Soriana was unable to overcome the drop in consumption caused by the coronavirus in 2020. The supermarket chain, which was born in the northern state of Coahuila, suffered the drop in sales last year, due to the confinement, and now the company expects that the ‘Julio Regalado’ discount season reversed the negative trend.
The company led by Ricardo Martín Bringas closed 2020 with a sales growth of 0.8%, the lowest among all supermarket chains, which during the first months of confinement benefited from panic purchases.
Julián Fernández, head of analysis at Bursamétrica, comments that during the past year, the company registered some logistics problems, which led consumers to make the supermarket in other stores due to the lack of some products on the shelves of Soriana.
“The company did not excel in sales because it was not ready. They had a boom but could not give it continuity due to the lack of logistics infrastructure. In addition, the operation has not been so strong because it has closed many points of sale, after the pandemic allowed it to distinguish which were the weakest, ”says the analyst.
During the first quarter of 2021, all the retail chains, with the exception of La Comer, had setbacks in sales, due to a high comparison base. But Soriana was the one that had the steepest fall, of 10.3%.
Soriana closed the first quarter with an operating cash flow of 2,805 million pesos, a decrease of 6.5%. However, its net profit reached 960 million pesos, which is also marked by the reduction in real estate income caused by the rent subsidy to its tenants.
Carlos Hermosillo, independent analyst of the consumer sector, details that since before the health emergency, Soriana was ordering its geographical positioning after the acquisition of stores from Comercial Mexicana in 2015, the relationship with the supply chain and order on the floor of sales. “The consequence has been that the customer shopping experience has not been competitive and this is seen in the loss of market share,” he says.
To win over consumers again, Soriana is looking to ride the e-commerce wave. In April, it launched its digital store on the Mercado Libre marketplace with the aim of accelerating the process for its omnichannel transformation, towards which it has sought to advance since last year.
The company, which has 794 stores of different formats, has greater coverage in the north of the country, so the alliance will allow it to access the 40 million customers of the Argentine marketplace and, at the same time, will allow it to get closer to those who do not have any of their units nearby.
However, analysts agree that it is late to the digital acceleration that the sector experienced during the lockdown, although it is a relevant support to revitalize its sales. “Looking for Mercado Libre implies trying to obtain an advantage in the already established platform, although it will be necessary to see at what level of profitability it can achieve it”, says Hermosillo.
Waiting for Julio Regalado
The outlook for Soriana still looks cloudy. Hermosillo considers that the competitor’s offer has notably improved in quality and convenience, while Soriana is still looking for ways to improve its value offer and the shopping experience, for which it estimates that they will continue to lose market, at least for the remainder of the anus.
In the second quarter, the comparison base will also be high, however, the summer promotions, which the chain has been undertaking since June with the Julio Regalado campaign, could boost sales in the third quarter of 2021 and give a good boost. closing of the year to Soriana.
“In the third quarter, Soriana will take advantage of the great mid-year offers to boost itself and it will be a great quarter where it will be able to position itself in its rightful place in the sector. Although the issue of the debt for the purchase of Comercial Mexicana is still thinking about them, the company is financially healthy ”, declares Julián Fernández.
