Mercadona to continue to lower prices

Mercadona has unveiled plans to continue lowering prices in the midst of the current economic crisis affecting Spain. The retailer started lowering prices on 800 items, around 9% of its total product offer, passing on EUR40 million (USD58 million) in savings last November and December. These were achieved thanks to the lower price of raw materials and savings derived from better deals with suppliers. Last November Mercadona lowered the price of bread, oil and canned food by 13%. Ultimately, the retailer aims to revise the price of its complete product offer. At the moment Mercadona is redefining around 2,000 items which are either of a low rotation (one or two items sold by day per store) or duplicated on the aisle (an item produced by a supplier and sold instore under both its brand name and Mercadona's private label brand). This duplication implies bigger fabrication, transportation and replenishment costs. Mercadona estimates that it will phase out around 700 items from both its private label and branded product offer, depending in each case on the preference of its clients. Another way to lower costs will be to reintroduce loose fruit (now sold packed), which will lower the price of fruit by 15%.

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