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Eco123 Revista da Economia e Ecologia
ECO123: You were the first owner of an Intermarché supermarket in Portugal, in Guarda and you are currently the owner of the Intermarché stores in Monchique, Lagoa, Porches and Messines. What corporate social responsibility do you practice?
Philippe Bourroux: That of managing to ensure each store balances its books with the primary objective of paying all members of staff. At this moment, we employ around 250 people with paying salaries highly difficult. However, socially, the role of a supermarket is to locally provide all of the products that people need to live. Such as, for example in places like Monchique, which is far from anywhere with its location up in the hills 30 kilometres from Portimão. I believe that the Intermarché in Monchique created a place of activity in the life of this town.
And what about local production?
I would very much like to work more with local producers. I am trying to distribute local products such as medronho spirit, honey and porco preto meat. It would be very good to expand this to local fruit and vegetables. However, there is one important problem: the product supply chain. Monchique, for example, lacks a cooperative able to centralise all of the production of the small producers around the area of Monchique so that we, the supermarkets, irrespective of the cost of production, might work not with various suppliers but with a single cooperative.
I would very much like to work more with local producers. I am trying to distribute local products such as medronho spirit, honey and porco preto meat.However, there is one important problem: the product supply chain.
What type of ecological responsibilities does a supermarket owner take on?
Nowadays, the large scale distribution sector is not entirely focused on ecology. We are selling packaged goods and correspondingly resulting in many tons of waste, which might be effectively recycled but we also know that our society still has a major problem with recycling waste. I think that in terms of supermarkets, we are not yet ready to go fully green. Clearly, in the future, we shall increasingly have to and show the will to adopt different forms of distributing products in bulk in order to simply sell only the product and not all the marketing around the packaging.
Were a supermarket to procure everything locally, there would be less plastic material. Thus, customers would buy and not need to throw anything away?
Effectively speaking, I think the supply chains do have to be involved. Altering our way of consuming might mean selling products without the conditioning necessary to that other way of purchasing them! We would have to come here with a box to put our products in if they are not properly packaged. Let us take rice being sold in bulk: we end up putting the rice into a bag and we’re back to the same situation. Otherwise customers would have to come here with a container for each production. That would be a rather different way of thinking abut consumption. Supermarkets will not be able to change this on their own. In general terms, there has to be a change in consumer mentalities.
Don’t supermarkets, along with all other participants in society, not hold responsibility for setting a good example? Such as ending with plastic bags at the checkout?
Given the current level of competition in the retail sector, a supermarket alone cannot make that decision! That kind of decision should come from above. As happened in France a short while ago. There, they passed a law definitively banning plastic bags.
That’s good. But what are we doing here in Portugal?
I think that this law will also reach Portugal. However, as the plastic bag is an easy solution for the client… In conclusion, I would imagine that any supermarket that decides on this alone with the current level of competition will simply see consumers going to wherever they still get given plastic bags.
I do not buy my things for the plastic bag…
I’m referring to the majority of customers that do not share your same attitude. The majority are saying that in Intermarché you pay for the bags but not at its competitors. There is still one chain today that does not charge for bags.
That’s why I avoid going shopping at the competition. And I also like buying water in glass bottles. However, I cannot find that option here. Is there any reason?
I cannot get you glass bottles of water on my own. To have that option, I first need to be supplied with that product. And in this case, my procurement centre cannot buy this product and hence I cannot sell it. There should be some central organisation doing the management of this distribution and collecting the bottles with deposits on them as happens with beer.
Avoid more waste and launch a bottle deposit system.
There are cases such as Belgium where there is a lot more usage of bottle deposits than in Portugal.
In France they also do something else: “inglorious foods”. That is, food outside the standard, the wrong shape or size. How can we do this in Portugal?
I’ve seen that. Let me tell you something: I’ve been in the distribution sector in Portugal for 23 years and, when I started out, all of the Portuguese fruit production was ugly in appearance. And since then, all of the country’s producers have changed significantly to transform the type of product supplied. In order to attain quality and a good appearance. And now you are saying that we should go backwards! That would seem a little…
I did not say that but I’ve always purchased and grown ugly fruit or that has fallen from the trees.
Many of the Algarve’s oranges are ugly – not all of them, but many. Certainly more than those from Spain. In Lagoa, for example, there are lots of tourists and they buy the oranges from the Algarve. Because they are tastier. In conclusion, the appearance of the fruit is not the most important factor. It is important because purchasing something with a good appearance gives pleasure but the product quality is more important. While it may be ugly, its quality level should be impeccable.
And do you sell them here?
Of course. We sell oranges, lemons, potatoes. However, the products, when they are good quality and the client knows this, whether or not they look perfect, still get purchased. Local products that customers know are good quality, they get bought.
What about products that don’t get sold. What do you do with them?
Firstly, the products that are not sold by an operation like a supermarket represent an important cost. The manager of any store holds responsibility for minimising that cost. Our objective is to minimise to the maximum any such wastage.
How many tons of products do you throw away annually?
I am not able to tell you.
As a percentage?
The percentage is…
20, 30, 50%?
We are working with a profit margin of 15%. We could never incur 50% of breakages. In the case of yoghurts, for example, there is a 2% waste rate.
