Success of Carrefour

Introduction

As the world leader in retail industry, the Carrefour Group, through over fifty years of dedicated efforts, is now the largest retailer in Europe and second largest in World. Since established, through a process of merge and acquisition, Carrefour has already expanded its market to different retail scales around the global, which includes hypermarket, supermarket, cash&carry and convenience stores. According to the financial report of Carrefour group, by the end of 2012, it had already generated 101. 3 million Euro of sales under banners.

Moreover, it opened 9,994 stores from different scales in 33 countries globally. Therefore, it is not surprise to find it has over 100 million customers world widely. Carrefour has its clear mission adapting different cultures, which includes to promote quality for everyone and ensure the safety of its products, meet all the expectations of customers and to provide customers with freedom to choose with specific ranges of Carrefour products. On the way to accomplish their mission, marketing strategy are implemented orderly by Carrefour group.

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As Cambra-Fierro and Ruiz-Benitez (2011) illustrate in their research, the basic strategy of Carrefour is making this brand globalized, through establishing as its main axes on the client and a full local adaptation and integration. No matter where Carrefour expands to, the commitment to local economic environment is an unchangeable strategy for Carrefour. Carrefour is also famous for training local staff and manager which can adapt to native environment more quickly. According to the key figures of Carrefour, it now has 360,000 employers world widely, and these employers are naturally sensitive to local consumer behavior.

It is evident that Carrefour obtain a huge success in China since it was embrace by As statistics shown in Chuang ,Wei, Donegan, & Ganon’s report(2011), by 2009, Carrefour ranked 7th among all chain stores in China with CNY? 36,600m in sales. When people are applauding for Carrefour’s victory, the whole retail industry is wondering the reason behind its success. Therefore, this proposal is aiming at illustrating a framework with the case of Carrefour, investigate the reasons contributed to its huge success, and detect whether this model is applicable to the whole industry and make the whole retail sector better off. . Brief History of Carrefour The Carrefour Company was created by the Fournier and Defforey families in 1959. In 1960, the first Carrefour supermarket was opened in Annecy, a city in eastern France that had become increasingly industrialized since World War II. From this first outlet, Carrefour changed itself into a worldwide entity with more than 15,600 stores pning 34 countries around the globe. Between 1961 and 1962, business at Carrefour increased 45 percent and salaries increased as well. In 1963, Carrefour created a new shop concept known as the hypermarket.

In 1970,Carrefour went public and Carrefour shares were listed on the Paris stock exchange. In 1976, Carrefour introduced its own production under no label. They assured that “Just high quality product for low price”. Between 1978 and 1982, the greatest number of new Carrefour stores was established outside of France, especially in Latin countries. Profits proved high at its stores in Brazil, Argentina, and Spain. In the 1990s, expansion in Central and South America was extremely strong. Carrefour moved into Mexico in 1993 and opened the first chain hypermarket.

By 1997, Carrefour operated about 60 stores in South America and was generating $7 billion in sales in Brazil and Argentina. In 2000, Carrefour merged with Promodes SA to become the largest European food retailing group (second largest worldwide). Carrefour also became Europe's leading operator of supermarkets, convenience stores, discount stores, cash-and-carry outlets, and hypermarkets. With more than 8,800 stores in 26 countries and revenues of nearly $65 billion, Carrefour entered the new century on solid foundation. While management worked on the merger integration process, the company remained focused on growth.

At the same year, it formed Global Net Exchange, an online supply house, with Sears and Oracle. Between 2001 to 2007,Carrefour continued the acquisition of hypermarkets in different countries and experienced continuous growth in all markets. In 2007,a New Era began in Carrefour history. A new home furnishing and decorations line was introduced at Carrefour and Carrefour became the sole distributor of Dell products in Europe. 3. MISSION As Europe’s leading mass retailer, and number two in the world, the Group comes into contact with thousands of suppliers and millions of customers very year, enabling it to promote responsible, quality consumption at low prices through the Carrefour product range. 3. 1 Promote quality for everybody and ensure the safety of our products. Carrefour has adopted an approach through the creation of its private labels which are now commercialized in the majority of the countries in which this firm is present to ensure the safety of their products. The approach is based on the implementation of private standards defined and owned by individual retailers.

These private standards prompted the retailers to establish relatively formalized contractual relationships with producer organizations, and to decrease the utilization of spot markets. As a result, the creation of vertical alliances between producers, manufacturers and retailers has proven to be an important mechanism in the regulation of agricultural product food chains. This action is intended to structure the supply chain by obliging suppliers to meet production requirements related to safety, quality and environmental levels, which are more demanding than public regulations.

Accessibility

The group operates 9,771 stores (both company-operated or franchises) through four main grocery store formats: hypermarkets, supermarkets, cash ; carry, and convenience stores. Carrefour also sells food and non-food products through the e-commerce channel. In FY2011, the group strengthened its food e-commerce solutions in a number of countries. For instance, all stores of the group across Spain deliver the items ordered through internet to customer homes.

