Mercadona will test its model in Portugal, the "paradise" of the discount

Mercadona will test its model in Portugal, the "paradise" of the discount



Mercadona will give its first jump to a foreign market in 2019 with its landing in Portugal, a country that will test to what extent the model with which the Valencian company has managed to dominate the Spanish market with an iron fist is exportable.

Despite the geographical proximity, the challenge in the Portuguese market is not without complexity, since the start-up of a new operation -installations, personnel, transport, etc.- is added to the notable differences in consumption behavior.

A recent report by the consulting firm Nielsen analyzed the behavior of consumers in the Iberian Peninsula and its conclusion is clear: the Portuguese are "passionate" about promotions and discounts, much more than Spaniards.

In fact, 46% of retail sales in Portugal are for promotional products, compared to 16% in Spain. Thirty points of difference that represent an added challenge for Mercadona, whose strategy has been summarized in the slogan "Always Low Prices" (SPB), without offers or discounts.

"Beyond sharing economic recovery, confidence to consume upwards and growing consumer markets, the truth is that consumers in Spain and Portugal are quite different from each other, much more than the geographical proximity could suggest," notes Nielsen's study.

According to its analysts, the Portuguese people's "frenetic desire to promote" makes their knowledge of prices "distorted", while Spaniards manage the cost of products better.

Another difference is that, in general terms, the Spanish consumer carries his shopping list but is willing to "open his hand more" and include products not initially planned, while in the case of Portugal it is a type of purchase "more improvised but more restrictive "in terms of spending, so it goes" to the hunt and capture "of promotions.

In this sense, the difference in income between one country and another is important: the average salary in Spain is around 1,639 gross euros per month, compared to 1,017 euros on the other side of the border, according to Adecco.

Despite this fact, the price level in the supermarket is similar, especially in food, while hygiene and beauty products can become even more expensive in the Portuguese part.

Another factor to take into account is that in Portugal on Sunday it is considered the second day of most sales for supermarket chains, while Mercadona does not directly open the last day of the week in Spain.

In addition to adapting to the tastes of the Portuguese consumer, Mercadona will enter a competitive market, where it will rival, among others, the hypermarkets Continente (from the Sonae group), the Minipreço supermarkets (the DIA group's brand in that country) and, above all, the Pingo Doce chain.

The latter, owned by the Jerónimo Martins company -with supermarket chains in Poland and Colombia as well-, bears some similarities to the Valencian label, with which it shares its family origin and the firm commitment to the white label.

Pingo Doce also shared the strategy of betting on "low prices all year round" without offers or discounts, although in the middle of the crisis he decided to change and began to enter the world of promotions so as not to lose a share.

The Portuguese project of Mercadona is expected to start in the summer of 2019 with the opening of the first of the four stores planned for now, all in the Oporto area.

The arrival to Portuguese territory culminates an almost historical aspiration of the company led by Juan Roig, who was already talking about making the leap to the border country back in 2002.

This option has materialized once consolidated its dominance of the Spanish market, where it is the undisputed king with a share of more than 25% – equivalent to the sum of its four biggest competitors: Carrefour, DIA, Eroski and Lidl – and a network of more of 1,600 establishments.

Óscar Tomasi

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