Case Study

Carrefour: Retailing in an International Marketplace

As the second-largest retailer in the world, the French company Carrefour
dominates the global retail market. The company’s first store opened on June 3,
1957. The name refers to the location of the first store near a crossroads, or
Carrefour in French. The company expanded at a strong pace within France during
the late 1950s and early 1960s. In June 1963, the company revolutionized the retail
industry in Europe with the introduction of the hypermarket. A hypermarket
combines a grocery store and a department store. As an early pioneer of this
retailing model, Carrefour grew rapidly in France, later Europe, and eventually
around the globe.

Currently the company faces many international complexities due to culture,

language, economic systems, political and legal systems, and infrastructure. To
overcome those obstacles, Carrefour leverages local partners when entering new
markets. Carrefour was the first Western retailer to enter the Asian market when it
began operations in Taiwan in 1989. The company partnered with the local
Taiwanese company Uni President Enterprises Corporation. The marketing team
focused on learning about the Asian business environment, especially culture,
through this relationship. This knowledge led to expansion in six other Asian
markets.

The same strategy of seeking local partners was used in other regions. A
local partner helped open the first store in Kuwait, and today stores are located in
ten Middle Eastern countries. Local partners assist in adjusting to the country’s
business culture, provide governmental contacts, and smooth the market entry
process.

Carrefour recently experienced problems associated with the global

recession and increased competition. In 2010, the company sold outlets in Japan to
its Japanese partner and closed 21 of 627 stores in Belgium. The experiences of
overcoming these difficulties will serve Carrefour as well as the company
encounters down cycles in the economies of the future.
 Retailing behavior may vary greatly depending on the local culture. The
willingness to make larger or small changes in response to this differences helped
Carrefour achieve success. Adapting to cultural differences in consumption in
Thailand required the company to move away from hypermarkets. Instead, in 2010
Carrefour introduced a mini-supermarket in Bangkok. These smaller stores still
provide ready-to-eat meals, plus groceries, frozen foods, drinks, and household
products. The format was created to better meet local Thai needs and leverage the
company’s strong position in the country.

Carrefour has made changes to account for religious differences. In the

Middle East, to generate goodwill and to meet Islamic expectations of corporate
giving, the company often donates to local charities. During Ramadan, the
company often makes large contribution to the Red Crescent Society. In 2009, in
the United Arab Emirates, Carrefour donated food worth AED625,000 (about
$170,000) to people in need.

Carrefour deals with many host country languages, which necessities strong
translation skills and sensitivity to local or regional differences in language. At the
most basic level, this means successful translation of the company’s name, when
necessary. In Chinese, while the sounds for the brand name remain close to the
French pronunciation, the characters used to make up the name Carrefour translate
to “Every Happy Family” which reinforces the company’s image.

Carrefour operates in countries with vastly different economic systems.

Singapore has a more open market economy than Egypt’s economy. The company
has been active in the relatively strong command economy of China since 1995. In
these situations, the marketing program is adjusted to meet governmental
restrictions. There may be limitations on the products that can be sold, the price for
certain goods may be set by the government, or the company may be required to
find a local partner.

Carrefour also faces political and legal difficulties. While the company’s
home country, France, has a traditional parliamentary democracy, the company
operates in countries with less-representative or less stable systems. Carrefour
entered Pakistan in 2009 even though the marketing team faced a situation with
high levels of political risk. In other markets, legal actions hinder activities. In the
Indonesian market, the firm was found guilty in a recent antitrust case. The
company has appealed, but if the appeal is lost, Carrefour will be forced to sell its
stake in a local Indonesian retailer.

As a grocery store, Carrefour sources many of its products locally. To

overcome difficulties in infrastructure, the marketing and sales departments often
couple education with relationship building. In India, relationships with local
suppliers of food have been established through camps for Indian farmers. The
camps educate farmers on technical farming skills. This creates important bonds
with the company increases the efficiency of Indian farmers, and, most
importantly, improves the sources of food.

With the skill to successful respond to complexity in international markets,

Carrefour continues to aggressively pursue opportunities in growth markets.
Specifically targeting Brazil, India, and China, the company moved aggressively
into these markets. In 2010, Carrefour entered the Indian market using the strategy
of leveraging local partners. In this case, the partner was Kishore Biyani of
Pantaloon Retail. Local partners may help Carrefour counter moves by the
American Wal-Mart and the British Tesco to corner the $390 billion Indian retail
market.

Following the same business strategy that fostered success globally,

Carrefour’s managers hope to continue to be a worldwide leader in retailing.
Whether the difficult faced is cultural, linguistic, economic, political and legal, or
infrastructure, the company’s acquired abilities suggest a bright future.

1. Explain the impact of the drivers of globalization described in chapter 1 with

regard to Carrefour.

2. How have the factors that create international marketing complexity both helped
and hurt Carrefour? Has the impact been mostly positive or mostly negative?