Carrefour history and retail

1. Carrefour
Carrefour Retail
By: Aamir Ansari

2. Background
 A French international hypermarket chain
 Headquartered in Levallois-Perret-France
 11,000 stores
 More than 32 countries and areas
 Over 495,000 employees (2009)
 Sales: 112.245 billion euro in 2010
 4 store formats
- Hypermarkets
- Supermarkets
- Convenience
- Cash&carry

3. History
The Carrefour
company is created
by:
- Marcel Fournier
- Denis Defforey
- Jacques Defforey

4. History
•Carrefour opens
its first
supermarket in
Annecy,
Haute-Savoie
• Promodes is
created by a
merger

5. History
Carrefour
invent a new
store
concept:
the
Hypermarket

6. History
•Carrefour
introduces
“produits libres” -
unbranded
products but
“just as good
and cheaper”
• Carrefour gets
listed on the
Paris stock
exchange

7. History
•Carrefour
brand-name
products are
introduced.
•Launches
Carrefour
insurance
service

8. History
•Carrefour creates
“filiere quality
systems” -
guarantees
product origin and
traceability
•Takes a
controlling stake
in Comptoires
Modernes
•Carrefour and
Promedes merge

9. History
Carrefour
group adopted
a new
governance
structure with
leading to a
more fluid and
effective
operation able
to respond with
greater speed.

10. History of Global footprint
 1969- the first overseas hypermarket was built in Belgium.
 1973- hypermarket in Spain
 1975- hypermarket in Brazil
 1982- hypermarket in Argentina
 1989- first hypermarket in Asia, in Taiwan
 1990- first hypermarket in Philadelphia, United States
 1991- second hypermarket in New Jersey
 1993- first hypermarkets in Italy and Turkey.
 1994- first hypermarkets in Mexico and Malaysia
 1995- first hypermarket in China mainland
 1996- hypermarkets in Thailand, Korea, and Hong Kong

11. Corporate Structure
Lars Olofsson
CEO and Chairman of
Carrefour
Noël PRIOUX,
Executive Director
France
Thierry GARNIER,
Executive Director
China and Taïwan
Eric LEGROS,
Executive Director
Group
Merchandise
José Carlos
GONZALEZ-
HURTADO, Chief
Commercial
Officer
Pierre-Jean SIVIGNON,
Chief Financial Officer

12. Financials
Year Revenues Profit
2008 89 billion Euros 382 million Euros
2009 87.2 billion Euros 385 million Euros
2010 87 billion Euros 1.87 billion Euros

13. Overview of Carrefour
 Primarily a hypermarket, but also operates
supermarkets, hard discounts, convenience stores
 No. 1 retailer in Europe and China in terms of size
 Reputation of variety, freshness and low price

14. Threat of New Entrant - Low
 Barriers to entry :
1) Product differentiation –All consumer goods under one roof
2) Economies of scale -Operates 10,378 stores in 29 countries
3) Switching Costs - Promotions, discounts, partnerships, credit program increase
switching costs for consumers, suppliers, and partners alike
4) Access to Distribution Channels – Very difficult for new entrants to get access
to new channels
 Expected Retaliation - Vigorous retaliation can be expected when the existing
firm has a major stake in the industry, when it has substantial resources, and
when industry growth is slow or constrained

15. Power of Suppliers - Low
 Supplier groups are less concentrated
 Many substitutes available to the firm
 Retail giants important for supplier groups
 Minimum threat of forward integration from
suppliers

16. Power of Buyers - Average
 Buyer’s are very important to the retail industry
 But no single buyer purchases enough to impact the
industry
 Important to know buyer’s taste and preferences
 Special promotions and discount decrease buyer’s
power

17. Threat of substitutes
 This depends on region or country of operation
 Generally low – promotion and services increases
switching costs – tailoring to local needs
 Culture dependent – Mom and Pop store more
popular in Asian countries

18. Intensity of Rivalry -High
 Numerous or equally balanced players
 Rapid Industry Growth
 Storage Costs and Fixed Costs
 High Strategic Stakes
 High Exit Barriers

19. Key Success factors
A hit with customers:
 One-stop shopping
 Extremely low prices
 Full range of choices
 High quality of products
From a business perspective:
 Seamless capture of international markets
 Resource integration
 High level of local sourcing

20. Business Level Strategy
 Hypermarket – Less cost, more variety of products,
low to mid level quality
 Supermarket – Low cost, one stop shop for
household’s needs
 Hard Discounts – Lowest cost, products with high
shelf life and bulk buying
 Free Shuttle Services – Differentiation, increasing
the reach of products
 Child Play Areas, Home Delivery, Cultural Center,
Free Credit, Themed Corners

21. Corporate Level Strategy
 Value Creating Diversification
 Economies of scope:
 Sharing Activities
 Transferring Core Competencies
 Market Power – Vertical Integration
 Financial Economies – Efficient Internal Capital Market Allocation
 Value Neutral Diversification – Low performance, Uncertain Cash Flow,
Synergy
 International Level Corporate Strategy
 Transnational Strategy – Global efficiency and local responsiveness.
Combination of multi-domestic and global strategy.
 Entry Mode – Initially Strategic Alliance, later on wholly owned subsidiaries

22. 1) Largest hypermarket chain in terms
of size
2) Second highest revenues
3) Joint ventures in various countries
4) Strong private label
1) High operating expenses
2) Weak positioning in Asia and
middle east
3) Expansion plans taking too much
time
4) Poor E-commerce performance
1) Joint ventures and
acquisition for more expansion
2)Discount stores
development
3) Improve sale performance
4) R&D in marketing
1) Walmart’s low prices biggest threat
2) New players/ Local players in the
industry
3) Less knowledge of Asian countries
4) Slow expansion outside France
SWOT

23. Current Challenges faced
 In China
 Govt. has stopped preferential treatment
 Rental prices high in Tier I cities
 Expansion plans halted
 In Europe
 Fall in operating profits
 Non food spending down by 10%
 Overall sales down by 4.4%

24. Recommendations
 Continue the practices that have been successful
 Leverage knowledge of international market and
expand into emerging economies
 Find innovative ways to improve products and
services
 Be vigilant about threats to its operations