Facing Diversity - Case Study of Carrefour in Asia

Topics: Economic growth, Carrefour, Retailing Pages: 15 (4030 words) Published: July 14, 2011

Facing Diversity Case Study of Carrefour in Emerging Asia
China – India – Indonesia

As of 2010, Carrefour S.A. was the largest global retailer in Europe and the second largest of the world in terms of revenue1. Carrefour develops with a multiformat approach ranging from its core hypermarket chains to supermarkets, convenience and hard discount stores. For professionals, Carrefour is also developing the cash & carry format. At year-end 2009, Carrefour had over 15,600 stores in 34 countries. 1


Bernardus Erry Nugroho Fanny Siskarina

(1006793113) (1006793441)

John Anthonius Luciana

(1006793706) (1006793800)

Facing Diversity|2

Figure 1: Carrefour’s Store Network, taken from Carrefour’s 2009 Annual Activity and Sustainability Report

Facing Diversity|3 As hypermarkets chain, Carrefour combines a supermarket and a department store with an expansive retail facilities carrying a wide and attractive range of products under one roof, including full groceries lines and general merchandise. In order to realize its vision to become the preferred retailer wherever it operates and to ensure sustainable and profitable growth, Carrefour is currently focusing its global business activities in Europe, Latin America, and Asia. Carrefour’s objective is to be the strong leader in key markets and be able to perform improvement in the organization and operating model. Taking chance in the rapid growth in emerging markets especially in Asia and Latin America represents the Carrefour group’s third priority. In order to improve competitiveness and optimize its knowledge of customers, the Group will focus most of its development resources on countries with stronger growth potential; this includes China, India, and Indonesia which we will discuss in this paper. As of 2009, Carrefour invested a total amount of $ 21.6 billion on tangible assets, increased $ 337 million compared to in 2008. The huge amount of investment mainly included sales area operated by the Group. A breakdown of the investment on each Point of Sales (PoS) in China and Indonesia in 2009 is presented below. CHINA Number of store Sales area (thousand sq.m) Sales area 1 store (sq.m) Investment 1 store (EUR) Investment 1 store (USD) Investment 1 store (IDR) Hypermarkets 156 1,230 7,885 3,172,748 4,550,355 42,961,572,823 Supermarkets Hard discount store 268 61 228 91,590 131,359 1,240,208,491

INDONESIA Number of store Sales area (thousand sq.m) Sales area 1 store (sq.m) Investment 1 store (EUR) Investment 1 store (USD) Investment 1 store (IDR)

Hypermarkets Supermarkets 61 382 6,262 2,519,930 3,614,084 34,121,898,543 15 23 1,533 617,009 884,914 8,354,803,430

Hard discount stores

Table 1 & 2: Calculation on Carrefour’s Investment, data taken from Carrefour’s 2009 Financial Report

Reviewing the scale of investment and the magnitude of the risk inherent in hypermarket format as its core business, Carrefour’s investment strategy is very much different compared to the scale of investment and risk of smaller modern retailers with supermarket and convenience format. The large difference in the characteristics of a hypermarket with a supermarket or convenience store is reflected on the large scale of investment needed. Based on analysis of Carrefour’s 2009 financial report, the initial investment of a hypermarket reached more than thirty-five times the investment needed to build a hard discount store

Facing Diversity|4 in China and four times the investment needed for development of a supermarket in Indonesia.

$5,000,000 $4,500,000 $4,000,000 $3,500,000 $3,000,000 $2,500,000 $2,000,000 $1,500,000 $1,000,000 $500,000 $China Indonesia $131,359 $884,914 $4,550,355 $3,614,084




Store Format
Hypermarkets Supermarkets Hard discount stores
Chart 1: Investment per Point of Sales in China and Indonesia, taken from...
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