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Carrefour

Carrefour

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Published by Jealous Farhat

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Categories:Types, School Work
Published by: Jealous Farhat on May 06, 2011
Copyright:Attribution Non-commercial

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03/17/2014

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Introduction
The worldwide expansion of 
Carrefour 
is the result of a structured approach. Since 1999, thegroup has drawn on its developments and acquisitions in its various businesses to implementa specific strategy, the so called ³
multi 
 
format approach
´. Over and above the synergiesbetween the formats, this
 
process creates an impetus for international expansion. The
 
establishment of hypermarkets in a particular country makes it possible to put in place thetools and processes necessary for further development (relationships with suppliers, logistics,marketing, etc.). The offer can then be extended progressively by setting up supermarketsand hard discount stores and, when the country is sufficiently mature, convenience stores.The multi format strategy thus leads to growth in global sales, improved purchasing conditionsand, of course, an increased market share in the countries concerned.The multi format approach is an essential means of securing market share in the variouscountries.
Carrefour 
tries to respond to the specific needs and shopping habits of localcustomers. The multi format approach contributes to the rapid expansion of the group. Itenables
Carrefour 
to transfer retail brands, while respecting the development of the tradingstructure of a town, region or ± even more common ± an entire country.
SWOT ANALYSIS
 
C
arrefour distributes groceries and consumer goods in 29 countries through more than10,000 stores. The company operates primarily in three formats, namely hypermarkets,supermarkets and hard discount stores. As the second largest retailer in the world thecompany enjoys a strong brand image and economies of scale yet the company hasseen stagnating sales in its domestic market of France in the last year.
 
Strengths
 
Weaknesses
 
M
arket leader 
 
Stagnant sales in France
 
 Aggressive marketing and adaptable business model
 
Declining profitability
 
Brand recognition
 
Losses for Ooshop.com
 
Focus on competitive prices
 
Increasing cash flows from operations
 
Opportunities
 
Threats
 
Strong growth potential in Asia
 
Stiff competition from discount retailers in France
 
New stores
 
Increasing labor costs in Europe
 
 Agreements with
C
oop Atlantique, Hyparlo and Finiper 
 
Poor retailing outlook in the Eurozone
 
Strengths
 
 
 
M
arket leader 
 
C
arrefour is the largest retailer in Europe and the second largest retailer in theworld. It is also the largest super-market chain in Europe. The company operatesprimarily in three formats namely hypermarkets, supermarkets and hard discountstores. The company¶s 6546 stores include 794 hypermarkets, 1495 supermarketsand 3888 hard discount stores besides 194 convenience stores, 175 cash and carrystores along with some mini markets and food service stores.
C
arrefour¶s leadershipposition in its three primary store formats helps the company maintain an advantagein the competitive retail scenario.
 
 Aggressive marketing and adaptable business model
 
C
arrefour concentrates on sustainable local development by means of providingprofessional training to its workforce to cater to the local market. Its retail formats areeasily adaptable in its various markets. The company has time and again displayedits ability to adjust its retail formats to suit the dynamics in a particular market, andthis, coupled with its aggressive marketing ability, has helped the company grow innew markets.
 
Brand recognition
 
Product positioning is thoroughly planned in each of 
C
arrefour¶s stores and this hasensured good brand recognition in all markets in which it operates.
C
arrefour operates its stores under 17 banners, including hypermarkets (
C
arrefour),supermarkets (
C
hampion, GB, GS, Norte), convenience stores (8 á Huit, SHOPI,
M
arché Plus), hard discount stores (Dia%, Ed), cash-and-carry stores (Promocash),mini markets (PROXi) and food service stores (Prodirest). Besides retailing thebranded products of renowned suppliers in its markets, the company sells productsunder many of its own brands including Destination Saveurs, Firstline, Produit
C
arrefour, Reflets de France, Topbike, Filière Qualité
C
arrefour,
C
arrefour Bio, GBBio, TEX, Souvenirs du Terroir, GB, GS, Escapade Gourmandes, Neufunk,Bout´chou,
C
icérone and Dia%. The company can boast of 90% brand recognitionrate, with its own branded products accounting for 18% of its worldwide sales. Thebrand salience for the company is high.
 
Focus on competitive prices
 
In each of its store formats,
C
arrefour maintains a strong focus on competitivepricing. In the hypermarkets segment, over three quarters of the company¶s storesoffer the lowest or the second lowest prices versus their local competitors. The sameis true for the company¶s supermarkets and discount-stores. During 2004, thecompany significantly reduced its prices, mainly in dry grocery products.
C
arrefour¶scontinued focus on offering competitive prices to customers has helped the companysustain its leadership position in a highly competitive industry.
 
Increasing cash flow from operations
 
 
For fiscal year 2004,
C
arrefour¶s cash flow from operations was E4.2 billion, anincrease of 13.1% over 2003. The free cash flow for the company was E1.7 billion,62.0% higher than 2003. The increase in operating cash flows was primarilyattributable to the increase in cash generated from the change in working capital. Thecompany¶s ability to generate higher cash flows from its operations suggestsincreasing operational efficiency.
 
Weaknesses
 
Stagnant sales in France
 
France,
C
arrefour¶s largest geographical market, accounted for 49.1% of the totalrevenues in the fiscal year 2004. However revenues from this market grew by a mere0.1% during 2004. This is largely as
C
arrefour has a relatively poor pricing imageamongst consumers in France. The company has tried to address this during 2004by cutting prices in all its stores, especially for dry grocery products. However, thecompany continues to witness stagnating sales in its domestic market.
C
arrefour¶sFrench market share has slipped, hurt by competition from closely held companiessuch as Le
C
lerc at a time when the French government is pushing retailers to cutprices.
 
Declining profitability
 
The operating profit of the company during fiscal 2004 was E4.9 billion, an increaseof 0.9% over fiscal 2003. Net profit was E1.4 billion during fiscal year 2004, adecrease of 14.8% from 2003. The operating margin of 
C
arrefour fell from 6.9% in2003 to 6.8% in 2004. The net margin of the company has declined from 2.3% in2003 to 1.9% in 2004. The largest decline in profits was experienced in thecompany¶s domestic market, France. The company¶s ability to invest in further growthis inhibited by declining profits.
 
Losses for Ooshop.com
 
C
arrefour operates its online shopping business, Ooshop.com, in both France andSpain. It is estimated that the business has accumulated losses in excess of E17million, despite sales of more than E50 million.
C
arrefour intends to sell Ooshop.com.However, the company has declined all offers it had received as it did not believe thatthe offers reflected the true value of the business. In times when internet shopping isgaining popularity, the company¶s inability to profitably run Ooshop is a burden on itsbottomline.
 
Opportunities
 
Strong growth potential in Asia
 
In Asia,
C
arrefour currently operates only through hypermarkets. Given the highpopulation in Asian countries and growing local demand, there is considerableopportunity to add other formats such as supermarkets and hard discount stores. The
 
company¶s has large plans to penetrate the growing
C
hinese market. There is

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