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Carrefour history and retail

Carrefour history and retail

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Carrefour history and retail

  1. 1. Carrefour Carrefour Retail By: Aamir Ansari
  2. 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. 3. History The Carrefour company is created by: - Marcel Fournier - Denis Defforey - Jacques Defforey
  4. 4. History •Carrefour opens its first supermarket in Annecy, Haute-Savoie • Promodes is created by a merger
  5. 5. History Carrefour invent a new store concept: the Hypermarket
  6. 6. History •Carrefour introduces “produits libres” - unbranded products but “just as good and cheaper” • Carrefour gets listed on the Paris stock exchange
  7. 7. History •Carrefour brand-name products are introduced. •Launches Carrefour insurance service
  8. 8. History •Carrefour creates “filiere quality systems” - guarantees product origin and traceability •Takes a controlling stake in Comptoires Modernes •Carrefour and Promedes merge
  9. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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

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