Extensive SWOT Analysis of Mercadona – A Spanish Supermarket Chain

Products and Services by Mercadona

Here are some products and services provided by Mercadona:

• Range of grocery products
• Pharmacy Items 
• Fish and meat
• Green groceries
• Bakery and dairy products
• Beauty accessories
• Animal food
• Home delivery services
• Barbershops 

Mercadona established its business model on the Low Prices (SPB in Spanish) formula, which allows the customers to purchase products at the cheapest prices in the market. 

Competitors of Mercadona

Below are the top 5 competitors of Mercadona:

• Carrefour
• Spinneys
• Heron Foods
• Stop & Shop
• Pathmark Stores
• ACME Markets

Now that we understand the company’s key business, let’s look after the SWOT Analysis of Mercadona.

SWOT Analysis of Mercadona

SWOT Analysis of Mercadona is a basic method that can help a company examine what it does best right now and develop a successful future strategy. It exposes the areas where people are holding back or how competitors may profit.

With the growing neck-and-neck rivalry in membership warehouses, it is critical for organizations like Mercadona to examine the business environment.

To better understand the SWOT analysis of Mercadona, refer to the infographic below:

Now first let’s begin with the strengths of the company from the SWOT analysis of Mercadona.

Strengths of Mercadona

Strengths are defined as what each business does best in its gamut of operations which can give it an upper hand over its competitors. The following are the strengths of Mercadona:

• Largest Supermarket Chain: Mercadona has the biggest supermarket chain and food distributor in Spain with 1300+ shops and almost one-fourth of marketplace share in the food marketplace.
• Good Brand Equity: It has good brand equity as it ranks among the top ten most reputable companies in the world by Forbes Magazine.
• Business Model: Mercadona’s business model is to sustain the environment by reducing packaging materials that are used for home deliveries. 
• Customer-Centric: Mercadona has always kept customers at top priority by providing added value through the finest and cheapest shopping experience for “The Boss” which is the customer.
• Quality Control with Speed Delivery: Its eating products go through strong and excellent quality control to make sure that the food is fresh and clean with maximum quality with minimum delivery time.
• Low Prices: The primary reason for the success of discount stores like Mercadona is the everyday low prices that they can offer in most daily use products. The store sells most essential goods at prices that are much lower than their competition and in addition to this also have regular promotions and offers in most specialist categories.
• Customer Satisfaction: Through low prices, faster barcode checkouts, lower waiting times and better service Mercadona have been able to retain existing customers as well as attract new business. The strategy used by them is to focus on savings by comparing the prices on offer to mainstream retail prices.

Weaknesses of Mercadona

Weaknesses are used to refer to areas where the business or the brand needs improvement.   Some of the key weaknesses of Mercadona are

• Inability to Penetrate Successfully in Foreign Markets: Quite unlike global contemporaries like Target or Walmart, Mercadona has restricted itself mostly just to Spain and Portugal. They have been lacking focus on Asia which has some of the most promising emerging markets like China and India.
• Inventory Management: Based on the details handed in the Mercadona case study, we can determine that Mercadona isn’t efficiently managing inventory and the cash cycle. There is a huge opportunity for enhancement in inventory management.
• Lack of Critical Talent: Mercadona is suffering from a lack of critical talent especially in the field of technology & digital transformation. Mercadona is floundering to restructure processes in light of developments in the field of artificial intelligence (AI) and machine learning.

Opportunities for Mercadona

Opportunities refer to those avenues in the environment that surrounds the business on which it can capitalize to increase its returns. Some of the opportunities include

• Investing in Technology and Advertising: Every business needs to buy marketing and marketing activities and embrace high technological equipment. So advertising can help the company to enhance its sales and success by spreading awareness amongst the consumers regarding the new features of the item being introduced by the company.

Mercadona does not spend on traditional advertising and marketing campaigns to save costs instead it relies on word of mouth and takes the help of social media and online reputation which is free of cost to promote and maintain its brand.

Bonus Tip: Developing engagement marketing using social media & online reputation management is one of the biggest reasons Mercadona is climbing the stairs to success. Without maintaining healthy relations with customers a business can never become a brand. So, it is important to learn these powerful digital marketing skills if you want your business to achieve global success in your industry.    

• Increased Spending: With the increase in the number of dual-income households, the propensity to spend for most millennials across the world has grown and people are also seen to be indulging in impulse shopping, an opportunity for retailers.
• E-commerce: Utilizing the benefit of online presence is a great opportunity for Mercadona. Their official site and other social media have benefited them and they are a step ahead of being popular!
• Developments in Artificial Intelligence: Mercadona can utilize developments in artificial intelligence to better predict consumer demand, serve niche segments and develop better recommendation engines.
• Profitable Opportunities in International Markets: Globalization has created opportunities in the global market. Mercadona is in a high position to tap on these chances and grow the market share. Growth in the global market can also support Mercadona to diversify the risk as it’ll be less dependent on the domestic market for share profit. 
• Working on Employees Satisfaction: Mercadona always works on their potential segments creating a better and safer place for their employees and staff members, which is why Mercadona always achieves a relatively low level of yearly employee turnover.

Threats to Mercadona

Threats are those factors in the environment that can be detrimental to the growth of the business. Some of the threats include

• Competition: The main competitors of Mercadona are Spinneys, Heron Foods, Stop & Shop and Tesco. In addition to this, they also face competition from online stores like Amazon.
• Increased Focus on Low-income Groups: The focus on an economic segment is likely to create the image of low-quality players and in the long run it may impact the growth of a business like Mercadona which will need to continue to be present in just the low-income low-value segment.
• Environmental Sustainability: The developing environmental sustainability trends act as a prime hazard while supplied products/services aren’t surroundings friendly. It attracts bad exposure and complaints from environmentalists and impacts the brand image in an aggressive market.
• Globalization & Dealing with Cultural Diversity: Globalisation pushes corporations to cross national boundaries and deal with cultural diversity, which can also additionally have a negative effect if the organization lacks cultural intelligence.