8
Feb

MERCADONA. THE SCREWDRIVER.

Escrito el 8 febrero 2009 por Jesus Guerro en General

Mercadona has recently shocked the Retail Distribution Sector which already leads, by announcing its new restrictive purchasing measure, consisting in cutting up a 10% its presently reduced portfolio (9.200) of commercial references. Its main followers (by turnover) Carrefour, Eroski and Alcampo had opted for incrementing their portfolios in order to gain market share by offering an added vale to their customers towards a wider election chance.


Shortenening Portfolio refers undoubtedly to a high aggressive hard discount positioning close to other players as Dia, Plus or Lidl. Many leaders think that if something goes well ¿why change?. Mercadona denies this premise and taking this decision It gives a new return to the nut and shows significantly its Hard Vision for Future.A future in which the best added value possible to offer will be “Downpricing”.
With this movement, its competitors could get nervous and even, hesitate about their respective strategies.
In addition, this warning for navigators is a real thread for many suppliers who are just today thinking how much to discount their product to maintain its allocation in the supermarkets. Some voices say that leaders that none of us will imagine out of the supermarket are in danger under the new project.
The 35% of Mercadona turnover comes from White Brands. The Valencian Company wants both to encourage this line and to erase references just to commercialize two brands as much in many of its product categories. So that, the leader and its white brand.
This measure is aimed to reduce complexity in terms of Administration ad Logistics processes and so, minimising operating costs.
Mercadona will demand other new requirements to its suppliers to reduce cost such as, even, re-forming the shape of certain round base products to a new square configuration to optimise space in warehouses and shelves.
Only Time will tell us if the Straegy is succesfull or not. Till then.. ¿What do you think about that? ¿Are there any risks associated to this Strategy? ¿Which will be the opinion/reaction of the consumer?
Thanks.

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