Carrefour moves closer to customers
localised catchment areas, after a year-long Spanish supermarket
trial has revealed the potential of neighbourhood discount stores.
Results from the Spanish trial, which saw the retailer tweak its underperforming Champion banner, have indicated the Carrefour brand works well as an express-style format in mature markets, and as a mini-hypermarket in local neighbourhoods.
It trialled three new formats in the country through 2005 - Carrefour branded mini-hypermarkets of 3,000-4,000 sq. metres, Carrefour Express soft discount supermarkets of 1,500 sq. metres, and Maxi-Dia discount stores only carrying private label products - and claims all have been a huge success with incremental sales of 40 per cent in each category.
"This has been not only a commercial success; it's been an economical success. We are having much better sales per square metre [in Spain] and with the synergies we are obtaining with one brand we are lowering our costs," chairman Jose Luis Duran said at an investors meeting in Barcelona this morning.
Spain is Carrefour's largest market outside France, and the firm cited three lessons learned from its Iberian operations over the past 12 months that have shaped its outlook and changed its international development policy.
"One is that we can grow quicker in terms of organic expansion with new formats," said Duran.
The company also believes it can garner a larger sector share in mature markets using the new formats, and is confident the legitimacy of the Carrefour brand for smaller shops has been confirmed by the trials in Spain.
The French-based firm, famous for inventing the hypermarket in the late 1960s, now plans to roll out hundreds of the new smaller store discount format in Columbia, Poland, Italy and France by 2008.
"The worldwide strategy of Carrefour is to try to give customers what they want. The location they want, the lines they want, the format they want and the prices they want.
"We were very rigid in the past and we were losing opportunities. Today this new format programme gives us dramatic opportunities," Duran said.
The company recently announced plans to plough on with a more general overseas expansion policy, pouring €10bn into the project over the next three years to open up hundreds of new stores and strengthen its brand name.
Almost half of the 100 planned hypermarkets will be built in Asia, and an average of 23 will open in China each year until 2008.
Brazil, Italy and Turkey will also account for a large chunk of the new shops, as Carrefour said it would also open 1,000 smaller international stores to increase its presence in these key markets.
