Carrefour Case Study

Q-1 BRIEFLY EXAMINE THE CARREFOUR STRATEGY. OR Q 2 CHALLENGES TO CAREEFOUR FROM WALMART s OR Q 3 CAREEFOUR STRENGTH TO OVER COME THE CHALLENGES FROM WALMART On June 15 of 1963, Carrefour opened a shop that the French had ever seen before.The surface of the shop was 2,500m2, and it had 400 parking spaces as well. It was the biggest supermarket in France at that time. The French named it hypermarché´ (hypermarket), which means ³bigger than traditional supermarkets. Learning from the experience of American experience in retail development, Carrefour realized that the importance of No Parking, No Business´.

Carrefour adopted the strategy of low-margin´ to attract the customer. The varieties of goods and price discount really had much influence on the French traditional retailers at that time. For Carrefour, the hypermarket is not merely the breakthrough of his selling skills, but also symbolizes as French Innovation .

Triple Strategy

After the success of Supermarket, Carrefour continues to step into his expansion strategies. We call it triple strategy´: internal growth, cooperation and franchising.

1)

Strategy of internal growth: Includes business-level strategy and corporate level strategy.

2) Strategy of cooperation: In order to increase its market share and reduce perceived risk, Carrefour cooperates with his competitors by joint venture in France.

3) Strategy of franchising

Carrefour Challenge from America

1- Carrefour has invested outside France since 1969 and the first country that it expands abroad is Belgium. From then on, Carrefour has expanded steadily. Now, Carrefour is 1st in Europe and the 2nd retailers in the world. Carrefour makes its half of sales outside of France. 2-The most difficult global reach of Carrefour is confronted by Wal-Marts challenge. Wal-Mart is a global company with over 1.3 million associates worldwide and almost 5,000 stores and wholesale clubs across 10 countries. 3- For Carrefour, the worlds second largest retailer, Wal-Mart has been the most threatened competitor. Compared with Wal-Mart and Carrefour competitive advantages are completely different. 4- Today, Wal-Mart has ambition to step into his global expansion, and gradually this will threaten Carrefour global reach.

Question 2: Retaining the customer by implementing various loyalty programs is ongoing program in service organization. What were the measures taken by Carrefour to motivate customer to visit the store frequently? Answer: Customer retention is very important in any of the business. When it come to service marketing this

factor become more crucial. Carrefour has done a lot to make the customer loyal to the company. Following are some of the measures taken by Carrefour to make the customer visit the store frequently.  The spacious and the comfortable shopping environment help the customer to spend more time in the store.  The merchandise was neatly displayed to help customer to easily find the commodities they needed.  In 1995 they introduce a loyalty program called SpesAmica, which was based on the loyalty card used by the customer.  Customer details were collected at the point of sale, further data analysis was done to enable CF to identify and classify customers on the basis of customer attributes combined with customer behavior.  To increase the loyalty, customers using the SpesAmica cards were given extra discounts, additional points toward a gift in a prize catalog, entertainment offers, and special coupons.  CF also offers supplementary services like free delivery for big appliances, free shopping for the everyday lucky customer, free parking, and goods return and exchange facility within 15 days etc.  Website and toll free number help the customer to register their compliance so that an immediate resolution can be taken by CF.

Question 1: As a retail store, how has Carrefour gone about improving its customer service? Discuss in the light of improvement in business processes and employee attitude. Answer: Following are the steps that Carrefour took for improving its customer service-

1-In the 1960s, Carrefour launched self- service hypermarkets throughout France for the better customer service, after that they subsequently expanded into other countries also. 2-sIn 1999, Carrefour introduced Spectrum 24R wireless local area network infrastructure and hand- held computers in its 68 stores in Asia. This system helped improve both productivity and inventory management, 1-After that, Carrefour tied up with HP in implementing Instant Support Corporate Edition, which helped to automate help desk services. This technological upgrade helped online registration of incidents, reducing telephone usage by 7%. Further, the system automatically tracked technical problems through web chat so that the IT department could look into it immediately without depending on the help desk person’s capabilities to resolve the problem. This resulted in the employees becoming more self- sufficient and an overall savings of 50,000 Euros annually which translated into lower prices for the customers. 2-Carrefour concentrated on providing an inspiring atmosphere for its employees by initiating various training and reward programs. It provided an average of 1.4 hours

training per employee throughout the world in 2003. The program helped employees learn to understand the customers’ perception and to develop an enthusiastic attitude. 3-Carrefour also conducted employee satisfaction surveys from time to time and these surveys were used as a basis for improving the work environment. As reward measures, employees were awarded bonuses of one or two months ‘salary in case of increased sales. 4-Carrefour stores are spacious and offer a comfortable shopping environment. Besides, the merchandise is neatly displayed to help customers easily find the commodities they needed. 5-Carrefour also introduced loyalty program. 6-Carrefour also offered supplementary services in its stores in China- free delivery for big appliances, free shopping for the everyday lucky customer, free parking, goods retirn and exchange facility within 15 days, etc. 7-Carrefour was providing information to the customers through information desks, toll free numbers, websites, catalogs, etc. Customer satisfaction surveys were also undertaken to improve service levels.

SWOT ANALYSIS OF CARREFOUR: STRENGTHS  Carrefour is the largest hypermarket chain in terms of size.  Second Highest revenues in the retail industry after Wal-mart.  Ranked third in terms of profit in the industry after Tesco and Wal-mart.  Joint ventures in different countries  Large network of Discount, grocery and convenience stores, cash and carry, hypermarkets.  Employee base of approximate 495,000 around the globe  Pioneer in hypermarkets especially in France.  Selling number of products with its own private brands.  Strong brand in the world of retail industry.  More than 50% sales of the company come from France.  Operating in 31 countries. WEAKNESSES  Reduce operating expenses.  Weak position in Asia and Middle east countries  Labor relations  Taking too much time in opening new stores.  Has not been able to attract Japanese customers  Weak own brand sales  Poor E-commerce performance. OPPORTUNITIES  Joint ventures and acquisition for more expansion  Discount stores development  Improve sale performance  Reduce operating cost  Research and development required in marketing area to understand the dynamics of different segment.  Maintain better labor relations.

THREATS  Fierce competition  Wal-mart low prices are the biggest threat for Carrefour.  Terrorism and instability in few countries of Asia and Africa.  New player are entering into retail industry  Facing Difficulties to understand the dynamics of Asian and Middle East countries.  Slow expansion outside France may allow the competitors to snatch the market share.