Carrefour m Marketing

Carrefour: Hypermarket Reinvention CM00028-002/Published 11/2010

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OVERVIEW

Summary

Verdict's Retail Innovations case studies are new for 2010. Each profile provides an evaluation of a company that stands

out due to a set of unique characteristics, or a particular strategic initiative. In this case study, Verdict examines Europe's

largest retailer, Carrefour, and its effort to revive sales growth at its hypermarkets across its key European markets.

In 1963, French company Carrefour invented the hypermarket format, an entirely new store concept where almost

everything could be sold under a single roof, from groceries to clothing and electricals. Carrefour has since grown to

become the second largest retailer in the world and by 2009, sales from hypermarkets accounted for 52.5% of turnover in

its core domestic market. However, in recent years the format has started to struggle, resulting in Carrefour pursuing

several different routes to achieve sales growth, including implementing new initiatives to reinvent the ailing hypermarket.

• This brief explores the reasons behind the fall of the hypermarket in Europe, the need for Carrefour to

ensure the survival of the format, and the strategies Carrefour is adopting to reinvent the concept that

helped it to rise to the top. Importantly, it also provides action points for grocers and other retailers looking

to revive their own large format stores.

• In its examination of Carrefour's approach, this brief will focus on the following areas: demographic

influences, hypermarket sales across Europe including like-for-like sales and sales densities, branding,

instore layout, focus areas across food and non-food categories, private label, new instore services and its

approach to convenience stores.

RETAIL INNOVATIONS CASE STUDY

Carrefour: Hypermarket Reinvention Carrefour's approach to revitalizing its hypermarket format and key action points for retailers looking to improve their large format store sales

Reference Code: CM00028-002

Publication Date: December 2010

Strategic Action Points inspired by Carrefour



STRATEGIC ACTION POINTS INSPIRED BY CARREFOUR

Carrefour's strategy demonstrates initiatives that large format retailers should consider

Offer additional services to improve the shopper experience and compete with the online channel

• Add services that are complementary to your product offering, such as a make-up advisory service,

hairdresser, or pharmacy.

• Add a food service area to encourage customers to prolong their stay in the store. Use some products that

can be purchased in-store in your food service operations and advertise which ingredients have been used

in each dish and where they can be found within the store.

• Add services that allow customers to complete other chores alongside their grocery shop, such as a post-

office, a banking facility, a launderette, or a dry cleaner.

• Offer a consignment area for shopping bags and complement this service with assistance to help shoppers

carry their purchases to their car. This will encourage use of in-store services and browsing especially

across non-food areas such as media and health and beauty.

Maintain a specialism in your core product area with own brand development and food-related services

• Develop and extend private label goods to improve brand penetration and profit margins.

• Add interactive services involving ingredients and food products available in store, such as food tastings

and live cooking demonstrations and cookery classes.

• Add specialist food areas, such as a butcher's counter, fishmonger counter, and a delicatessen to enhance

reputation for fresh food.

• Develop market style displays and offer product assistance to personalize the experience and undermine

the clinical feel often associated with large stores.

• Add sections dedicated to local food produce and specialties to give each store its own localized identity.

Successful regional offerings can also be extended to other stores or markets if they have more universal

appeal.

• Consider extending organic or sustainable food ranges to cater for growing demand.

• Add a convenience food area to cater for top-up shoppers and those looking to eat on-the-go.

Customize and rationalize non-food categories in accordance with local preferences

• Be prepared to alter category areas and services according to the store location and local consumer

preferences.

• Rationalize the non-food assortment to focus on the most profitable categories. This may also involve

discontinuing certain ranges, but in the longer term it will help improve sales per store and sales densities.

Strategic Action Points inspired by Carrefour



Clearly departmentalize selected categories to help revitalize sales and facilitate cost-effective renovation

• When creating new formats consider a modular approach akin to a department store. This creates clarity for

the customer when searching for products. Furthermore it means that underperforming departments can be

removed with ease and successful ones can be rolled out to other stores and markets to minimize

redevelopment costs.

