Carrefour

Carrefour

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

Background

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.

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

History of Global footprint

Lars OlofssonCEO 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

Corporate Structure

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

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

Overview of Carrefour

Barriers to entry : 1) Product differentiation –All consumer goods under one roof2) Economies of scale -Operates 10,378 stores in 29 countries3) 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

Threat of New Entrant - 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 Suppliers - Low

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

Power of Buyers - Average

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

Threat of substitutes

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

Intensity of Rivalry -High

A hit with customers: One-stop shopping Extremely low prices Full range of choices High quality of productsFrom a business perspective: Seamless capture of international markets Resource integration High level of local sourcing

Key Success factors

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

Business 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

Corporate Level Strategy

1) Largest hypermarket chain in terms of size2) Second highest revenues3) Joint ventures in various countries4) Strong private label

1) High operating expenses2) Weak positioning in Asia and middle east3) Expansion plans taking too much time4) Poor E-commerce performance

1) Joint ventures and acquisition for more expansion2)Discount stores development3) Improve sale performance4) R&D in marketing

1) Walmart’s low prices biggest threat2) New players/ Local players in the industry3) Less knowledge of Asian countries4) Slow expansion outside France

SWOT

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%

Current Challenges faced

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

Recommendations