Carrefour Brazil’s non-food e-commerce site which was launched in 2010 is presently ranked among the country’s top six commercial websites. In FY2011, Carrefour France also launched a wide range of non-food products online, including household appliances, television, video, telephony and other high-tech products. In Greece too, the group has provided its customers a facility to purchase groceries and household appliances online.

Price

Carrefour's mid-range brand offers merchandise at price range which is 15%–30% lower than national brands. Provide customers with freedom to hoose with specific ranges of Carrefour products. Carrefour has more than 30 years of unparalleled experience in retailing private label products. The group makes use of an in-depth analysis of the purchasing habits and expectations of its customers in order to create its private label offerings. The Carrefour Discount brand carries discount products, consisting of 500 basic everyday products (including grocery, fresh and frozen products as well as non-food goods) at a low price range. The group also offers product ranges focused on more specific customer requirements.

The Carrefour Selection brand is positioned in the premium segment and the Carrefour Kids brand in the children's segment. Carrefour also offers authentic products from its regional brands ‘Reflets de France’ and ‘Terre d'Italia’ which include traditional Italian products. It also offers organic and environmentally responsible brands such as Carrefour ECOplanet in Italy, and Carrefour Ecobio in Spain. The group has established itself as a major retail player in organic farming products with an offering of nearly 2,300 food products throughout the world.

Carrefour—Marketing Strategy in China

Owing to the maturity of the European market Carrefour and unfulfilled foreign investment in other continents, Carrefour needed to seek for new markets, and one of the most important one is Asia, especially China- a market with huge potential. Therefore, in 1995, the Carrefour began it and, soon, it generate a huge success in China soon after its establishment domestically in China. Decentralized management is the biggest reason for Carrefour’s success in Chinese market. Carrefour has divided its Chinese market into four big regions ehich are east, south, north and middle China.

Considering of the legal issue and culture obstacles, the company chose the local partners, and even different partners in different regions, such as choosing partners in Beijing and Guangzhou represent north and south agency respectively. Carrefour has a clearly marketing plan in China by knowing well about Chinese national condition. Carrefour learned about Chinese market and found the preferences is even different in Chinese market according to different areas, such as Tsingtao beer is so famous in Tsingtao but in Beijing almost everyone drinks beer from Beijing.

Therefore Carrefour also needed to further adapt to local tastes and preferences in that area. EXAMPLE From the market in Taipei, it learned how Chinese people sold the fish. Carrefour hence adopted two strategies; selling fish alive and selling frozen fish. For those people live in coastal city, they prefer alive fish which right out of the fish tanks, while people live in west and middle, where is further away from coastal, prefer to buy frozen fish which can keep fish fresh. After Carrefour adapted to this concept it saw fish sales go up 30-40%.

Furthermore, Carrefour adapted to the local consumer and their shopping behaviors while merge the foreign culture into its culture style. The Chinese consumer likes to compare different brands, so Carrefour had distributed larger shelves in order to place all the different brands in one area so that the consumers feel more satisfied during choosing what they want to buy. Additionally, Carrefour introduced new products to China such as wine which was not regularly being consumed by the Chinese population, which changed Chinese consumers’ perception to some extent.

Carrefour did this by holding wine fairs and introducing to the Chinese how to drink the wine and what kinds of food it goes with. Since the taxes on wine imports were lowered, Carrefour was able to provide its Chinese consumers with cheap imported wines such as French wine. So more and more Chinese get use to the culture of wine. Through all these adaptations to local taste or by using its knowledge from Taiwan, Carrefour was able to successfully enter the Chinese market. Carrefour China is one of the biggest markets for Carrefour and as of December 31st 2009 China’s Net Sales were 3,473 billion Euros which showed a growth of 4. % from the previous year. Carrefour’s main competitor in China is Wal-Mart which has more bargaining power than Carrefour because of its big size. It was a successful idea when Carrefour introduced the fresh bakery concept in its stores. Unfortunately, Carrefour failed to include the Chinese deserts in its bakery section which its competitors did not. In order to stay competitive, Carrefour updates its strategy every three years since China is a market that is changing quickly.

Carrefour invests a lot of money into Human Resources in order to train employees just in order to stay competitive with those large retailers. The company also deals with retention differently than in Europe. For example, it invests a lot of money in its training and the employees need to sign a three to five year contract. If the employee wants to change to the competition he/she has to pay back the money for the training which is a lot. If employees stay with the company for five years they receive a big bonus. All these strategies turn to keep labor turnover very low.