And how do they get thrown away?
There is a company that deals with these dairy products. Because even when the product has gone past its sell-by date, it’s still perfectly edible for the next 10 to 15 days but I do not have the right to deliver it to persons or associations in need of them. After all, in the case of any accident when any product past its sell-by date is given by me for consumption and does harm to a person, then I’m responsible for that.
However, could you not sell it off at a much cheaper price prior to reaching the expiry date?
Yes, but the volumes I have are not significant for doing this. When referring to volumes of 1, 2 or 3%, they are not particularly significant. Cauliflower, for example, is also at this 1 or 2% breakage rate. Because they are not pretty to consume.
In the meat and fish sections as well?
In terms of meat, what essentially gets thrown away are the fats. The main objective is never to put anything in the rubbish!
However, the expiry dates also end on such products? What do you do with them?
You should come in and manage the supermarket! In meat, we do not have any wastage. Normally, with a good lead butcher, you don’t get any waste. If I do, then that butcher is clearly not up to the job. Because we do not wait for the meat to go off. We make daily orders for delivery on the next day. In conclusion, we always have new meat arriving. Beef lasts five or six days before beginning to go off! It is not just a single day to sell it in. What I mean, is that what goes into the bin are just the fats and parts we do not consume.
And how about the fish? Is that much more difficult as you only have one or two days?
Yes, fish is far more difficult to manage with accuracy but we always strive to ensure we don’t have leftover supplies going into the waste. Our main objective is not having any wastage. With a profit margin of 15%, were we to incur a waste margin of 2%, we would only be returning a profit of 13%.
Could you explain your 15% profit margin?
The operating margin that is the difference in the price of sale to the public and the price of wholesale purchase minus VAT. Whenever you spend 100 euros in a store, 85 go to purchasing the product and 15…
… is the profit?
No, not yet. First you have to deduct all of the costs incurred. Staff, electricity and so forth…
There was a time when some of my competitors gave the idea that they were working with margins of 50% to 70%. I would be very rich were such the case and instead I’m experiencing difficulties in paying all my staff. Such just is not the case.
Out of personal experience, I know that here in the store, you purchase drinks for €2.50 and sell them for €5.
We are also buying products for one euro and selling them for one euro. In sum, talking about operating margins refers to an average for the supermarket. Fula cooking oil is a hyper-psychological product and all retailers are selling a litre of Fula oil and making precisely zero. You don’t make any money out of Fula oil. And there are many things like that. Rice only has a margin of between 2% and 4%. There was a time when some of my competitors gave the idea that they were working with margins of 50% to 70%. That they were therefore able to provide discounts with these percentages to their clients. No, this is not possible. And it’s also not true: distributors and stores are not working with margins of 50%. I would be very rich were such the case and instead I’m experiencing difficulties in paying all my staff. Such just is not the case.
People tend to think supermarket owners are very rich. That there are big profit margins on foodstuffs.
The supermarket here in Monchique is only now breaking even. You can check that with my accountant.
Recapitulating: what can a supermarket such as Intermarché do to make the future a better place? What does 2015 hold in store?
I am ready to do anything to try and evolve but I do need external help because I do not personally have the right ideas for this. Because I am in my world of distribution which functions according to my obligation to buy from the company procurement centre. And we don’t have much scope for getting away from that.
What does evolve mean? Might you tomorrow begin selling meat that has not been industrially slaughtered?
The main problem is that, according to the law and especially health and safety requirements, we are forced to sell meat slaughtered by official slaughterhouses. Everything gets rather complicated when saying that the meat did not come certified by an official entity. Monchique has plenty of porco preto production and I’ve been here for two years and have not yet been able to sell a single Monchique pig. I don’t have a single pig breeder wanting to sell me produce to sell in my store. That’s true. In order to have porco preto on sale, I have to buy it from my suppliers who do not source their produce in Monchique. I wanted to get Monchique porco preto on sale in my store but I have not been able to for the last two and a half years.
In addition to porco preto, are there also other things, such as potato and lemon?
Potatoes, we do sell some of them and we do always have Monchique potatoes. The problem is the quantity produced.
Do you have any other idea that you have not yet been able to do in the supermarket? An improvement that you would like to see happen? Or is everything running well?
Everything is operating according to the norms of contemporary distribution. Our difference is that we have independent owners for each store. We have a certain degree of liberty to do things locally. I have done various things but the most important is that there are also local producers with the will to reach agreement first with each other and then subsequently with me. There is simply not the means to function with 50 different producers and suppliers of the same type of product. We don’t have the structure for that and I would not know how to begin. In conclusion, this is not just about my own personal will, there has to be movement from the other side as well. I would like to sell Monchique porco preto in my Monchique store! I would like to find a breeder who turns around to me and says: “Let’s find a solution”.
Perhaps the breeders only want to protect their business and their butchers?
In reality, there are five companies making porco preto products in Monchique. All of them have fresh pork but not one of them wants to sell any apart from their products and for their outlets. And I don’t know how to change that.
A self-evaluation? On a scale from 0 to 20, how would you classify your satisfaction?
15.
Thank you for talking to us.
