Carrefour
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Establish in France since 1963.
Own over 5200 branch store in 26
countries and region.
About 36.3 billion of the sale amount and
earn 7 thousand million profit.
More than 240,000 thousand employee.
The sale feature of Carrefour
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Hypermarket
Various products (including household
appliances)
Giant size
Giant quantities
Carrefour in Hong Kong
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Entrance in 1997
Own 4 branch store in Tuen Mun,
Yuen Long, Tsuen Wan, Hang Fa
Chuen.
Unfortunately, all closed in 2000.
Carrefour in Chinese Mainland
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Entrance in China since 1995.
Launch 118 branch store until now.
Create great profit in Chinese Market.
Question 1.
Why do you think that Carrefour withdrew
from the H.K. market yet have become
very successful in the Chinese mainland?
Hong Kong’s situation of
Carrefour
Marketing segmentation
Geographic:
1.
Hong Kong is a small city in the world.
2.
About 6 million population during 1997
3.
In higher population density.
4.
The average living size is 450 square feet
5.
Less supply of the shops over 100
thousand square feet in the commercial
centre. (place for development ???)
Hong Kong’s situation of
Carrefour
Marketing segmentation
Demographic:
1.
High household income in 1997 but
decreasing since 1998 by financial crisis.
2.
Higher ratio of rent in the commercial
market.
Behavioral :
1.
Quality and price perspective are equally
important.
Hong Kong’s situation of
Carrefour
Marketing segmentation
Psychographic:
1.
The purposes of shopping in Supermarket of
H.K people buy can food, soft drink,
groceries.
2.
Shopping in wet market everyday for fresh food.
3.
Buying household appliances in the other
channel e.g. Broadway.
4.
Not localize in H.K.
Hong Kong’s situation of
Carrefour
Competitors
Parkn
Shop
Wellcome
CRC
They
Shop
create the “price cut ” try to fright back
Carrefour.
The same destiny of competitor “Grand Mart”
Carrefour’s Localization
(China Mainland)
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Buying behavior is the objective
Localize their distribution to fit Chinese
tastes
China is not a totally centralized country
Difference region have their own taste
and rules
Carrefour’s Localization
Example 1:
 Middle & Western China people are more
confident of frozen fish than of unfrozen
dead fish.
 Carrefour change the product offered
 Increase 30-40% sale volume
Carrefour’s Localization
Example 2:
 Tsingtao beer is the famous beer brand
around the world
 But in Beijing, Beijing beer is the no.1
brand
Carrefour’s Localization
Example 3:
 Panda is the old fashion and low-quality
brand in general views
 But in Nanjing, 35% of television are
made by Panda
Directly Distribution
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The marketer reaches the intended final
user by distributing the product
directly to the customer.
There are no other parties involved in
the distribution process that take
ownership of the product.
Question 2:
As a manufacturer, why would some
Chinese companies engage directly
distribution of products in China? What
kinds of problems does it reflect in China’s
distribution system?
Example : GREE (格力電器)
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Manufacturer
consumers
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No parties involved between each others
GREE plays 1. Manufacturer
2. Retailer
REASONS
1. Cost 
  10%
to 15% cheaper than others
2. Profit ↑
smooth ordering, packing and delivery
without
intermediaries
3. Customer loyalty
Protection of trademark, patent and copyright
REASONS
4. Degree of control
 take over all aspect transactions
( example , logistics of shipment, collecting
payment )
5. People Power ( Channel Power )
customers feel more secure in doing business
with you
Problems
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1. More Risky
lack of information about Chinese culture
require the largest involvement in the
export process
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2. Conflict
Boycott of supplies
in China
Problems
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3. Cost ↑
 Responsible for every level of organizations
 Handle all the logistics of the transaction
Gome vs Gree
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Conflicts on pricing strategy between the
channel leaders– Manufacturer &
Retailer
Gree withdrew from Gome to develop a
direct distribution (point of sale)
In 2007, Gome & Gree both are the
market leader in their industries in China
Finally they cooperate again!
Carrefour Situation
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A traditional distribution channel
Manufactur
er
Agent
Wholesalers
Consumer
Carrefour
Wholesales
Market
Carrefour Situation
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Manufactur
er
A traditional distribution channel
Carrefour
Consumer
Carrefour Situation
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A traditional distribution channel
Manufactur
er
Carrefour
3 rd
parties
distributors
Consumer
For example:
Logistic
Company
Question 3:
Base on the Carrefour’s distribution
channel, what are the challenges and
perhaps strategies for Carrefour?
Manufacturers
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Carrefour
The cost of distribution is high
Less competiveness
Time spend more through many
middlemen
Manufacturers
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Carrefour
農村合作社
Carrefour buy from the farmer directly
The farmers are responsible for the packaging
and transportation as well
Shanghai, Wuhan, Beijing and Guangzhou have
join the system
Manufacturer
Carrefour
Manufacturers
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Carrefour
The cost of the supply chain have
reduced 20 – 30%
The cost is much clear
Time have saved
Protect the quality of food
For farmers, their income is
increased and guaranteed
Vendor Managed Inventory (VMI)
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Carrefour provides information to
suppliers
the suppliers take responsibility for
maintaining inventory at the
Carrefour's store.
Carrefour have cooperated with
Nestle
Benefits of VMI
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Planning and ordering cost will
decrease
The overall service level is improved
A true partnership is formed
between the Supplier and the
Carrefour
Stabilize the timing of Purchase
Orders
Share risk
The End