapidly boosting their presence in the sector, and redressing the balance with the French retail groups, but both Eroski and Consum will inevitably lose out in the short term.