DRAFT: This module has unpublished changes.

  

   Carrefour S.A is a French multinational retailer headquartered in Boulogne Billancourt, France. It is the largest retailer in Europe and the second largest retailer in the world, after Wal-Mart. Carrefour is based mostly in Europe; however, the company is also located in four of the seven continents. These areas include: the Americas, Africa, Europe, and Asia. Carrefour has been on the rise in expanding into many new areas and has a focus on new and emerging markets. Carrefour means "crossroads" in French.

  Carrefour is a hypermarket that specializes in grocery and retail items. These items include: hardware, clothing, perishable and non-perishable food items, and a variety of other household items. Carrefour’s networks relating to various retail businesses include supermarkets, hypermarkets, discount stores, convenience stores, online stores, and electronic commerce.

Carrefour has over 11 thousand stores in the world. In 2004, the company’s sales reached 81.3 billion Euros, and were reported as 22nd of the top 500 fortune companies in the world by Fortune magazine.

 

   In the 1950’s, after the Second World War, because of France’s good cuisine, the business of food retailing developed rapidly. At that time, two French businessmen, Marcel Fournier and Louis Defforey caught this opportunity and entered into the market. In 1959, the Fournier and Defforey families opened the Carrefour Company in France, and in the second year they set up the first supermarket in Annecy, Haute-Savoie. This supermarket attracted a lot of consumers because of its lower price, self-service, and good location compared to other retailing stores. In 1963, a challenging idea was born. These two businessmen built a new market, which not only included food merchandise, but also involved life necessities, parking services, gas services and shopping centers. The scale of this market was the largest one in French history, and it was so-called the father of today’s hypermarket. After that, Carrefour’s business developed increasingly rapidly. In the 1960’s and 1970’s, Fournier and Defforey tried to improve the market by adding some more convenience service, and lower the price. In fact, they made it and became the winners. During those years, the hypermarket was pretty popular in France.

  Later, Carrefour’s boom made other small retailing business face closing down. Its scale expanded larger and larger, and the government had no choice but to set a growth limitation to protect small retailing businesses. So, Carrefour and other large retailers had to seek other opportunities to make profit. Carrefour sold its stock to the public and tried to open its overseas market. In 1969, the first hypermarket, which opened outside France by Carrefour, was in Belgium. Carrefour’s early plan of internationalization was successful. All of its overseas hypermarkets ran well and made profit. In France, Carrefour is still the leader of retailers.

 

  In 1989, Carrefour opened the first hypermarket in Asia, in Taiwan. It meant Carrefour began to enter into the huge Asian market. Asia’s success encouraged Carrefour to expand its market outside France; however, Carrefour experienced its first failure in the United States. In the 1990’s, Carrefour opened a new large store in Philadelphia. The huge market couldn’t attract American’s attention because of its poor advertisement, and only 2 years later, a strike started by labor unions led Carrefour in Philadelphia to a recession.

 

 In 1991, Carrefour opened another store in New Jersey, but unfortunately again, Carrefour couldn’t make money from the U.S.A. America had already had various merchandises, and the style which worked well in France didn’t mean it would fit America. In 1993, Carrefour was forced to close these two stores in America. Except in the U.S.A, Carrefour’s global expansion was almost successful. In 1993, Italy and Turkey had their first Carrefour hypermarkets. The next year, Carrefour opened another two hypermarkets, one located in Mexico and the other in Malaysia. In 1995 Carrefour began to enter into the huge market in China mainland, and in 1996, Carrefour expanded Asia’s market by creating stores in Thailand, Korea, and Hong Kong.

 

At the end of the 20th century, Carrefour had already been the largest retailer in

 

Europe and the second in the world. Its most important competitor was Wal-Mart. This is also the significant reason why Carrefour couldn’t enter into the U.S. Region.

 

 

 

   The strengths of Carrefour: it's large size (no. 2 worldwide) and strong market share in areas where the group is present; clear strategy of conquest of market share, ambitious investment plan and strict policy of cost control; relay for international growth, which represents more than 50% of sales of the company, particularly through the liberalization of certain markets such as India; focus on areas where the company is strong.

