3. Global: Q1 Strategic Changes

© Carrefour
Strategic Preview: Q1
January – March 2014
8 April 2014
Gildas Aïtamer
Retail Analyst
Strategic Preview: Carrefour Q1
1. Expectations for the Quarter
2. France: Q1 Strategic Changes
3. Global: Q1 Strategic Changes
4. Outlook
5. What’s new at Planet Retail
2. France: Q1 Strategic Changes
Boosting private label volumes
 France: Carrefour is aiming to double export sales of its
Reflets de France product line year-on-year.
 To meet this objective, several strategies could be explored:
• Export to other Carrefour international operations, with enhanced presence in
stores in CEE and the BRICs, primarily in outlets located in more affluent areas.
This move is not fundamentally new as the equivalent Italian private label has
been available in Belgian stores since last year.
• Export to new markets via local distributors. Germany and the UK are thought
Reflets de France is already available on Chinese shelves,
but at twice the price as in French stores.
to be the most likely initial destinations given the proximity and potential
volumes. British grocery e-commerce operator Ocado already distributes the
private label range. However, Planet Retail believes further markets where
demand exists for French produce such as the US or Japan could offer even
more long-term potential.
 We regard Carrefour’s pushing of its premium regional cuisine lines as
a cost-efficient method of increasing economies of scale while
differentiating itself from competition abroad.
 Carrefour’s move echoes Casino’s internationalisation strategy for its
French private labels. The retailer’s own brands are available across
most of its international operations. Casino has signed several
international distribution agreements and has recently announced that
a distribution contract for its high-end Monoprix Gourmet line is to be
concluded this year.
Introduced in 1996, the line generated some EUR320
million (USD438 million) of sales in 2013.
3. Global: Q1 Strategic Changes
New loyalty programme in Italy
 Italy: Carrefour has introduced a new loyalty
scheme named “Payback”.
 We believe the decision was motivated by a wider reshaping of
the commercial strategy of Carrefour Italy.
 However, while revolutionary for Carrefour, such a scheme is
merely keeping pace with rival Auchan. The latter has a
partnership with Europe’s other heavyweight loyalty operator,
Nectar, which includes Italian partners such as Dixons Retail’s
UniEuro electronic superstores.
© Carrefour
 The American Express “Payback” scheme encourages cooperation with other businesses to provide enhanced value for
cardholders. This move will help Carrefour differentiate from
the currently better-performing Coop Italia and Conad which
operate their own loyalty programmes.
In Italy, the Payback card also offers points at Esso petrol
stations, 3Mobile telecoms or with Alitalia airlines.
© Rewe
 Carrefour, to its credit, has adopted a less costly solution with
Payback, which will allow it to reach new customers via its
partner network. This, however, is at the expense of control
over this particular marketing channel. It will be interesting to
see if the venture actually proves beneficial to Carrefour and
will be sustained in the long run.
Germany’s Rewe Group also joined the programme a
few weeks later, as its first nationwide loyalty scheme.
3. Global: Q1 Strategic Changes
International round-up
 Turkey: CarrefourSA to change fresh food supply policy.
 Much as in other markets, Carrefour is trying to break free from
wholesalers for fresh produce as it favours supply directly from farmers.
We see this as a way to offering fresher produce by streamlining the
supply chain and cutting out costly intermediaries.
 This policy change and convenience store expansion requires sharper
investments in supply chain and back office functions. We believe that
CarrefourSA was lagging behind in these matters, but recent investment in
this area should provide a stronger base going forward.
The new supply approach should enable CarrefourSA
fresh produce to reach the shelves within 36 hours of
intake, against 72 hours previously.
 Argentina: Carrefour is to invest some ARS800 million
(USD127 million) this year in the country
 This amount is roughly in line with previous years. Planet Retail was
anticipating a hike of funding to around ARS1 billion (USD158 million)
following the wider investment strategy as outlined by Plassat.
 In a market still dominated by traditional retailing, homegrown rivals
Cooperativa Obrera’s eponymous convenience banner as well as Coto's
Minimercado Coto have engaged in a degree of cautious expansion of late.
© Carrefour
 The bulk of the funds will be dedicated to small-box outlets which are
ideal for small, but high frequency, purchases – worth considering in the
context of high inflation.
In Argentina, Carrefour is putting a strong emphasis on
its convenience stores. 80 openings have already been
confirmed for 2014.