Success story of a Spanish supermarket chain

Written by Lisa Rottmann for Buljan & Partners Consulting

The Spanish financial crisis challenges even the largest and most valued companies and changes strategic trends in different market sectors. A few years ago, El Corte Inglés comfortably occupied the first place in the distribution chain of Spanish supermarkets, now Mercadona has stolen the “throne”.

Mercadona’s success is due to a commercial strategy based on creating value for and satisfying the needs of all stakeholders: customers, employees, suppliers and society – all of equal importance.

In 1993, the management decided to implement a new business strategy as summarized in the slogan “always low prices”. Mercadona cut their advertising costs, cancelled all special offers and committed to always sell at the same price. Therefore, the company changed the relationship with suppliers, moving from being a tough negotiator to be faithful to their purchases for years with stable prices. This way, Mercadona has managed to save itself in the midst of turbulence and implement a unique, original and innovative model in the sector: stability in price, suppliers and employees to loyalize customers.

Although the results were not evident on a medium term basis, the president stayed firm in the strategy and in 1995, Mercadona began to notice a positive trend. Since then the company has started a spectacular growth process, which has made them one of the largest and most profitable supermarket chains within the market.

Reference: ISBN 978-84-92956-26-5

Mercadona guides its entire business model to the complete satisfaction of its customers. The customer is at the top of the company’s organizational pyramid, where the role of leader and the rest of the organization is to serve the customer. The philosophy of Mercadona focuses on increasing customer value, which is achieved not only through a policy of low prices by deleting costs that don’t add any value to consumers, but maintaining a constant dialogue with the customers in courses, tastings, social networks etc..

Concerning the service at Mercadona high quality starts from the inside. Before starting work, employees receive a nine-week course about what a customer-centric culture means to Mercadona. The training continues throughout their careers within the company and is complemented by a policy of internal promotion that facilitates that employees identify themselves to the brand. Salaries –well above the industry average-, the job design and politics of reconciliation between work and private life are embedded within this human resources policy. Mercadona has significantly reduced absenteeism and turnover numbers of employees, – both very high within the sector – and significantly raised productivity levels of workers.

Mercadona aims to continuously increase quality, understanding by quality also the comfort, speed, integrity, service and product variety. In addition, the company intends to become a reference in recommending products that suit to its quality standards in order to build trust and loyalize customers. To assure this quality on a long term basis, Mercadona has established a relationship with suppliers based on trust, cooperation, mutual cooperation and stability.

Even though the concept seems to be simple, the implementation of a customer-centric model was a challenge for Mercadona. A major difficulty lies in introducing programs and developing tools to satisfy all its components, but there is a clear indication that it’s worth the effort on a medium term basis. Some of Mercadona’s providers have introduced a customer centric strategy and have achieved even better results.

Sources:
Diario Expansión
Cámara de Comercio de la Comunidad Valenciana
Generalitat Valenciana: Conselleria d’economia, indústria i comerç
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