About three years after the initial confinement to curb covid infections, and months after turning one year old, the Russian invasion of Ukraine added another shock to the world. Food prices continued to rise sharply. Inflation on food reached new highs in February, at 16.6 percent compared with the previous year. The VAT reduction on a range of food products did not arrest the climb and fueled ongoing debate in Spain about whether the government should strike deals with large distribution chains to lower prices.
So far, supermarkets have publicly resisted, arguing that the problem spans the entire food supply chain and must be shouldered by everyone. Narrower margins mean many products would become unprofitable, and a few items could simply disappear from shelves. Industry associations have warned for months that price increases must be contained without sacrificing viability. Despite this, a number of chains have taken steps to curb inflation. Prices have fallen on nearly a thousand products at some chains, while others have implemented targeted measures. Mega retailers have offered subsidies on meat and fish purchases through June as part of broader price containment efforts. What are the main Spanish chains doing to fight inflation?
Mercadona
This chain holds the largest market share in Spain. In its earnings presentation, the president stressed that limiting prices wholesale was unlikely. He admitted that prices had risen by about 10 percent on average, while the company has worked hard to bring prices down. A key tool is the Direct Product Profit method, or DDP, which helps better calculate costs and profitability for each product. A new Store Organization Model has been introduced, delivering substantial savings. The chain announced a plan to cut 500 products, aiming to reduce costs further. It highlights protections for staples like dairy products including cheese and yogurt, nuts, oils, cleaning and household care items, pastries, perfumery, and some fresh foods identified by a yellow label.
Mercadona enters disinflation debate by lowering the price of 500 products by the end of the year
Carrefour
This French company launched a 30-for-30 euro shopping cart for a limited period last September. The move drew public attention when the government urged distributors to jam down price increases. The idea raised questions about whether a basket should include items consumed only occasionally. For now, Carrefour France is pursuing similar savings ideas in Spain but the local branch has not adopted the same approach. In this market, the emphasis has shifted to promoting savings through other means, including a flat-fee subscription that unlocks discounts.
Dia
This week the retailer disclosed a 15 percent boost to its promotional budget for 2023, amounting to 150 million euros to offer discounts of up to 30 percent on around a hundred products. The plan targets the general public, with registered customers to receive even greater discounts. The company has also reaffirmed its commitment to its own brand to meet more than half of what customers typically buy at work sites.
Eroski
The Basque cooperative withdrew from the price ceiling debate by announcing a campaign to cut prices on more than 1,000 products in mid-March. The measure is part of a year-long effort to slow inflation. Eroski continues aggressive promotions, a loyalty program, and other savings actions that translated to more than 335 million euros in consumer savings in 2022. The program includes staple foods, occasional items, and personal care products, all designed to ease household budgets.
Caprabo
Part of the Eroski group, Caprabo also promotes a price containment campaign under its bearable price banner. The strategy has emphasized a strong loyalty program, personalized discounts, regular offers, and occasional price drops. The overall aim is to keep prices predictable for families while maintaining quality and variety.
Consum
The Valencia cooperative chain has focused on special and personalized offers. Company sources note that 80 percent of customers hold Consum cards, ensuring member discounts across the board. The retailer has intensified its promotional activity, offering tailored deals and assisted, personalized sales to ease the shopping experience for regular customers.
Bonpreu
The Bon Preu and Esclat group announced a March campaign to subsidize 5 percent of meat and fish purchases for three months, deposited onto customer cards. Management says supplier negotiations will pull back on price increases, and when price relief is not possible, some of the difference will be absorbed by the company. While results for the year remain uncertain, profits are expected to drop versus past years. In parallel, the chain is expanding its own-brand strategy with biweekly promotions and individual discounts aimed at loyalty and personalization.