Carrefour

Background

A French international hypermarket

chain
Headquartered in Levallois-PerretFrance
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

History

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

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

History

Carrefour
invent a new
store
concept:
the
Hypermarket

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

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

History

Carrefour
creates
filiere quality
systems guarantees
product origin and
traceability
Takes a
controlling stake
in Comptoires
Modernes
Carrefour and
Promedes
merge

History

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

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

Corporate Structure
Lars Olofsson
CEO and Chairman of
Carrefour

Pierre-Jean SIVIGNON,
Chief Financial Officer

Nol PRIOUX,
Executive
Director France

Thierry GARNIER,
Executive
Director China
and Tawan

Eric LEGROS,
Executive
Director Group
Merchandise

Jos Carlos
GONZALEZHURTADO, Chief
Commercial
Officer

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

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

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

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

Power of Buyers - Average

Buyers are very important to the retail
industry
But no single buyer purchases enough to
impact the industry
Important to know buyers taste and
preferences
Special promotions and discount decrease
buyers power

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

Intensity of Rivalry -High

Numerous or equally balanced players
Rapid Industry Growth
Storage Costs and Fixed Costs
High Strategic Stakes
High Exit Barriers

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

Business Level Strategy

Hypermarket Less cost, more variety of
products, low to mid level quality
Supermarket Low cost, one stop shop for
households 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

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

1) Walmarts low prices biggest

threat
2) New players/ Local players in
the industry
3) Less knowledge of Asian
countries
4) Slow expansion outside France

1) Joint ventures and acquisition

for more expansion
2)Discount stores development
3) Improve sale performance
4) R&D in marketing

SWOT
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) Largest hypermarket chain in

terms of size
2) Second highest revenues
3) Joint ventures in various
countries
4) Strong private label

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%

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