WABEL NEWS

Understanding the new strategy of Carrefour in 4 key points

January 24th, 2018 Retailers Insight

Wabel will help you to understand the new strategy of Carrefour in 4 key points after the announcement yesterday by the new appointed CEO, Alexandre Bompard, of the Transformation Plan called Carrefour 2022.

1. Simplify the general organization

Carrefour has decided to rationalize the locations of its headquarters in all of its countries. This rationalization will have an impact on employment, since Carrefour aims to eliminate 2,400 jobs at the French head office, out of a total of 10,500 employees - a quarter of the workforce.

Partners

Carrefour Group also wants to open up to more partners, structuring them to take advantage of innovations and best practices and benefit from "the experience of innovative start-ups and the power of sectoral leaders", like the agreement signed with Fnac Darty in consumer electronics and the partnership with Showroomprivé for online private sales. Carrefour announced a future partnership that should help it strengthen its position in China with Tencent, global technology leader, and Yonghui, specialist distributor of fresh and small formats in China. The signature of a strategic partnership with Tencent opens up great opportunities for Carrefour in this country, especially on e-commerce food.

2. Gain in productivity and competitiveness
Reduce the size of the assortment by 10% and negotiate internationally

Carrefour intends to achieve €2 billion in savings by the end of 2020. To do this, Carrefour wants to optimize its merchant purchases by reducing the size of its assortments by more than 10%, and by driving international negotiations, taking advantage of the group's presence in 30 countries.

Release of Dia stores: redemption or closure

The network Dia bought by Carrefour in 2014 is not doing well. As a result, Carrefour plans to release 273 Dia stores from its perimeter. The group will first look for purchasers store by store. In case there isn’t any purchaser, these stores will be closed.

More efficient and better targeted investments to develop omnichannel

Carrefour Groupe plans to invest €2 billion a year this year in order to maintain the Group's assets and to implement its transformation ambitions. Specifically, the retailer intends to significantly increase its investment in computer and digital and increase channel supply investments oriented to the creation of an omnichannel supply in the food by automating order picking platforms.

3. Create an omni-channel universe of reference
Investment in the attractiveness and efficiency of hypermarkets

The retailer's hypermarket strategy was eagerly awaited in France. In order to improve the efficiency of this format, Carrefour will adapt the size of the hypermarkets to their catchment area: the spaces of some hypermarkets will be downsized when it is necessary, for a total of at least 100,000 m2 by 2020. Carrefour will also look for buying and selling alliances to improve the non-food offer when it is not so relevant (ex partnership with Fnac Darty in France for electronics). Carrefour also intends to reinforce the operational efficiency of stores by adapting to best practices on flows, inventory management and markdowns. No hypermarket closure is planned in France at this stage.

Accelerated investment in conquest formats

Carrefour will rely on supermarkets and convenience stores. At least 2,000 convenience stores will open in the next five years and will strongly invest in major European cities. Each of these formats will actively participate in the deployment of the omni-channel universe of the Group by being a preparation or delivery center, a point of withdrawal or return for customers. The Group also wants to accelerate the development of the cash & carry format: Carrefour will open 20 Atacadão per year in Brazil as of 2018, including 5 hypermarket conversions in 2018; in Argentina, Carrefour announces that it is investing in the Maxi brand by launching the conversion of 16 hypermarkets in 2018; the declination of these formats in Europe will be continued with an acceleration of the deployment of Promocash in France and further experimentation in other countries.

Massive investment in digital

The Group will invest €2.8 billion over 5 years, six times more than the investments currently made to change the dimensions in digital and omnichannel.

A target of €5 billion in sales in food e-commerce by 2022

Carrefour's ambition is to become a key player in food e-commerce, with € 5 billion in revenue for the Group and a food e-commerce market share of over 20% in France by 2022 . To do this, the retailer wants to rely on its physical network: all the delivery solutions offered by Carrefour will be reliable and widespread. In France, home delivery will be extended to 26 cities and express delivery in 1 hour will be deployed in 15 cities starting this year; as of 2018, 170 new Drive will be opened in France and the overall quality of service will be improved, notably thanks to the deployment of automated logistic means (picking platforms); Click & Collect will be expanded to more than half of stores by 2019. Finally, to strengthen its digital identity, Carrefour will launch in 2018 a unique site, Carrefour.fr, which will include all its general merchandising offers. This unique site will have a vocation to be declined in all the geographies.

4. Redesign the offer in the service of food quality
1 million consumers of traditional fresh produce in addition to France by 2022

Carrefour sets an ambitious target for traditional fresh produce in France: sales growth three times higher than that of PGCs and one million more consumers by 2022. To achieve this goal, the retailer talks about launching an agroecology plan in 2018, the valorization of local productions or a partnership with WWF, as well as the generalization of Blockchain technology and the double of trained fresh produce employees.

Achieve €5 billion in organic sales in 2022

Carrefour is positioning itself as a leader in the democratization of organic products and wants to increase its turnover from €1.3 billion to € 5 billion by 2022. To this end, Carrefour will generalize areas dedicated to organic products in French stores and expand its organic range. The Group is also strengthening its online organic offering by accelerating the development of its specialized Greenweez brand. Carrefour will use its pricing, promotion and loyalty policies in favor of the democratization of organic products.

Achieve one third of its turnover via Carrefour brand products by 2022

Carrefour branded products will play a key role in achieving the Group's ambition in terms of food quality, particularly through a wider range and greater price attractiveness. This is one of the priorities of the company's strategy, which justifies the creation of original and very qualitative private label, on both components and revenues. Carrefour is thus making a profound change by launching a new quality policy that notably involves the massification of controls and the rapid elimination of all controversial substances. The Group will also reduce by 5% the amount of packaging for Carrefour brand products by 2020. Co-construction with customers is a key factor in the development of the company's own brands, as is the strengthening of the traceability of products and the ingredients that compose them.