Ensure layout and signage is clear and accessible to customers

• Widen aisles and add self-service checkouts to decrease congestion in store.

• Lower shelving to improve visibility and to improve access to all available products.

• Consider local demographics when designing a store layout. Older consumers and families in particular will

benefit from wider aisles and lower shelving.

• Add large, clear signage and banners to promote pricing and make products visible throughout the store.

Expand more successful store formats as an alternative to the hypermarket

• Take the pressure off the hypermarket format by expanding more successful chains and, in the longer term,

reducing the proportion of sales derived from large store formats.

• Re-invest sales derived from profitable stores into improving the core hypermarket format.

Drivers Behind the Strategy



DRIVERS BEHIND THE STRATEGY

Hypermarket sales have been impacted by changing consumer behavior and legislation

Social and demographic changes are impeding the performance of the hypermarket

• Across Europe and other mature markets, the population is gradually growing older as birth rates are

falling, while life expectancy is on the rise. Such a demographic shift is already starting to profoundly impact

upon the retail sector.

• In the EU27 region, the share of the population aged 65 and over is expected to rise from 17.0% in 2009 to

20.1% in 2020, indicating one of the largest proportions of older people in the developed world. With the

majority of Carrefour's sales derived from European markets in which the population is aging fastest, the

retailer must indentify a suitable response.

• In the US the proportion of the population aged 65 or over is expected to increase from 12.9% in 2009 to

16.1% by 2020.

• In Australia the proportion of older consumers was 13.3% in 2009, compared to the emerging market of

India, where an extremely young population means that those aged over 65 account for only 4.9% of the

total population.

• Mature markets across the world are witnessing a rise in single person households. This trend is being

propelled not just by the aging population, but also by the emergence of smaller families, as well as rising

incomes providing individuals with the means to live alone. The result is a smaller shopping basket

requirement, thus reducing reliance on hypermarkets.

• Footfall to hypermarkets is being further weakened by the rise of the urban population in the developed

world. Denser and larger cities mean more opportunities for retailers, as well as heightened demand for

smaller stores located in close proximity to shoppers' homes. This trend has facilitated the need for – and

consequently, the rise of – the top-up shop.

Consumers are no longer favoring out of town shopping, driving spend in city center stores

• The cumulative factors of an aging population, growing urban areas and rising incomes are resulting in a

fall in out-of-town shopping. Cities are increasingly able to cater to all consumers' shopping needs, with

many retailers opening up downsized formats in urban areas, including discount retailers.

• This means that many consumers no longer have to drive out of town for cheaper groceries. Moreover, as

total incomes are rising for many shoppers, consumers are more willing to pay a premium for convenience,

and thus conduct their grocery shop in higher priced neighborhood stores.

Legislative factors are affecting hypermarket growth

• In multiple European countries, legislation governing retailers' store expansion impedes the growth of larger

stores, and instead facilitates the spread of smaller outlets. Carrefour is particularly affected by such

legislation as its core markets include France and Italy, where such laws have been put in place over the

last two decades.




• To this end, as the retailer relies on store network growth to drive sales, exploiting the laws will be of great

importance to its future success. In France, the Loi Raffarin act of 1996 means that stores less than

1,000sq m may be built under a single building permit, while stores exceeding the threshold require more

judicial processes and planning permissions. Consequently, this has spurred smaller retailers to increase

the pace of their expansion. In order to compete against neighborhood stores, Carrefour has resorted to

opening smaller outlets, to the detriment of its core hypermarket format.

• A similar law was put in place in neighboring Italy in 1998, entitled the Bersani law. The purpose of the

Bersani law was to encourage competition through the expansion of medium to large stores. However, the

law placed the planning of entry and expansion of such stores in the hands of local and regional authorities,

which often remained reluctant to allow new retail space that would threaten the livelihoods of retailers in

town centers. For such reasons, a cap on new retail space and number of larger stores was put in place by

many regions, effectively counteracting the original intentions of the law and encouraging the growth of

smaller stores.

