The cooperative will continue to grow without entering the ‘super’ price war and leaving behind internal disputes with some partners.
In October the Governing Council of Covirán appointed José Francisco Muñoz López as the new CEO. An appointment that comes to give stability to the cooperative and that leads a new stage in which leave behind the internal quarrels that ended with the expulsion of two partners and faces a 2021 marked by its 60th anniversary.
Before that, it will close 2020 with very good results: the growth of 10% of the regional sector of the ‘super’ and with more than 130 new additions to supermarkets, as the newly appointed CEO tells Invertia in his first interview. And that the strategy will not be based on growing to grow, but on allowing its new partners “to be sustainable in the future.”
A sustainability and efficiency in which they will not enter the price war in which the sector begins to settle as a result of the economic crisis derived from Covid, which continues to sow uncertainty in the future of the economy.
Although from Covirán they are clear that will continue to serve that ’emptied Spain’, where it has 53% of its establishments (just over 1,500 stores) in towns with up to 10,000 inhabitants. “We are a cooperative of 2,500 members and we are not a millionaire family, or foreign multinational,” he says.
With what challenges and objectives do you assume the position of CEO of Covirán?
As a granaíno (sic) I am proud to be able to lead Covirán, but at the same time I am aware of the great responsibility and the challenge assumed. I have clear ideas and I know what I have to do. It is true that this year’s strategic plan has been blown up. The fundamental objectives, which we are finishing redesigning, revolve around three axes: greater profitability of the partner, sustainability of the business model and the continuity of our social work, because we are being a very important lever in the local economy.
What is this new plan you are working on going to consist of?
We are rethinking the plan and we have lines of action that we have not yet finished defining. We are also waiting to see how this year ends because what the pandemic has taught us is that looking three years ahead is impossible.
I hope that the number of partners that are implementing ecommerce will increase this coming year.
In 2019, we started the cultural and digital transformation and there are two fundamental pillars: people and innovation. We want to promote internal talent and innovation via digital transformation and process optimization. We are going to establish many lines that will be our approach and will be presented to the Governing Council in January and February.
In this sense, and as in previous positions you were responsible for the Digital Transformation of the Covirán cooperative, what has this process consisted of, where is it now and what happens with the launch of the Covirán ecommerce?
The digital transformation of the cooperative has been taking place since 2018 with greater force. It is a cultural transformation and we are introducing the concept of agility in the cooperative.
Regarding the ecommerce we have a platform already developed. We are talking about 2,500 ecommerce. We do something that is not in the market: each store has its own sale online. But with the pandemic it has been paused while other actors have used it. In the end it is a different business model. We have the platform and it is associated with the sales software and the partner is free to use it.
This tool, when is it going to be launched? Can there be some disadvantage with competitors?
I hope that the number of partners that are implementing the ecommerce in this coming year. The disadvantage is not so clear to me because our partners have been doing e-commerce for many years, even without knowing it through orders by phone, mail or WhatsApp.
Changing the subject, in what situation is the company after the Covid crisis?
A ‘dirty’ growth has originated. I wish we had not had this growth for these reasons because there are many people who have lost their jobs. Our only objective was to provide a service to society by having the stores open and stock of merchandise.
We have grown a lot in sales volume, but extraordinary expenses associated with Covid have skyrocketed
As a sector we will spend 10% of turnover compared to last year, especially the regional ones. The big ones have suffered more because they have lost market share.
Their privileged position in towns and rural areas benefited them …
We are a cooperative of 2,500 members and we are not a millionaire family or a foreign multinational. At the same time, we are where no one wants to be. We are efficient in reaching that empty and rural Spain, those places where the big companies do not rent them. Our objective is not to have a monetary benefit, but to have an impact on our partners and give back to society what it gives us. This capillarity is what has given us an advantage in the crisis.
You have commented that Covirán has grown in sales. How much are we talking about?
Above 10%. This year we have exceeded 500 million euros. (Data relating to the ‘sell-in’, that is, what the members buy from the cooperative. To this figure we must add what the rest of the group companies invoice and what the members sell).
There are those who say that the economic crisis derived from Covid will generate a price war between supermarkets, do you think so too?
Yes. Every time there is a crisis it usually leads to a price war. I like to be careful. Being a cooperative close to local producers, we cannot enter into a price war in which the losers are SMEs, manufacturers … We would not like to enter there, but we are seeing where it goes. We want to be more efficient, but not at the expense of others.
How do you expect the Christmas campaign to be?
It is usually a pretty good campaign overall for impulse buying. But this year it is totally atypical. We don’t know how the consumer will respond. Part of the purchase will drift home and there will be a spike in consumption at the last minute. But this goes by zones.
His arrival to the management in October took place at a turbulent moment and in the midst of an internal war with some partners who were expelled. Does your appointment calm the waters and give stability after the departure of several managers in recent years?
I don’t like the word war. Rather, they were dissensions and different points of view. On this occasion, these points of view have been transferred to the outside instead of being carried out in the bodies that the cooperative itself has to share the different opinions.
More than the appointment, it is the overwhelming support that the governing council and the president of the assembly have had. In the end, the social majority believes that the project started in 2019 was necessary and that it laid the foundations so that this year we have reacted as we have.
These expelled partners belonged to a group of almost 300 members opposed to Covirán’s leadership. Do you think that with their expulsion the problem is resolved or that there are still ‘unruly’ partners?
I don’t know if the platform was made up of 300 partners. I know they are not those numbers. Members with different opinions have always been, there are and there will be. And it will be bad the day when all the partners think the same because then I will know that they are cheating on me.
It gives us a broad perspective of what we need to improve from headquarters. The important thing is that the different opinions come together. The cooperative has been for 60 years next year because the members have dedicated themselves to adding.
In 2019 they invested 19.7 million euros in modernizing stores. Have they completed the process or will they continue in 2021?
We will continue to invest. Without closing the year, the number of net registrations will exceed 130. We do things conscientiously and we are not opening all that we can because the strategy changes here.
Our strategy is that at least 10% of the group’s turnover comes from the Portuguese market
We further safeguard that people who want to be partners of Covirán have a profitable and sustainable business in the future and do not encounter financial problems in the coming years.
Is the idea to expand throughout the national territory or in some specific points?
Our plan had planned to expand in 2020, but the pandemic has slowed us down. The expansion is being due to these stores that want to open or other franchises that are entering. We want to expand, but not as a strategy in a specific place. The important thing is to give a good service and not to open stores to open.
The people who sign up come from other franchises such as Dia …
In many cases they are rebounded because the conditions to enter Covirán are very favorable. And there are also profiles of entrepreneurs. The main philosophy is that the new partner is sustainable over time.
And what is the strategy in the Portuguese market?
Consolidate ourselves. The market is growing quite well and our strategy is for at least 10% of the group’s turnover to come from the Portuguese market. We have been around for many years and there is little left to be mature. We are very happy. We have 320 stores.
Has the arrival of Mercadona affected you?
No. We are in proximity and our market share is 2.3 or 2.35 at the national level. If we go to an area of less than 300 m2, the market share shoots up to over 20%. They are different models. They are large surfaces, and we are SMEs that are more in the rural part, but also in cities.
What will the Covirán of 2021 that will celebrate its 60th anniversary be like?
Hopefully it will be a more communicative Covirán. We have not communicated everything we do. The people closest to us know us, but there are many people who do not. In this pandemic we have detected it by the entry of many new consumers who did not know us. It is also going to be a supermarket that will bet on innovation, modernization and social action by creating local employment or revitalizing the rural part.