Spain: MERE, the Russian ‘hard discount’ similar to the start-up model of Lidl and Aldi

Discount Retail Chain MERE (owned by Russian Torgservis and managed by Svetefor) is a Russian ‘hard discounter’ similar to the initial model of the German discounters Lidl and Aldi. Stores similar to Soviet warehouses, austere aesthetics, aisles delimited by pallets, low prices and costs reduced to the maximum. The description could well correspond to the initial commercial model of the first discount stores that the German Lidl and Aldi implanted in our country, but we are not talking about They, but MERE, the chain owned by the Russian group Torgservis, which has just landed in Spain, through Svetefor's, and whose model evokes the first 'hard discount' centers imported from Germany.

And it is precisely in the gap left by the German companies Lidl and Aldi, they evolved in their respective business models towards a 'smart discount' concept, where MERE has found a business opportunity, also sponsored by the economic crisis that lies ahead. the impact of the pandemic. Although unlike Lidl and Aldi and what we could consider a traditional 'hard discount' with the MDD as the protagonist of the commercial offer, 100% of the products marketed by MERE are manufacturer's brands and the company is currently consolidating a panel of suppliers, of which "more than 60% are national." That is why, in the words of Andrey Murzov, CEO of MERE Spain, "ours is an extraordinary business model, which allows us to act without direct competition in Spain."

MERE supports its main competitive advantage in manufacturer brand price, offering products between 10% and 20% cheaper than those of its direct competition. The chain's formula "involves the sale of drugstore, perfumery, bazaar and other family products that allow us to maintain the planned margin," they point out. And how does it manage to reduce prices so much? In the first place, it requires from its suppliers a cost between 20% and 30% lower, including transport to the supermarket, and up to 50% in the case of well-known brands, as well as the return of all unsold products. In return, the packaging can be as simple as possible. Second, its strategy is based on lowering costs at the point of sale, with significant savings in rents and basic equipment, making the sale from the pallets or boxes of the products.

And third, through a new logistics system. MERE makes direct truck deliveries from the supplier's factory to their stores. At least for the moment, the group does not consider having intermediate warehouses for these operations. This would make it a unique and exceptional case among retailers, who tend to centralize their suppliers' loads on platforms to streamline subsequent delivery to stores.

Also for this reason, the chain's establishments will be located in locations that allow easy access to the supply vehicles of their suppliers, either within the population center or within walking distance, in industrial estates or access roads, with parking for 30-40 vehicles. In any case, "the location does not matter so much, as long as the place is close to a population of more than 20,000 inhabitants," they point out. MERE also looks for premises that require a very basic investment, with almost no need for work. The dimensions of its premises will be from 800 m² and up to 1,500 m². The standard workforce will be made up of 10-11 workers per store.

Ten stores operational by the end of 2021

MERE has already put his first foot in our country with several projects in the portfolio. The first known, a store in the Madrid town of Parla, perfectly exemplifies its strategy, as it is located in a 1,400 m² warehouse on Avenida de la Ronda, one of the access roads to the city from the south and the area of commercial development. To this project will be added, during the months of May and June, four openings in the Valencian Community, specifically in the Valencian towns of Gandía, La Pobla de Vallbona and Aldaia, and the Alicante town of Petrer, in the Dynamia shopping center. The set objective is to reach the ten openings by the end of 2021. Apart from Madrid and Valencia, other priority areas for the group are Catalonia, Murcia, Andalusia and Castilla-La Mancha.

Torgservis already has more than 1,000 operating stores in Russia, Germany, Lithuania, Poland and Romania, both under the 'Svetofor' brand, with which it started operations in its country of origin in 2009, and under 'MERE', aimed at European countries. The company plans to expand into all markets in the European Union.

See here for more: https://www.alimarket.es/alimentacion/noticia/330710/mere--el--hard-discount--ruso-simil-al-modelo-inicial-de-las-alemanas-lidl-y-aldi