The traditional hypermarket format is in decline

Sales at Carrefour's European hypermarkets have been floundering since 2008

• Sales at Carrefour's hypermarkets have been weakening as consumer behavior has shifted. This

development has become especially evident in its European stores, which contribute the bulk of the

retailer's total sales.

• Year-on-year sales at Carrefour's hypermarkets across the G4 countries (France, Spain, Italy, and Belgium)

started to plummet in Q4 2008, although in Belgium, sales declines had been evident well before that, and

sales across other markets had also been weak throughout 2008.

• Sales fell dramatically across all markets in 2009 when compared to 2008. However, in 2010 year-on-year

sales began to recover in both Spain and France. Nonetheless, the improvement was based on very low

comparatives, and hypermarkets in both markets have some way to go before they reach the sales values

achieved in 2008.

• The steep and continuous decline in like-for-like sales at its hypermarkets demonstrates the poor

performance across existing stores, with an exceptionally disappointing performance in both Spain and

Belgium. In Spain, food sales were heavily impacted by strong deflation. However, the non-food segment

remained a key contributor to falling sales.

• Consequently, hypermarket expansion slowed down in 2009, with Carrefour divesting sites in Belgium and

Italy and not opening a single hypermarket in France during the whole year.




Figure 1: Hypermarket sales change across Carrefour's core European markets, 2008–10

Carrefour hypermarket total sales change in core European countries, 2008-2010

-14

-12

-10

-8

-6

-4

-2

0

2

4

Q4 2008 Q1 2009 Q2 2009 Q3 2009 Q4 2009 Q1 2010 Q2 2010 Q3 2010

Chan

ge in

tota

l sal

es y

ear

on y

ear

(%)

France Spain Italy Belgium

Carrefour hypermarket like-for-like sales change in core European countries, 2008-2010

-14

-12

-10

-8

-6

-4

-2

0

2

Q4 2008 Q1 2009 Q2 2009 Q3 2009 Q4 2009 Q1 2010 Q2 2010 Q3 2010

Chan

ge in

like

-for

-like

sal

es y

ear o

n ye

ar (%

)

France Spain Italy Belgium

Source: Carrefour, Verdict Research V E R D I C T




The convenience store format has been vastly outperforming the hypermarket network in France

• Sales at Carrefour's convenience stores in France have been continuously resilient, outperforming turnover

at its hypermarket network. Consequently, Carrefour has been encouraged to invest heavily in its smaller,

more versatile outlets in terms of expansion and format innovation.

• The strong performance of Carrefour's convenience stores helped to buoy the retailer's total turnover in its

domestic market, which accounted for 42.9% of consolidated sales in 2009.

Figure 2: French hypermarket vs convenience store like-for-like sales change, 2008–10

-10

-8

-6

-4

-2

0

2

4

Q4 2008 Q1 2009 Q2 2009 Q3 2009 Q4 2009 Q1 2010 Q2 2010 Q3 2010

Chan

ge in

like

-for

-lik

e sa

les

year

on

year

(%)

Convenience stores Hypermarkets


The "everything under a single roof" format is no longer profitable for Carrefour

• Carrefour invented the hypermarket with the aim of selling all items under a single roof, thus increasing

basket sizes. The turn to non-food items helped Carrefour to boost its profits, as many of these carried

higher margins than food categories. This was especially applicable to categories such as electricals and

furniture. Customers benefitted as the retailer was able to sell big ticket items at competitive prices.

• However, this model is no longer proving effective for Carrefour. While margins in food have grown, many

non-food items have been underperforming. In 2009, non-food sales at Carrefour's hypermarkets in France

fell 5.6%, compared to a decrease of 1.7% for food sales for the year.




• Its other core European markets reported similarly disappointing results. In 2009, non-food sales at

hypermarkets in Spain and Italy slumped by 9.6% and 7.7% respectively. These extremely poor

performances pulled down total sales for the hypermarket format.

