Carrefour Looks to Get Back in the Driver’s Seat

It wants to focus on food – what CEO Lars Olofsson calls “the heart of our business” — and give the fruit and vegetables department a market-like atmosphere. The presentation of fresh produce will be changed to create a more pleasing shopping environment.

Olofsson wants to offer hypermarket customers “une fête permanente” – which translates to non-stop festivities. Carrefour is reportedly at work on a concept that would feature monthly events at all hypermarkets and some supermarkets designed to support hypermarket sales. It also is developing a child-care concept for children ages 5 to 12 called “Le Kid’s Club.”

Olofsson has acknowledged that the “everything under one roof” concept is dead. Concerning its non-food offer — which accounts for 30 to 40 percent of the total assortment in a Carrefour hypermarket, and in which the company experienced a 5.6 percent decline in sales last year — the retailer will cut some categories. That offer will now depend, to some extent, on local competition — tacit recognition that Carrefour doesn’t want to go head-to-head with specialty retailers like Decathlon or Leroy Merlin.

Carrefour intends to act as a “specialist” in each of the non-food categories it chooses to carry by means of boutiques in its hypermarkets, and “could work with branded suppliers,” Olofsson says. According to French press reports, Carrefour is in talks with LG for home appliances and Arc for tableware.

Some boutiques could even be managed by specialist retailers. Carrefour is reportedly in discussions with Micromania and Score Games for its gaming department; in Belgium, Carrefour has already conceded space to The Phone House. Back in France, Carrefour will also employ more pharmacists.

The retailer also wants to make better use of multi-channel sales via in-store order points connected to Carrefour online. These kiosks can act as multi-service centers that offer various services — insurance, travel, ticketing, gift cards — in one place.

Carrefour plans to open several drive-in outlets in the second half of 2010, with the first wave supplied by hypermarkets. It also is piloting a “hypercash store” project — the European version of the successful Brazilian Atacadão banner, a mix of low-cost hypermarket and cash & carry. The first Hypercash units are scheduled to open in France and Spain before the end of the year, although the French stores will not feature cash & carry departments. With sales areas of around 75,000 sq. ft. and discount prices, the stores could resemble Auchan’s Pryba discount hypermarkets.

Revitalizing the Carrefour brand
Carrefour also aims to improve purchasing practices through its Carrefour Category Optimisation (CCO) program. Believing that less is more, Carrefour wants to simplify and optimize its offer to meet consumer needs. It plans to reduce the number of SKUs in everyday consumer goods by 15 percent and increase the number of “consumer needs units” by 5 percent, which means fewer supplier brands and more higher-margin Carrefour-branded products.

Carrefour wants to make its private-label products a real point of differentiation. It recently launched a range of gluten-free products, a product category where there is virtually no national brand, and this year launched Carrefour Kids in partnership with the Walt Disney Co., a line of some 50 children’s food products with a strong commitment to nutrition.

Carrefour also hopes to get customers back in its hypermarkets by capitalizing on Carrefour Competitive Pricing to better target promotions and prices. The hypermarkets will feature more attractive everyday pricing and fewer-but-bigger promotions.

In this context, Carrefour recently launched “PromoLibre” for its loyalty cardholders in France. Each week, Carrefour will promote a specific product category: loyalty cardholders who buy three grocery products from the promotional category can get the cheapest of the three products for free. For non-grocery items, customers can receive a 20 percent discount.