Carrefour once faced a very difficult position. In April 2008, the Olympic torch relay was interrupted by Tibetan independence advocates in Paris where the protesters tried to get a hold of the torch from a wheelchair bound Chinese representative. Because of this, some Chinese activists have tried to boycott Carrefour stores because of its French roots. To manage its bad image, Carrefour has taken multiple actions. First, to make better relations with its suppliers, Carrefour started financing programs for smaller suppliers allowing them to apply for loans with Deutsch Bank.

The company has also created a mailbox and hotline for suppliers to report any corruption and has personal investigators to go after such malpractices. In order to seek better relations with its employees, Carrefour has increased its communication with its employees and settled the disputes regarding overtime. Carrefour has also increased its fulltime employees’ salaries by 8% and put in place a minimum wage that is 5% higher than the local minimum wage. To eliminate its price differences Carrefour also promised to have regular internal price inspections.

Carrefour was ordered to correct its illegal prices and refund its overcharged customers. Carrefour China said that it would refund all of its customers who were charged more than the retail price.

Conclusion

Evaluation/recommendation Now we can draw a conclusion that the main reason of Carrefour’s success in China should owe to its sparing no effort to localization. It manifests that Carrefour try their best to follow the motto: “when in Rome, do as the Romans do” to grasp the Chinese customers’ needs accurately and then maximize their profits.

Why the Carrefour’s localization is firmly believed to be successful, here we can compared with another famous foreign retailer company Wal-Mart’s strategies in China. Firstly, let’s look at marketing strategies. Carrefour took the striving to develop in opening more stores as its primary target. In order to be faster than its competitors, Carrefour broke the routine procedure of opening stores instead of making the stores blooming everywhere. Now Carrefour has inished its strategic layout in the coastal cities and economic center cities of China on the whole that is faster than Wal-Mart for about two or three years, which helped Carrefour to save the time to adjust its management system. However, Wal-Mart chose to copy its suburbanization strategies totally in China from America. But it ignored the situation of Chinese that not every family can own a car. In addition, compare to Carrefour’s “crazy” expansion strategy, Wal-Mart performed a cautious and conservative attitude that it insists keep a foothold in Shenzhen but paced up and down at the southern part of China’s market.

So it missed the right timing to expand to the whole China’s market. The table below shows that the comparison between Carrefour and Wal-Mart. Due to the present situation, we can learn from that the number of stores can directly affect its velocity and time of making profit for foreign retailors in China. Besides, consistent with local circumstances is vital factor. Secondly, let’s look at localization in products. Carrefour attach great importance on choosing local products, and in Carrefour, half of manufactured food in the store accommodates local people’s tastes.

Not only that, Carrefour highlights all the local products in order to convenient to customers. Besides, Carrefour also purchases goods from farmers directly, which not only increases farmer’s salaries but also allows Carrefour to keep good quality with low price. From its behaviors we can learn that provide convenience to customers and meet customers’ needs well are good ways to attract customers and improve the customer loyalty. Thirdly, lets’ look at the localization in culture. Carrefour as a French company did a better job on human-based management. We can see it from its Chinese name “??? , which is very nice and localized. In addition, its slogan is happy at home and happy at Carrefour which also in keeping with culture value of its Chinese name. However, Wal-Mart is a little defective in this part. It is worth mentioning that every time Carrefour opened a new store, started new slogan, or other events, the Chinese media always give it enough focus and reports them on the internet, although there has also been negative news, it might reveal that Carrefour is good at attracting not only journalists’ attention but also that of local government.

Comparing to Carrefour, Wal-Mart seems to be more low-pitched that it is cautious to every action and looks like a merit student in China. This is right but is such an ideologism which is not to the benefit of advertisement to its potential customers. To sum up, Carrefour indeed provides certain valuable experiences to its competitors and it is worth to learn from such an outstanding company.

References

1. Presentation of Carefour. (2013). Retrived April 8, 2013 form http://www. carrefour. om/content/presentation-group
2. Cambra-Fierro, J. , & Ruiz-Benitez, R. (2011). Notions for the successful management of the supply chain: Learning with carrefour in spain and carrefour in china. Supply Chain Management, 16(2), 148-154. doi: http://dx. doi. org/10. 1108/13598541111115392
3. Ming-Ling Chuang, James J. Donegan, Michele W. Ganon, Kan Wei, (2011) "Walmart and Carrefour experiences in China: resolving the structural paradox", Cross Cultural Management: An International Journal, Vol. 18 Iss: 4, pp. 43 – 463
4. Zoe, Z. Y. (2012). Management strategies of Carrefour and Ito-yokado in china: A comparative study. International Journal of Business Anthropology, 3(1), 134-157. Retrieved from http://search. proquest. com/docview/1018555862? accountid=38789
5. Carrefour S. A. SWOT Analysis. (2013). Carrefour SA SWOT Analysis, 1-11. Article from http://wenku. baidu. com/view/c5d3b2c9da38376baf1faebc. html

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