• Carrefour has been finding it difficult to remain price competitive in many categories, thus resulting in

squeezed margins, which has ultimately impacted upon the profitability of the format.

Reviving the format is vital for Carrefour's sales performance

Hypermarkets account for the majority of Carrefour's total sales

• Despite the poor performance of Carrefour's hypermarkets in Europe, the format remains vital to the

retailer's growth, as it forms the core of its entire trading concept. It also forms the bulk of its total European

turnover.

• Turnover at Carrefour's so-called G4 countries accounts for 69.6% of total group sales, indicating how

crucial this region is to the group's overall performance.

Figure 3: Proportion of total sales and hypermarket sales from Carrefour's G4 countries

Total Group Sales

Total Group Sales in G4 Countries

70%

Hypermarket Sales in G4 Countries

37%


• In 2009 sales across all stores in France accounted for 42.9% of total group turnover, meaning that the

sales performance in its domestic market has an acute impact on the group's bottom line.




• However, in France, hypermarket sales made up 52.5% of Carrefour's national turnover in 2009. Therefore

the hypermarket sales fall contributed to an overall sales decline of 2.8% in the country.

• Similarly, sales in Spain, Italy, and Belgium make a large contribution to total turnover, accounting for

35.5% of total sales. In these countries, hypermarkets also play a large role, accounting for 54.8% of full-

year sales in 2009.

• The heavy sales decline across all of Carrefour's European hypermarkets has dealt a blow to the group's

finances. As such, it is vital for Carrefour to improve the sales performance of this format so that it can

achieve its goal of market share gain across the G4 region, and to finance continued growth in its emerging

markets.

Carrefour's Strategy in Focus



CARREFOUR'S STRATEGY IN FOCUS

Carrefour has developed the Planet format as an alternative hypermarket

Carrefour Planet has been created to revive the retailer's failing hypermarket sales

• To ensure growth, Carrefour has developed a three-year transformation plan entitled "En Avant" (or

"Getting Ahead") consisting of seven core strategies. One of these strategies focuses on revitalizing the

ailing hypermarket, further indicating the importance of the format when it comes to boosting the overall

performance of Carrefour.

• Carrefour's hypermarket revitalization program involves the creation of a completely new format – one that

is built upon a new philosophy – in the form of Carrefour Planet.

• Carrefour Planet is a large format multi-specialty grocery store. It is similar in size, store location, and

product proposition to the traditional hypermarket stores with the main difference being its format. Carrefour

Planet is more departmentalised and thus creates a clearer division between categories.

• The retailer is planning to replace nearly half of its hypermarket stores across France, Spain, Italy, Belgium,

and Greece with Carrefour Planet.

Figure 4: Carrefour's new Carrefour Planet store format





• The branding for the Planet stores is consistent with Carrefour's other brands, such as Carrefour Market

and Carrefour City, in order to adhere to the retailer's brand convergence strategy.

Figure 5: Carrefour Planet branding, in line with the branding of its other formats

New large store format

Supermarket format

Inner city convenience store format


• Carrefour opened five pilot Carrefour Planet stores across Europe over the summer months of 2010. The

in-store proposition across all stores varies slightly, so as to match local market demands:

o two stores were opened near Lyon, France, in Ecully and Vénissieux

o two stores were opened near Madrid, Spain, in El Pinar and Alcobendas

o one store was opened in Mont-Saint-Jean, Belgium.

Nearly half of the existing hypermarket stores in the G5 region will be converted to Planet

• Carrefour is aiming for Europe-wide expansion for the new Planet format. It aims to open stores across

Carrefour's G5 markets in Europe, where the majority of hypermarkets are based, and where hypermarket

revitalization is badly needed. The G5 region consists of France, Spain, Italy, Greece, and Belgium.

• The format will be rolled out from the beginning of Q2 2011 and will be almost completely finished by early

2013.

