Mercadona has achieved something that seemed impossible in the saturated food distribution sector: A net margin of 3.88% in 2024. Well above not only Spanish or European rivals, but even world giants such as Costco (2.95%), Walmart (2.88%) or Tesco (2.87%). The figure, a trifle compared to other sectors, is stratospheric if we compare it with rivals such as Carrefour, with just 0.93%. Others, such as Dia, Casino or Auchan directly record losses. The supermarket business Historically operates with megic margins (1-2%) compensated for its high volume and cash flow. Mercadona, touching 4%, It is an anomaly. And he has achieved it mainly in the last five years, in which it has gone from 2.7% of 2019 to 3.88% of 2024. In addition, its net benefit has shot 37%, to 1,384 million euros. The 6 keys to unprecedented profitability “Total Efficiency” Model. The figures obey a polished strategy for decades. Juan Roig described the results of 2024 as “from ‘very good’ to ‘spectacular’” during his presentation at the central offices in Paterna. He attributed them to “the good progress of the economy, a great business model and brave decision making,” according to Castellón Plaza. One of Mercadona’s distinctive elements is its commitment to an “efficient assortment.” In other words: a short catalog. Other chains offer between 15,000 and 20,000 references, Mercadona has a rather lower number, prioritizing high -rotation products. It is one of the points that highlights the analysis of Food retaila strategy that “allows you to be more efficient, reach economies of scale and boost the quality of your own brand, all this while offering low prices.” That goes in the next point … Own brand domain. The weight of the distributor brand in Mercadona is overwhelming: its landowner brands, green or deliplus forest represent 58.2% of its sales, according to data from Actuality distribution About 2018. The chain then controlled approximately 44%of the total Spanish market of white brands, far ahead of competitors such as day (16%) or Lidl (11%). This strategy eliminates marketing costs and intermediaries associated with commercial brands. And allows you to set competitive prices without sacrificing margin. Mercadona has constantly invested in improving the quality of these products, developing them together with specialized suppliers to match or overcome the quality of leading brands. A unique relationship with suppliers. The Valencian chain has changed the distributor-professional relationship since the late nineties, when Roig promoted the “interproved” model. As it details INFORETAIL MAGAZINEMercadona “selected a manufacturer by category and granted long -term exclusivity to produce its brands”, working in “open book”: the chain knew the costs of the supplier and jointly set objectives of productivity improvement. Although this model has evolved since 2018 to a broader base of 1,400 “Totaler suppliers“, The philosophy of vertical integration and joint optimization remains. Mercadona negotiates block for all its stores, and that allows you to get conditions that other distributors do not get. The success of this symbiosis is such that, according to The economist“Mercadona suppliers are made of gold”, with growth of more than 10% in their sales during the last year. Logistics and automation. Mercadona operates one of the most sophisticated logistics networks in Europe, with 16 large highly automated blocks that supply their 1,674 supermarkets daily. In 2024, it allocated 276 million euros (26% of its total investment) to strengthen this infrastructure, according to Digital economy. The company has implemented advanced technologies such as the system Figa bridge picking (PPG) In its fresh warehouses, which speeds up the preparation of orders: it allows you to carry fresh products from the field to the store in 24 hours. Less losses and better perceived quality. This obsession with efficiency has raised productivity per employee at 313,545 euros per year, the highest in the sector. Almost null expense and marketing control. Unlike other chains with a lotHere is an example in this house) and not so much to announce products. Trust more on the mouth-a-or and the repetition of purchase. This savings in marketing, which for competitors can mean 1-2% of sales, is direct to the net margin. The company also maintains a relatively simple directive structure. In 2024, he even reduced his management committee to only six members, in front of the sixteen he came to have, according to reports Castellón Plaza. The six members of the Management Committee with Juan Roig in the presentation of results of exercise 2024. That committee came to have sixteen members. Image: Mercadona. No promotions or discounts. Mercadona has no loyalty program, points, coupons or specific discounts. Instead, opt for stable and competitive prices throughout the year. He no longer entrusts his motto ‘Always low prices‘which started at the end of the nineties, and in fact He has explicitly said that it is not his goal to be cheapbut the idea of SPB remains in a certain way: fixed prices instead of specific offers. This saves you promotional marketing costs and constant price changes. In 2024 He reduced 2,000 pricesbut permanently and without this affecting its profitability, according to the company itself. In fact, its gross commercial margin remained stable at 24.7%, confirming that the increase in net profit (37%) compared to sales (9%) is mainly due to internal efficiency improvements, not to make products more expensive. Internationalization problems Mercadona has a 28% market share in Spain and is a baggy leader, but it is having difficulties when leaving other markets. In Portugal he has been for five years but “only” has sixty stores. Although the Portuguese is a market that has begun to give benefits (7 million euros in 2024), Roig has admitted that “it costs a lot” to grow there. As collected The avant -garde“after being forty years in Spain” it is not easy to adapt the model, and international expansion requires “generating managers in the country through internal promotion, which is a long process.” Mercadona has had to adapt its assortment to Portuguese taste and develop a local supplier network. According to Merca2although store sales in Portugal … Read more