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Case Study Carrefour: Retailing in an International Marketplace As the second-largest retailer in the world, the French company Carrefour dominates the global retail market. The company’s first store opened on June 3, 1957. The name refers to the location of the first store near a crossroads, or Carrefour in French. The company expanded at a strong pace within France during the late 1950s and early 1960s. In June 1963, the company revolutionized the retail industry in Europe with the introduction of the hypermarket. A hypermarket combines a grocery store and a department store. As an early pioneer of this retailing model, Carrefour grew rapidly in France, later Europe, and eventually around the globe. Currently the company faces many international complexities due to culture, language, economic systems, political and legal systems, and infrastructure. To overcome those obstacles, Carrefour leverages local partners when entering new markets. Carrefour was the first Western retailer to enter the Asian market when it  began operations in Taiwan in 1989. The company partnered with the local Taiwanese company Uni President Enterprises Corporation. The marketing team focused on learning about the Asian business environment, especially culture, through this relationship. This knowledge led to expansion in six other Asian markets. The same strategy of seeking local partners was used in other regions. A local partner helped open the first store in Kuwait, and today stores are located in ten Middle Eastern countries. Local partners assist in adjusting to the country’s  business culture, provide governmental contacts, and smooth the market entry  process. Carrefour recently experienced problems associated with the global recession and increased competition. In 2010, the company sold outlets in Japan to its Japanese partner and closed 21 of 627 stores in Belgium. The experiences of overcoming these difficulties will serve Carrefour as well as the company encounters down cycles in the economies of the future.

 

  Retailing behavior may vary greatly depending on the local culture. The willingness to make larger or small changes in response to this differences helped Carrefour achieve success. Adapting to cultural differences in consumption in Thailand required the company to move away from hypermarkets. Instead, in 2010 Carrefour introduced a mini-supermarket in Bangkok. These smaller stores still  provide ready-to-eat meals, plus groceries, frozen foods, drinks, and household  products. The format was created to better meet local Th Thai ai needs and leverage the company’s strong position in the country.  Carrefour has made changes to account for religious differences. In the Middle East, to generate goodwill and to meet Islamic expectations of corporate giving, the company often donates to local charities. During Ramadan, the company often makes large contribution to the Red Crescent Society. In 2009, in the United Arab Emirates, Carrefour donated food worth AED625,000 (about $170,000) to people in need. Carrefour deals with many host country languages, which necessities strong translation skills and sensitivity to local or regional differences in language. At the most basic level, this means successful translation of the company’s name, when necessary. In Chinese, while the sounds for the brand name remain close to the French pronunciation, the characters used to make up the name Carrefour translate to “Every Happy Family” which reinforces the company’s image.  Carrefour operates in countries with vastly different economic systems. Singapore has a more open market economy than Egypt’s economy. The company has been active in the strong command economyto of China 1995. In these situations, the relatively marketing program is adjusted meet since governmental restrictions. There may be limitations on the products that can be sold, the price for certain goods may be set by the government, or the company may be required to find a local partner. Carrefour also faces political and legal difficulties. While the company’s home country, France, has a traditional parliamentary democracy, the company operates in countries with less-representative or less stable systems. Carrefour entered Pakistan in 2009 even though the marketing team faced a situation with

high levels of political risk. In other markets, legal actions hinder activities. In the

 

Indonesian market, the firm was found guilty in a recent antitrust case. The company has appealed, but if the appeal is lost, Carrefour will be forced to sell its stake in a local Indonesian retailer. As a grocery store, Carrefour sources many of its products locally. To overcome difficulties in infrastructure, the marketing and sales departments often couple education with relationship building. In India, relationships with local suppliers of food have been established through camps for Indian farmers. The camps educate farmers on technical farming skills. This creates important bonds with the company increases the efficiency of Indian farmers, and, most importantly, improves the sources of food. With the skill to successful respond to complexity in international markets, Carrefour continues to aggressively pursue opportunities in growth markets. Specifically targeting Brazil, India, and China, the company moved aggressively into these markets. In 2010, Carrefour entered the Indian market using the strategy of leveraging local partners. In this case, the partner was Kishore Biyani of Pantaloon Retail. Local partners may help Carrefour counter moves by the American Wal-Mart and the British Tesco to corner the $390 billion Indian retail market. Following the same business strategy that fostered success globally, Carrefour’s managers hope to continue to be a worldwide leader in retailing. Whether the difficult faced is cultural, linguistic, economic, political and legal, or infrastructure, infrastructur e, the company’s acquired abilities suggest a bright future.   1. Explain the impact of the drivers of globalization described in chapter 1 with regard to Carrefour. 2. How have the factors that create international marketing complexity both helped and hurt Carrefour? Has the impact been mostly positive or mostly negative?