Number of supermarkets in Spain continues to increase

The number of supermarkets in Spain has grown steadily over the last five years (2015-2019). In this period, the number of stores managed by retailers has grown by 5.6% and exceeded 24,300, according to data provided to Efeagro by the Retail Data consultant.

On average, there have been 270 net openings per year in this period. This is especially remarkable, considering that Mercadona had already completed most of its expansion and that the DIA group has closed nearly 500 stores in the last two years.

Also, between January and May, the number of stores has increased by 80, despite the fact that the pandemic practically paralyzed the country since mid-March. This shows that the growth rate is slowing down, but it is not coming to a halt, even during a crisis like this.

More restructuring and more small stores
In Spain, consumer reports suggest that buyers prefer local supermarkets over hypermarkets, whose share continues to decline, but also small stores. Since 2015, the surface has increased by 6% and it already exceeds 14 million square meters.

The key that explains this rise in the surface is the fact that "chains like Mercadona or Lidl are restructuring their network, closing some stores and opening larger ones," says Retail Data managing partner Raquel Segura.

As for the net opening of stores, it is linked to the "convenience" side, with some, for example, located within service stations and being operated by distribution groups.

Sector with narrow margins
However, what about profitability? Supermarket officials have publicly said that the rate of openings should be limited, in view of the risk of “saturation”, and they even acknowledge that new stores could “cannibalize” part of sales of other stores of the same brand.

For example, the market leader in Spain, Mercadona, has stopped expanding, as it considers that it has reached its peak with its more than 1,600 supermarkets. Meanwhile, Carrefour has strengthened its commitment to gas stations and small stores (mostly franchisees), due to the fall of the hypermarket format.

All this is happening in a sector where the profit margin is estimated at around 2-3% of the total turnover, which is notably lower than that of other commercial categories, like fashion.

So how do they make money? On the one hand, by taking market share from independent neighborhood stores, and on the other, by betting on products with higher added value and greater margins, such as those in the take-away category, where they are starting to compete against bars and restaurants.



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