Own label bonanza for Mercadona

MERCADONA strengthened its position as Spain’s leading supermarket,  Kantar Worldpanel said.

Despite rivals’ growth and a relatively shaky start to the year, Mercadona  has reversed the tendency to reduce its market share detected in the first quarter of this year, according to the market research specialists.  The Valencia-based company headed by Juan Roig finished the summer with a share not far short of 27 per cent, Kantar found.

Mercadona’s 26.1 per cent quota between January and August was three-tenths of a percentage point more than during the same period last year, exceeding the quotas of its four closest rivals added together.

Carrefour remained unchanged at 9.9 cent while Lidl increased its market share by six-tenths of a percentage point to 6.5 per cent. Eroski took fourth place with a 4.4 per cent market share after Dia lost four-tenths of a percentage point.

Supermarkets’ own-label items accounted for a record 43.5 per cent of fast-moving goods, without taking into account fresh products, although Kantar predicted this would eventually decelerate.

“Price rises are partly responsible as increases were higher for branded goods,” Kantar’s Bernardo Rodilla said.

Once these were more in line with manufacturers’, the increased own label sales would slow down, he added.

The secret to Mercadona’s success, Rodilla said, was April’s decision to reduce the prices of 500 own-label products.  That allowed the supermarket chain to take advantage of customers’ visits and halt the trend of losing clientele to Lidl and regional supermarkets.

Rodilla also explained that the manner in which the reductions had been communicated was almost as important as the prices themselves.  This was demonstrated by the way that Mercadona recovered its market quota in six of the 10 categories studied, although prices had not been reduced in half of them.

The big chains were currently fighting it out with different promotions and offers, Rodilla said, foreseeing a price war during the coming months.

The Kantar expert said that as 2023’s last quarter approached,  looking “uncertain and a little pessimistic”, the industry would step up promotions to compensate for price rises and ensure that these did not curb spending.