• Carrefour aims to convert 245 of its 500 strong hypermarket network in the G5 region to Planet stores. The

retailer hopes for 70.0% of hypermarket sales in the region to be taken by the converted stores. €1.5bn will




be invested in the new format over the next three years, with an expected 18.0% sales rise at Carrefour

hypermarkets.

• Although revitalizing the hypermarket format is imperative to boosting flagging sales, converting almost half

of its network in Europe will prove to be a very costly process indeed; therefore, rollout needs to be

considered on a store by store basis.

• Carrefour's plan for the French market is more ambitious, with the aim of converting 120 stores, which

account for 60.0% of the existing network, with the hope that they will generate 76.0% of total hypermarket

sales in the country.

• For all remaining G5 countries outside of France, the aim is to convert 125 stores, accounting for 45.0% of

the hypermarket estate, which the retailer hopes will generate 60.0% of total hypermarket sales.

• In addition, certain aspects of the Planet format will be implemented in underperforming hypermarkets

internationally, especially in key growth markets such as Brazil.

Figure 6: Carrefour's rollout strategy for its Planet format across the G5 region for end of 2012

500 245 120

Total G5 hypermarket network

Planned Planet stores in G5

Planned Planet stores in France





Hypermarkets not converted to Planet will be revamped to boost performance

• Carrefour has embarked on a two-pronged strategy to help revive its hypermarket sales in the G5 markets,

meaning that all hypermarkets in the region will be revamped to some extent to negate the current trend of

falling sales.

• Nearly half of all hypermarkets will become Carrefour Planet, while the remaining stores will retain the

Carrefour brand, with some departments and features from the Carrefour Planet format integrated into the

stores.

Store layout will be improved to include segmentation across departments

The large sales space of the hypermarket format will be reduced in underperforming stores

• The retailer acknowledges that if the use of space cannot be fully maximized in some hypermarkets, then it

will have to reduce selling space to improve sales densities and profits. Indeed, this is a strategy that has

been adopted in the past. For example, its Toulouse store in France was downsized from 25,000sq m to

19,000sq m in 2010.

• Sales densities have suffered a steady decline since 2005, indicating an urgent need to divest stores of

unprofitable space.

Figure 7: Consolidated hypermarket sales data, 2005-2009

5,000

5,200

5,400

5,600

5,800

6,000

6,200

6,400

2005 2006 2007 2008 2009

Sale

s pe

r sq

m (€

)

40

45

50

55

Sale

s pe

r st

ore

(€m

)

Sales per sq m (€) Sales per store (€m)





The Carrefour Planet store layout is designed to be more accessible to shoppers

• Carrefour aims to utilize the large amount of space in Planet outlets to reflect the feel of a real market and

make each area much more visible and accessible to the customer, thus facilitating ease of movement

around the store. The following layout strategies have been adopted at Carrefour Planet:

o shelving and gondolas have been lowered by about 30cm

o aisles have been widened by about 20%

o signage indicating category location and pricing has become much clearer and more prolific.

Figure 8: Store layout of the new Carrefour Planet format


• Similar tactics have been adopted by other European retailers such as Edeka, with its Edeka 50+ stores in

Germany, which are specifically tailored to appeal to consumers 50 years and older. The more open layout

makes the store suitable for changing demographics, such as the aging population, but also for larger

families.




Figure 9: Large store signage indicating category locations in a Carrefour Planet in France


Carrefour Planet stores in France have been divided into nine category departments

• Carrefour Planet is clearly segmented into different departments, each focusing on a distinct category and

each with its own large signage hanging from the ceiling.

• Dividing the store into clearly distinct departments means that each store can be fitted out with the

departments most suitable for its location and consumer demands in the vicinity.

• Underperforming category areas have either been cut down or removed completely from stores, a strategy

the retailer will adopt for the remaining hypermarket network.

• The new format has also been clearly split into food and non-food with a separate entrance at each half of

the store, demonstrating how Carrefour is differentiating its non-food and food offer.

