Mercadona: from columbarium ideas to a 4.52% margin
Mercadona makes €4.52 for every €100 in sales. With a margin that thin, its customers' wild ideas only fit in the realm of humor.
English · Original discussion in Spanish · Published
Columbariums, Sundays and a 4.52% margin: ideas for Mercadona
One customer demands the return of the spicy chicken wings that vanished without explanation. Another has spent 17 years mourning some Christmas pastries that are impossible to find. And one suggests turning a store's restaurant into a columbarium. When consumers imagine new business ventures for Spain's biggest supermarket chain, they don't hold back.
The proposals range from plausible to absurd: opening on Sundays, making use of Correos (the Spanish postal service) parcel lockers, pulling bunk beds out of the stockroom at night. Some ask for 2019 prices, others suggest an in-store shopping assistance service like the one Decathlon already offers with sporty staff. The underlying issue, however, is serious: with a net margin of €4.52 per €100 in sales, the chain cares more about volume than ingenuity. The rest goes to taxes and, to a lesser extent, suppliers; competitors barely manage €2 or €3 in profit per €100.
A margin that leaves no room for fantasies
The figure constrains any proposal. For every €100 in revenue, Mercadona keeps €4.52. Competitors, with less than half that, charge higher prices. Anyone asking for a return to 2019 prices is asking someone else to absorb that margin, and no shareholder will sign off on that. The low-cost formula by definition rules out columbariums, hostels and lockers: they are cost structures incompatible with such a thin margin.
Nostalgia as a thermometer
Spicy chicken wings, hazelnut ice cream, vanilla ice cream, the Christmas pastries similar to miguelitos that disappeared 17 years ago. The list of discontinued products is no accident: it is the consequence of a shrinking product range kept that way to maintain low prices. But that efficiency has an invisible cost: customers who miss what disappeared and today buy the expensive version at another chain, or simply stop shopping there.
With these numbers, any new line of business will go through the calculator before the brainstorm. The columbarium can wait.
One customer demands the return of the spicy chicken wings that vanished without explanation. Another has spent 17 years mourning some Christmas pastries that are impossible to find. And one suggests turning a store's restaurant into a columbarium. When consumers imagine new business ventures for Spain's biggest supermarket chain, they don't hold back.
The proposals range from plausible to absurd: opening on Sundays, making use of Correos (the Spanish postal service) parcel lockers, pulling bunk beds out of the stockroom at night. Some ask for 2019 prices, others suggest an in-store shopping assistance service like the one Decathlon already offers with sporty staff. The underlying issue, however, is serious: with a net margin of €4.52 per €100 in sales, the chain cares more about volume than ingenuity. The rest goes to taxes and, to a lesser extent, suppliers; competitors barely manage €2 or €3 in profit per €100.
A margin that leaves no room for fantasies
The figure constrains any proposal. For every €100 in revenue, Mercadona keeps €4.52. Competitors, with less than half that, charge higher prices. Anyone asking for a return to 2019 prices is asking someone else to absorb that margin, and no shareholder will sign off on that. The low-cost formula by definition rules out columbariums, hostels and lockers: they are cost structures incompatible with such a thin margin.
Nostalgia as a thermometer
Spicy chicken wings, hazelnut ice cream, vanilla ice cream, the Christmas pastries similar to miguelitos that disappeared 17 years ago. The list of discontinued products is no accident: it is the consequence of a shrinking product range kept that way to maintain low prices. But that efficiency has an invisible cost: customers who miss what disappeared and today buy the expensive version at another chain, or simply stop shopping there.
With these numbers, any new line of business will go through the calculator before the brainstorm. The columbarium can wait.
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Summary of a discussion on Burbuja.info - Foro de economía, actualidad y política., translated from Spanish and reviewed before publication. Read the full discussion (32 replies).
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