Supermarket fever: covid triggers a wave of corporate operations

The pandemic has driven a wave of corporate operations in the supermarket business, which have become one of the safe haven sectors for a varied profile of investors. Condis, La Sirena, Sánchez Romero or Caprabo have been some of the last to change hands, but the financial sources consulted by ‘El Periódico de España’ indicate that This wave of transactions has only just begun and will continue in the coming months as a result of changes in consumer habits after the pandemic.

According to data from the Nielsen consultancy, the turnover of supermarkets rose 6.8% during 2020, reaching 95,000 million euros in Spain (3,100 million euros more than in the year prior to the arrival of the coronavirus). Although this year the rise will not be as strong as almost all the restrictions derived from the pandemic have been lifted, the figure will remain stable thanks to the implementation of these new consumer trends.

In the first place, the coronavirus has accelerated the digitization of Spanish society as a whole and more and more people choose to make the purchase through the computer or their mobile devices instead of dedicating a specific time of the week to this issue. This has caused that, only in the first quarter of this year, online sales of supermarkets have skyrocketed up to 544 million euros.

That is to say, triple the figure registered two years ago and above everything that was billed through the internet in 2016. For this reason, almost all the large chains are allocating huge amounts of money to digitize them. Gone are the controversial statements of Juan Roig, president of Mercadona, just four years ago when he described the website of his chain as “bullshit & rdquor ;.”

Now, it has gone from losing money to being profitable and mobilizing more than 1.2 million orders last year. At the moment, its online billing represents 1% of its total sales (176 million), but it must be taken into account that during the first months of the pandemic in 2020 online shipments stopped to support the people who came to its establishments. Now, the arrival of new investors to the sector can greatly boost these improvements in the digital world, which entail large capital outlays linked to this transformation or logistics.

In addition, the pandemic has also generated another important change in consumption dynamics linked to mobility restrictions. On the one hand, shopping in department stores has been put aside to give priority to supermarkets with a proximity format, which has triggered the billing of regional chains such as Consum or Bonpreu, among others. On the other hand, the Spanish population has put aside spending on restoration and now more money is left in supermarkets, something also linked to a greater concern for a healthier diet.

This was one of the reasons that launched El Corte Inglés to buy Sánchez Romero: a food chain gourmet focused on one more customer premium, until now only present in Madrid but wants to expand to other regions of the country. Faced with this, the Spanish department store giant has put part of the Supercor business up for sale, as revealed The confidential. A change in its strategy that other famous chains such as Carrefour are also considering, which is analyzing different acquisitions of different regional companies. Among them, experts give names such as Gadis, Maxcoop or Ahorramás as some of those that investors look at with more interest.

How does it benefit you?

For some of these brands, the entry of a new investor can represent a financial reinforcement to continue growing and gain more size, which in turn translates into better purchasing conditions in order to be more competitive. In addition to assuming, in many cases, a solution to the issue of generational succession that many of these family chains will have to face in the coming years.

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An example of this was the stake that the Spanish venture capital fund bought Portobello Capital in the Catalan chain Condis, which in turn took the opportunity to reorganize its business by shedding 30 stores it had in Madrid and in the downtown area, helping buyers (Uvesco -BM Supermercados- and EcoMora -La Despensa-) to grow in this region. In this context, the large national and international food groups want to take advantage of this wave of sales to gain market share and consolidate their brand, as they did. Carrefour last year with the purchase of 172 Supercor stores, transferring 38 of them months later to other local chains such as Cash Lepe or Froiz.

Faced with these corporate operations led by funds and companies in the sector, the case of La Sirena is striking. After being acquired by OpCapita in 2014 in a difficult situation marked by high indebtedness, the British venture capital fund has managed to transform its balance sheet during these seven years to make the company profitable again. Thanks to this, in February of last year they launched a process to search for a new investor to finance their new growth plan. Finally, and against all odds, La Sirena has ended up in the hands of businessman José Elías, known for being the owner of Audax, showing the growing and varied investor appetite for these types of assets.

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