By Bryan Roberts, global insights director

While the Spanish retail sector shares similarities with its counterparts across Europe, it retains certain distinguishing features that give it that extra special local flavour. With Loyalty Reimagined in Barcelona drawing ever closer, Bryan Roberts, global insights director at tcc global, takes us through the key factors making up the Spanish retail landscape.

Low-cost supermarkets do well, but discounters are on the rise

In Spain, the low-cost supermarkets have historically outperformed others. Mercadona is a prime example—a retailer that rose from out of nowhere in the 80s to become a well-respected market leader today. A key reason for its success has been its operational efficiency. Mercadona is an impressive player when it comes to buying, product development, private label and logistics, and its excellence in these departments has allowed it to pass savings on to customers. It’s also raised its game in-store over the last few years, notably adding service counters for items like fish and charcuterie.

Yet as in so many countries across Europe, market leaders like Mercadona are fending off the advances of the discounters. Lidl is the primary force of disruption in Spain, with an ever-expanding market share of 4.4%, according to Kantar Worldpanel, having overhauled its in-store look and feel to improve all-round customer experience. It has also introduced local touches familiar to Spanish customers—for instance the inclusion of loose frozen seafood, unique to Spain amongst Lidl’s international markets.

Experiential experiments

With price-led retailers making ground, some Spanish retailers have joined other European chains by focusing on developing the experiential nature of their stores. The likes of Carrefour, Eroski and Caprabo have all launched interesting initiatives, such as creating more child friendly shopping experiences or even launching in-store cookery schools. There has been a widespread realisation that differentiation, not racing to the bottom, is the key weapon in taking on the disruptors. Even Dia, the biggest Spanish discounter, has begun to diversify from its roots by using technology – including the most successful Spanish retail app – and launching convenience stores, drugstores and supermarkets to fend off the likes of Lidl.

Tapping into an independent spirit

An identifiable characteristic of Spanish grocery shoppers is that they often break down their weekly shop into individual components, visiting different outlets for different individual ingredients. Not only do customers want to show support to local, independent traders, but the general perception across the country is that small grocers offer the best value and – most importantly – the best quality. With this independent spirit in mind, it makes sense that independent butchers and greengrocers have been more resilient in Spain than in the rest of Europe.

Many city-based shoppers still prefer to use traditional market stalls; perfectly understandable considering the vibrant, sensory experiences that await customers in markets such as La Boqueria in Barcelona or Valencia’s Mercado Central. Some retailers, such as Carrefour and El Corte Inglés, have invested heavily in steps to recreate this marketplace feeling within their stores. Staffed service counters – with someone on hand to price and bag the loose produce around them – are included next to the self-service fresh counters, transporting traditional grocery practices into a supermarket environment.

Investors in loyalty

Spanish retailers have found great success when embracing schemes that focus on children or loyalty. Child focused campaigns in particular have caught shopper’s imaginations—including a campaign created by tcc global for Dia that involved the smash-hit Minions franchise. While it certainly can’t be said that schemes like this are unique to Spain alone, the country is distinctive in how its retailers are willing to invest more in loyalty than other markets. As is clear, the Spanish retail landscape is vibrant and full of activity. With so many players at work, investment in meaningful loyalty programs is just one more way in which retailers are differentiating from the competition.

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