• In France, Carrefour Planet has been divided into nine core areas, to emphasize specialism in a few of its

strongest performing categories:

o organic food

o fresh food




o health and beauty

o children's goods

o clothing

o home

o leisure goods.

o frozen food

o multimedia goods

• Across its European networks in Spain, Italy, Belgium, and Greece, the category focus is the same with the

exception of multimedia goods and frozen foods which aren't explicitly mentioned as key focus areas

outside of France. Outside of France, seasonal products, such as Christmas decorations have also been

cited as a core category.

• Although the category focus is broadly similar across the store network, each one will include customized

departments catering exclusively to the local shopper. For example, pilot Planet stores in Spain include a

department for bicycles and an area selling Iberian ham, while the store in Belgium includes a wine cellar

and a games department.




Figure 10: Games and Iberian ham departments in Carrefour Planet stores in Belgium and Spain


• This strategy of departmentalization not only better showcases a given store's product offering by

highlighting its key areas of focus, but also means that selected departments can be easily slotted into other

traditional hypermarket outlets. Moreover, it means these can be moved around in a Carrefour Planet

without compromising operations in other departments.




• Focusing on select categories will enable Carrefour to maximize the sales potential of each department.

Cutting down or removing categories that have been hampering sales will greatly help to improve profits

through the reduction in mark-downs, while also helping to improve flagging sales densities.

Carrefour has focused its product assortment on value and best performing categories

The stock-keeping unit count across food categories in Carrefour hypermarkets has been rationalized

• According to Carrefour, the concept of selling everything under one roof, the philosophy which the

hypermarket format was founded upon, is now out of date, with sales of many product categories

underperforming and consequently pulling down total revenues. As Carrefour is not able to be competitive

across all product categories, some of these are being withdrawn to give more prominence to the most

competitive and successful categories. This applies to food and non-food areas.

• In some countries, the stock-keeping unit (SKU) count of food products may be decreased by 15.0% to

leave Carrefour with product areas which have the highest sales potential. For example, frozen food and

organics form a large part of shoppers' baskets in France, and so the amount of space dedicated to these

departments has been extended in the French Carrefour Planet model by 5.0% and 200% respectively.

• Growing consumer demand for fresh food has prompted Carrefour to introduce a fresh food area

resembling a traditional market, with fruit and vegetables sold from large wooden crates, and other fresh

foods, such as fish and meat, sold from deli style counters. Indeed, the fresh food area has increased by

33.0%. However, the SKU count in the department was cut by 13.0%.

Figure 11: Carrefour Planet's fresh food area, laid out to resemble a market





Carrefour aims to boost its profits by increasing the range of own brand food products

• The proportion of Carrefour's own brand food products present in store will be boosted. Currently, around

4,500 Carrefour branded groceries are sold. This will help Carrefour improve margins and also boost brand

penetration across the network.

• Carrefour hypermarkets have long held the reputation of carrying comparatively high prices. Extending the

presence of own brand ranges in store will help the retailer to improve its reputation for value. It claims its

own brand range tends to be 15.0-20.0% cheaper than manufacturer brands.

• The entry level Carrefour Discount brand, originally developed for the French market, has been extended

across the G4 region since mid-2009, with stores in Italy being the latest to launch the range in October

2010. Further rollout plans are in progress for the end of 2010; in Spain and Italy, the range will be boosted

to 300 SKUs by the end of 2010, while in Belgium, the SKU count will reach 390 by the end of the year.

This compares to 423 Carrefour Discount lines available in France.

• The retailer has reported that it will invest in creating innovative products across its own brand range, rather

than simply replicating existing products. This development will also take place across non-food categories.

• The retailer hopes that enhancing its private label range will boost margins by 40.0%.