  A weakness is that Carrefour has its own brand name products. This increases consumers to lose trust with the company. Other weaknesses: competitive and difficult environment in Europe; including high pressure on prices and margins in France which represents nearly half of the group sales; duty of heavy investment for growth; repositioning strategy prices affecting operating margin; uncertainty about the success of the investment plan; exposure to emerging markets and foreign exchange movements.


 

   Carrefour operates in 29 countries around the world. World population is rising, geographic distribution of populations is shifting, ethnic mixes in developed countries are changing rapidly, and average household incomes are increasing. The demographic environment presents both opportunities and threats for Carrefour. Increases in population size and household incomes help to expand the market in which Carrefour operates. However, changes in the geographic distribution of populations, due to technological advances in communications, may cause difficulties for Carrefour in determining profitable locations for new storefronts.

 

  In 2004, there was substantial economic growth due to near-record low interest rates in the United States, resulting in substantial growth in global trade. This growth was tempered by high oil prices.The economic environment presents both threats and opportunities for Carrefour. Growth in global trade presents opportunities for Carrefour in identifying new products and services to offer to its customers. High oil prices, however, threaten Carrefour’s profitability by increasing the costs of transportation for goods destined for Carrefour’s warehouses and storefronts.

 

 

 

   Carrefour faces a great deal of competition. This competition includes both indirect and direct competition. Several indirect competitors of Carrefour are convenience stores, grocery stores, and shopping centers. Convenience stores offer general merchandise and various supermarket items, much like Carrefour offers. Because many people fill their cars with gas at these stores, individuals enjoy the convenience that these stores offer. However, convenience stores do not offer the wide variety of items that Carrefour sells. Also, shopping centers are a competitor with Carrefour. At these shopping centers, customers are able to purchase clothing and general merchandise. Many people choose to shop at shopping centers for their variety of items all in one location; however, shopping centers do not always have discounted prices like Carrefour does.

 

Grocery stores are another area of competition for Carrefour. Both grocery

 

stores and Carrefour sell food items; however, it is still easier and more convenient to go to a store where shoppers can have a one-stop-shopping experience, much like Carrefour, which has more than 100,000 items in stock under one roof.

 

  Direct competition is also quite fierce for Carrefour. One direct competitor is Auchan. Auchan is a French grocery chain that is growing at a rapid pace and is expanding into Central and Eastern Europe. E. Leclerc is another competitor of Carrefour. E. Leclerc is a cooperation of over 550 food retail franchises, mostly in France, but spread over Spain, Italy, and Portugal, and now moving into Eastern Europe. In addition to food products, E. Leclerc also sells clothing, making the company a major competitor with Carrefour.

 

  The world's number one retailer and the most famous competitor of Carrefour is Wal-Mart. Carrefour has a one-stop shopping center for their customers, the lowest prices possible, fresh produce and is a self-served shopping center in a hypermarket with free parking. Carrefour also has been expanding to foreign markets at a quicker and more flexible rate than Wal-Mart. Wal-Mart, on the other hand, insists on the lowest prices every day, to carry out total solution services, effectively control the cost of global logistics, and powerfully motivated employees that work and share knowledge and who adopt a play-safe strategy in internationalization. When considering international business, Carrefour is much more experienced than Wal-Mart. In Asia, Wal-Mart’s sourcing is localized. This localization allows Wal-Mart to meet customer’s needs and it also lowers the lead-time and the delivery costs.

 

   Though it encounters some threats from both itself and the retail industry, at home as well as overseas, Carrefour is quite confident of its ability to maintain current advantageous market share, and even try to substitute Wal-Mart to be the largest. As a whole, Carrefour has done a great job. However, Carrefour also has noticed that some harmful problems are still suspending. How to solve them becomes the priority of the company. Carrefour faces a great deal of competition, not just from retail giant Wal-Mart, but also from convenience stores, grocery stores, and shopping centers. The competitors of Carrefour are many, however, besides Wal-Mart, they do not have what Carrefour has to offer. To customers, Carrefour offers convenience, variety, low prices, and over 100,000 items under one roof.

