Mercadona planning expansion after good 2003
its investments by more than 50 per cent this year as it seeks to
spread its portfolio of stores across the country and build on its
excellent performance in 2003.
The Valencia-based group posted sales of €7.2 billion in 2003, some 25 per cent higher than in the previous year, in turn lifting net profits by 37 per cent to €125 million.
Its exclusive focus on the supermarket format has allowed Mercadona to grow rapidly at a time when other groups operating larger hypermarket stores, have seen their growth pegged back by planning restrictions, and the company is clearly keen to exploit this loophole even further this year.
Last year it opened 89 new stores, taking its nationwide total to 770 spread between 13 different autonomous regions. Total investments in 2003 reached €325 million, most of which was spent on new stores, although 70 outlets were also refitted during the year. A new logistics hub was built in Seville, while another in Alicante was revamped.
And this high rate of expansion will continue into 2004, with investments set to increase by 54 per cent to €500 million. The company said it planned to open around 90 new outlets during the year, taking the total to 854, while a further 78 existing stores would be refitted. Another new logistic centre will also see the light of day in 2004, necessary to supply the rapidly expanding network of Mercadona stores.
Mercadona also prides itself on its innovation, highlighting the fact that it was the first major Spanish retailer to implement new recommendations from the retail association AECOC designed to reduce the disturbances caused by deliveries to its stress and warehouses.
A pilot scheme in Barcelona saw Mercadona use a fleet of specially adapted lorries allowing it to make deliveries at night without disturbing the surrounding neighbourhood. The scheme is part of Mercadona's stated commitment to reducing noise and air pollution in city centres, as well as reducing traffic congestion, and should be rolled out to other Spanish cities this year.
Given its ambitious growth plans, Mercadona is a prime candidate to snap up a large part of Ahold's Spanish supermarket this year - although the company does seem quite happy to pursue its new store development programme and may not feel the need to resort to acquisitions.
But with more than 600 outlets in Spain - mostly supermarkets and convenience stores - the Ahold business may be too much of a temptation for Mercadona, although there are likely to be a large number of interested parties - including both foreign groups (Carrefour, Auchan/Alcampo, Casino) and local players (Eroski, Consum).