Carrefour aims to become a specialist across a few select non-food areas




Figure 12: Carrefour Planet non-food sales area rationalization strategy

CHANGE IN SALES AREA

+ 40%

-15%

-12%

+3%

-5%

Health & Beauty

Home

Fashion

Electricals

Baby


• In the current economic climate, margins in non-food have declined, while those in food have actually risen,

a statistic which runs contrary to the original basis behind adding non-food ranges to hypermarkets.

• This is forcing Carrefour to rationalize its non-food offer, cutting down categories where margins have been

falling and extending categories that are proving to be profitable.

• Categories have been chosen according to the typical store demographic, and according to Carrefour's

competitiveness in that particular category. As women tend to form the bulk of Carrefour shoppers, health

and beauty and children's products have generally become more prominent in store.




Figure 13: Extending health and beauty area in a Carrefour Planet store in France


• Conversely, some items, such as electrical goods and furniture, in which online stores are making great

gains, are proving less profitable, and are being cut down by Carrefour in some stores.

• Removing bulky products such as electricals and furniture is a sensible move, as poor sales in these areas

have a great impact on sales densities, with such products also taking up selling space that could be used

to extend profitable categories.

Additional services and events have been introduced to Carrefour Planet

Services offering convenience and encouraging customers to stay in the store for longer have been added

• Carrefour has added services to its Carrefour Planet stores in a bid to boost basket sizes and sales across

multiple areas in the store.

• A consignment area has been added, where shoppers can leave their groceries while they browse the rest

of the store. Providing adequate assistance is offered to help shoppers carry their purchases to their car,

this strategy should help Carrefour to encourage customers to shop across departments.




• Furthermore, Carrefour has added a babysitting area and a crèche inside the store, which will help to speed

up the grocery shop for customers with young families.

• A snacking area with added seating has been incorporated into the Carrefour Planet layout. Carrefour is

trying to enhance the customer experience through eating areas customized to the store's particular

location and demographic. Stores in Spain include a bar, while others include diverse food-to-go options,

such as sushi.

Figure 14: Dedicated eating area in a Carrefour Planet store


Services promoting the multi-specialism of Carrefour Planet have been introduced to the format

• Carrefour's non-food areas have become much more specialized. To further promote its expertise in certain

non-food areas, it has added complementary services to those areas. For example, virtual makeover kiosks

and hairdressing areas have been introduced, alongside the extended health and beauty department.

Figure 15: Beauty Bubble hairdressing area in the health and beauty department





• The hairdressing unit offers a 10 minute haircut for €10 in an area called the Beauty Bubble. Such a

specialized service gives Carrefour Planet the air of a department store. However, the majority of shoppers

will still visit the outlet for their grocery shopping, while potentially adding some extras to their basket.

• It remains to be seen how successfully a hairdressing area in an open plan health and beauty department

will fare. While the lack of privacy may be an issue for some customers, the speed and value of the service

will appeal to certain demographics, such as men and parents with children that require a hair cut.

Moreover, the presence of a consignment area will help to attract shoppers to make use of services

• Carrefour is now partnering with well-known brands to open dedicated areas in Carrefour Planet stores.

Partners include Apple, Sony, and Samsung. This feature serves to highlight Carrefour Planet's department

store-type proposition.

The fresh food area has been revamped to appeal to food enthusiasts

• Carrefour has introduced a number of services and events in its fresh food area, intended to promote a

market style atmosphere and thus appeal to food enthusiasts, such as food tastings and the opportunity to

meet producers of goods sold in store.

• Such events will help to meet rising consumer demand for organic, local, and ethical food, as well as

encouraging consumers to cook from scratch, and therefore buy their ingredients from the store.




The pilot stores have already shown an improved sales performance over traditional hypermarkets

• Carrefour has reported strong sales gains from some of its pilot Planet stores. However, it should be kept in

mind that some of these gains may have originated from high footfall from first-time visitors keen to explore

the new launch. Only time will tell how much longevity the concept has once the initial novelty has worn off.

