Top Spanish retailer Mercadona has no external investors – unlike compatriots El Corte Inglés and Inditex. Will it always be so?
The big European retail news this month is the sale of a 10% stake by El Corte Inglés to the Qataris. It is the first time this dominant Spanish phenomenon has opened its share capital to a foreign investor, triggering the view in El País that it might even presage an IPO of this historic, privately owned business.
This is conjecture. What is certain is that this move deals directly with one of the two sources of criticism of El Corte Inglés – its financial structure – and has sound implications for the other – its lack of international scale.
“The opening up of zealously guarded retail assets can provide dynamic impetus to international growth”
Whether or not El Corte Inglés, instead of Hudson Bay, should have secured its rumoured acquisition of Kaufhof last year, the group’s substantial level of debt was then a heavy constraint.
The opening up of zealously guarded retail assets, be that to the public market, private equity or sovereign wealth, can provide dynamic impetus to international growth.
Look at another great Spanish retailer, Inditex, whose globalisation has accelerated non-stop since it went public in 2001. In the first quarter of 2015, Inditex said its eight commercial concepts opened stores in 27 markets, bringing its worldwide network to 6,746 stores in 88 markets.
Biggest Spanish business
However, the largest Spanish retailer by total group sales is neither El Corte Inglés nor Inditex, but Mercadona.
Juan Roig has been executive president of Mercadona, wholly owned by the Roig family, since 1981.
He has overseen the establishment of a supermarket chain, with sales last year of €20bn (£13.9bn), which is universally admired by his peers.
Many would argue that Roig is, in fact, peerless. He’s maintained an unwavering focus on the basic tenets of great supermarketing: total quality; everyday low price; customers in command; well-paid employees with permanent contracts; and strong supplier relations.
Mercadona has a relatively low SKU count and an equally low advertising budget but has always been an early adopter of new technologies. It was the first retailer in Spain to use barcode scanners and, more recently, an adept proponent of social media.
Roig’s tough but close and long-term collaboration with the group’s 120 private-label suppliers has the makings of a quasi-vertical food chain that brings Morrisons to mind. But Mercadona remains resolutely private, with Roig more focused on food markets than capital markets.
Sir Ken, no doubt, has taken note.
The newly reopened Mercat del Ninot, one of Barcelona’s 40 fresh food markets, whose combined annual turnover approaches €1bn (£696m), is in a gleamingly restored 1894 building with 100 fresh food stands (many with tasting counters) on the main floor, 40 independent stalls around the exterior selling clothing and hard goods and, on the lower ground floor, a Mercadona supermarket. Thrift or treat under one splendid roof.
This is a public-private partnership that redefines the term: the local authority bringing together independent traders and the leading private national chain for public delectation.
But at some point, Mercadona – like El Corte Inglés – is going to have to decide whither next and how. Private or public? At home or abroad? I wonder if it has thought of Doha.
- Michael Poynor, founder and managing director, Retail Expertise