 

  Carrefour stores are not only large in size, but the expansion all over the world is also remarkable. It is moving forwards quickly and there are major plans and a large new market in the works. Carrefour stores are very reactive and are expanding very quickly. Carrefour may be the world's second largest retailer; by implementing strategic plans and setting high expansion goals, Carrefour will give Wal-Mart the fiercest competition possible.


 

   Carrefour is first known for its creative store format – the hypermarket, which provides an extraordinary diversity of products under the concept of “everything-under-one-roof”. So far, hypermarkets have always been the most profitable division for Carrefour. In 2005, hypermarkets accounted for 58.8% of net sales. Carrefour chooses the sites that are “located in the center of broad catchments areas, and will often be important drivers of traffic in the area around them.” Carrefour has a large economic scale, especially in Europe, Asia, and Latin America.The major element of Carrefour’s success is that the setting-up new ones’ speed and the total number of stores have far surpassed others; even Wal-Mart, the largest in the world, can not compete with it. Therefore, Carrefour can always keep its operating cost low, and it can have competitive low prices.

 

  Though it is the second largest retailer in the world, Carrefour is particularly concerned about global expansion. According to the statistics in 2003, Carrefour “won 50% of its sales in the international checkout in 29 countries”, while Wal-Mart, the world largest retailer, just “got 16% of their sales outside of home’s shopping aisles and had a presence in only 11 other countries”. Today it still holds the priority of extensively opening new stores, especially in the Chinese market. So far, Carrefour has 75 stores in China, and it is said that it is to open 60 more in the next 3 years.


 

   In March 10, 2005, Carrefour announced its withdrawal from the Japanese

 

market after only four years. Carrefour was hoping to take over Japanese consumers by offering a more sophisticated image, and more international groceries than traditional Japanese supermarkets. Instead, it could not survive. The traditional method of discount sales through volume purchasing is not favored by Japanese consumers. In contrast, they greatly pursue distinctiveness and uniqueness. Thus, Carrefour could not attract a majority of Japanese consumers and had to pull out of the valuable market.

 

  Japan is not the only country Carrefour has withdrawn from. It is, in

 

fact, a strategy of Carrefour. First, from the company’s perspective, Carrefour has decided to shift its efforts from overseas to home base. Due to the terrible performance in France, the directors of Carrefour have suffered a lot of pressure. Thus improving the current situation has become the priority. Second, from the competitor’s perspective, Carrefour sold the stores to the local retailers instead of big ones, such as Wal-Mart, on purpose in order to ease the competition from them worldwide.

 

 

 

   Recommendations for the company: Carrefour could open a daycare. This could be a short-term goal of the company for the parents who would like to be able to shop without having to make sure their little ones don’t pull things off shelves. It would also take the pressure off of the parents, so they can have an enjoyable time at the superstore.

 

  A long-term goal for Carrefour would be to enter into Mexican areas. Even though the country has experienced difficult times in the past, there is still potential for Carrefour. In the past five to six years, the Mexican economy has shown signs of stabilization, growth, and more predictable governmental actions. Moreover, the increasing spending power among Mexican consumers has spurred a heavy demand for choice and foreign goods. Currently, Mexico has 26 Carrefour hypermarket stores. However, with the increasing number of illegal aliens coming to the United States for work, there is a clear demand for work in Mexico. For example, in 2004, Carrefour opened a store in Acapulco. The new hypermarket created 323 new jobs, with over 85% of employees from the local community. With an increase in Mexican jobs, like Carrefour, it is possible that more Mexicans will choose to stay in their country for work.

 

Wal-Mart, uses the price strategy labeled “every day low price”. Thus, Wal-Mart seems more attractive in normal time, and in the long-term, the current strategy will impair Carrefour. In order to overcome this drawback, Carrefour has to figure out something innovative to draw customers’ attention.

 

 Additionally, Carrefour can come up with a membership. The more goods customers consume, the higher level they are in the membership, and the more benefits they can get.

 

 

 

 

 

 

 

 

 

 

DRAFT: This module has unpublished changes.