MADRID: Brand owners and retailers in the Spanish grocery sector must respond to wide-ranging changes that are reshaping consumer behaviour, McKinsey has argued.
In a new report, the consultancy stated that the Spanish grocery sector consistently expanded by over 7% per annum from the early millennium onwards, before shrinking by 3% a year since 2008.
One trend currently influencing the market is the rise of private-label products, which delivered 41% of sales for the leading chains in 2011, versus 29% in 2005. This figure rises to over 50% for Dia, the discounter, at present.
Moreover, discount chains have rapidly enhanced their position, taking 12% of value sales today, having seen average growth of 3.3% since 2006.
Consolidation is also having an impact, as the top five chains now take 57% of value sales, up from 45% in 2001. This compares with 86% in Denmark, 79% in Germany, 68% in Holland and 62% in France.
Mercadona is currently the market leader, securing 22% of value sales, and has gained five percentage points on this metric since 2006.
The top ten players also now hold 73% of value returns, up from 62% in 2001. Denmark has a high level of concentration here on 93%, with the Netherlands on 91%, Germany on 90% and France on 80%.
Indeed, despite the wider movements observable in Spain, traditional outlets like "mom-and-pop" shops and wet markets still have a far higher market share than in most other major Western European nations, on 27%.
Hypermarkets have also come under pressure since 2006, losing four percentage points of share, to 29.5%. Supermarkets, by contrast, have gained three percentage points, to 51.6%.
Additional industry-wide challenges relate to food and beverage prices, which fell by 1.1% in 2009 and 0.8% in 2010. While prices increased last year, McKinsey reported they are nowhere near the pre-crisis level.
Elsewhere, promotions have been particularly widespread, with 20% of grocery expenditure in 2010 attributable to items sold on deal.
By contrast, online is yet to make a big impression, as less than 3% of Spanish shoppers buy grocery goods in this way. Ecommerce thus only has a 1% share of category revenues, although it is growing by 19% per year.
Data sourced from McKinsey; additional content by Warc staff