Consum, the largest consumer cooperative in Spain in term of members, has published a solid performance for 2016. Sales grew by 10.5% to EUR2.34bn, which is roughly in line with increased investment (up 12.9%), which was directed towards organic expansion and supply chain improvements. The bottom line soared 20%, with profit reaching EUR46.8mn. The retailer attributes its strong performance on its wide assortment of branded goods, the quality of its fresh produce, best prices and its cooperative structure which motivates its staff. For 2017, the retailer wishes to sustain its momentum by opening 45 supermarkets and developing its recently introduced organic range ECO.
The double-digit sales growth is particularly impressive when one considers that the retailer increased its sales area by a mere 3.3% in 2016. It also confirms the excellent dynamic of the cooperative, even during the hard times of the Spanish recession. To us, the feat is even more impressive given that Consum operate in the heartland of price-aggressive market leader Mercadona. Consum nonetheless manages to strive thanks to a different approach to assortment, which is vastly centred around branded goods – private labels account for just 13% of the assortment.
We see the retailer expand along the densely populated and affluent Mediterranean coast – from its home region Valencia, toward Murcia in the South and Barcelona in the North. Not to mention Consum’s ongoing e-commerce venture, we feel the retailer still has plenty of room for growth. LZ Retailytics data shows Consum will outperform the market over the period 2016-2021, growing at more than double the market rate, with a forecasted annual growth rate of 6.45%.
The only thorn in the retailer's side could come from the uncertainties raised by an independent Catalonia, an eventuality that the management deems unlikely and does not compromise the retailer’s ongoing strategy. Besides, traditionally focused on organic expansion, the retailer does not exclude any potential acquisition, if relevant. That being said, Consum is likely to be extremely cautious of that route to growth, as one of the reasons for fellow cooperative Eroski’s current struggle is attributed to its acquisition of Catalonia-based Caprabo supermarkets.