Mercadona, non typical Spanish

Few Spanish companies are growing up in a domestic market struck by the crisis… except Mercadona. This Valencian company has passed from 8 stores in 1981 to be the most largest supplier chain in Spain (1.310 stores now). So curious is the fact that Harvard has made a study of this company. Getting as a response that its key is a perfect model of quality, from the row material to the stores.

The purpose of its recipe is to satisfy the five components of the business: customers, workers, suppliers, the society and its capital. We could highlight long term relationships with suppliers and the fact that Mercadona doesn´t invest money in advertisement.

We don´t know which is the secret so that people decide to buy in Mercadona ahead of other firms like Carrefour. What is true is the fact that every time more and more Spanish families choose Hacendado. It is the blank brand for Mercadona´s products. They are cheaper than other brands but with the same quality or even higher. We could say that Mercadona gained the trust of Spaniards.

These words are endorsed by numbers, economic numbers which confirm this amazing progression. If we go to the annual report 2010, we can see clear numbers which reveal this exception in the Spanish economy.

Afterward, I will talk about other numbers but now I want to look at these ones. While other companies and PYMES get sink in the bankruptcy, Mercadona got these impacting figures in 2010. Increased sales by 6% to reach 16.485 million Euros in 2010, a year in which earned 398 million Euros (47% more). Also increased its workforce by 3.500 employees (total 63.500).

With more than 2.000 suppliers and almost 10.000 collaborators of row material, Mercadona just has an average ratio of 63 days for paying its debts to the suppliers. This figure is going down every year. Contributing with 3.059 million Euros to GDP and 1.000 million Euros as investment give one idea to us about the magnitude of the business.

Its EBITDA increased 38% and its net benefit was 47% higher than in 2009. However, its policy is to reinvest in the business. This way in 2010, Mercadona invested 90% of its benefits in its own resources (2.255 million Euros).

You can see more and more details in its ANNUAL REPORT which demonstrates it is not a casuality. When things are getting do well, you can get more benefits. In this case, Mercadona is the best example of it. A good strategy of business economy.

Kind Regards

Jonathan Cabrero Sánchez.

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