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El Corte Inglés and Mercadona fail to expand beyond Spain

Teresa Sánchez

Both companies have been trying to internationalize for years, but for one reason or another neither has been able to make their plans stick. Italy has been their main focus in recent years, but despite multiple negotiations and processes undertaken by both names, neither has been capable of gaining a foothold. This contrasts with large fashion companies like Inditex, which owns Zara and operates in 86 countries, and Mango, which has stores in over 100 countries.

Between El Corte Inglés and Mercadona, only the former has taken the first step, extending into Portugal. El Corte Inglés has one department store in Lisbon and another in Porto, as well as smaller establishments such as Supercor, Sfera and Bricor. However, neither has achieved their main objective: to set up shop in Italy.

El Corte Inglés began considering the construction of a department store in Rome more than a decade ago, scouting locations in the city's historic quarter.

However, faced with the challenge of finding a space to meet its needs, about eight years ago it changed its strategy. The company set its sights on Milan, and even reached an initial agreement to build its first department store Sesto San Giovanni, a suburb outside the city. It was to be part of a major urban development project to be executed with prestigious architect Renzo Piano, and included hotels and residential and shopping areas.

However, the local authorities ended up rejecting the project. At the end of 2011, senior executive Jorge Font gave the project another go, announcing that, following difficulties in Italy, the objective was now Eastern Europe and, in particular, Latin America.

El Corte Inglés believed it would be much easier to find the right locations in these new geographies. Nevertheless, it was unable to advance. The company's CEO, Isidoro Álvarez, highlighted the need to internationalize year after year at the General Shareholders' Meeting held at the end of August. And yet, year after year, he never had any progress to report. Not in Italy, not in Latin America, and not in Portugal. Portugal aside, El Corte Inglés's international operations are limited to a few stores under its youth fashion brand Sfera in Greece and Mexico, and not much else.

The company has finally changed tack, confirming its focus on in Europe via the internet after launching its online store (www.elcorteingles.eu) in the UK, Ireland and the Netherlands. Its goal is to strengthen the image of the group and the brands it sells in Europe, with the idea that tourists visiting Spain can later return to their home countries and make the same purchases online; however, it's a far cry from true international expansion.

Mercadona's experience is even worse. The Valencian company announced its internationalization plans eight years ago.

During an annual earnings presentation, group chairman Juan Roig confirmed that the company was looking to expand into neighboring countries, such as France and Portugal and, primarily, Italy.

Se trataba de Francia, Portugal y, fundamentalmente, Italia. En 2008 el diario italiano La Reppublica publicó que la cadena de supermercados española estaba interesada en la compra de una participación en la firma italiana Esselunga. Bernardo Caprotti, el presidente de esta empresa, de características muy parecidas a Mecadona, tenía la intención de vender el 49 por ciento del capital. La operación estuvo sobre la mesa al menos durante dos años más, pero nunca llegó a concretarse.

In 2008, Italian daily La Repubblica reported that the Spanish supermarket chain was looking to acquire a stake in Italian company Esselunga, a retail chain similar to Mercadona. Bernardo Caprotti, chairman of the company, was looking to divest 49%. The offer was on the table for at least two years, but it never took shape, and last year Roig definitively closed that chapter and cancelled the project.

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30/10/2017