• Like-for-like sales increased by 8.0% on a 10.7% rise in footfall at the El Pinar store since its opening, while

the store in Belgium has benefitted from an increase of 8.9% in sales from a 13.1% rise in traffic, despite

the fact that this store has not yet been fully reformatted. As a comparison, sales growth at the rest of the

hypermarket stores remained in negative territory.

• The retailer reported that the revamped fresh food department at the new Planet stores has fared especially

well with a rise of 25.0% in revenue at the pilot stores in France and Spain.

Growth of convenience stores has been kept at a high level across the network

Carrefour is growing its network of convenience stores while revamping existing hypermarkets

• In light of falling hypermarket sales, Carrefour has been placing great focus on boosting its convenience

store numbers across its core G4 markets, as well as its emerging markets in Brazil, China, Indonesia, and

Turkey. This strategy has been pursued alongside its hypermarket revitalization plans. However, for

retailers without a dependence on existing large format stores, concentrating on opening smaller stores

may be the preferred strategy.

• The convenience store expansion strategy has been implemented partly due to the lower start-up costs for

smaller stores, and partly due to the sales success that such stores have brought the retailer.

• In comparison, hypermarket growth has slowed down. As such, the future growth strategy for Carrefour in

Europe involves boosting convenience store numbers, while maintaining hypermarket numbers and

revamping such outlets.

• Over the course of 2010, Carrefour opened 89 hypermarkets across its growth markets, compared to 358

convenience stores.

• It should be noted that the vast majority of hypermarket openings have taken place in the emerging

markets, with not a single store opening in France since 2008.

Figure 16: Carrefour global hypermarket vs convenience store openings




0

20

40

60

80

100

120

Q4 2008 Q1 2009 Q2 2009 Q3 2009 Q4 2009 Q1 2010 Q2 2010 Q3 2010

Num

ber

of s

tore

ope

ning

s

Convenience stores Hypermarkets

Source: Verdict V E R D I C T

Appendix



APPENDIX

Retail Innovations case studies

Verdict's Retail Innovations case studies are new for 2010. Each profile provides an evaluation of a company that stands

out due to a set of unique characteristics, or a particular strategic initiative. Verdict outlines the background of the company;

discuss the company's strategy; provide details of operational implementation; and comment on the successes and

challenges faced by the company in question. Forthcoming titles are subject to change as retailers reveal new initiatives.

Methodology

A variety of secondary sources were used in the creation of this case study, including Carrefour's strategic presentations on

its hypermarket reinvention plan, sales press releases, and annual reports: www.carrefour.com.

Further reading

Datamonitor (2010) The Future of Convenience Retailing in Europe, April 2010, DMVT0573

Datamonitor (2009) Private Labels in Retailing 2009, July 2009, DMVT0535

Datamonitor (2009) European Grocery Retailing 2009, January 2009, DMVT0483

Datamonitor (2010) In-store Services and Events in Global Retailing, December 2010, CM00025-004

Global Retail FreeView

Our fortnightly publication brings you a round-up of all the major events, news, and views in the international retail sector.

Click this link to register http://www.verdict.co.uk/news_freeview.htm.

Ask the analyst

The Verdict Knowledge Center Writing team can be contacted at [email protected]

Verdict consulting

We hope that the data and analysis in this brief will help you make informed and imaginative business decisions. If you

have further requirements, Verdict’s consulting team may be able to help you. For more information about our consulting

capabilities, please contact us directly at [email protected].

Disclaimer

All Rights Reserved.

No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form by any means,

electronic, mechanical, photocopying, recording or otherwise, without the prior permission of the publisher, Verdict.

The facts of this report are believed to be correct at the time of publication but cannot be guaranteed. Please note that the

findings, conclusions and recommendations that Verdict delivers will be based on information gathered in good faith from

Appendix



both primary and secondary sources, whose accuracy we are not always in a position to guarantee. As such Verdict can

accept no liability whatever for actions taken based on any information that may subsequently prove to be incorrect.

Copyright of Carrefour: Hypermarket Reinvention is the property of Datamonitor Plc and its content may not be

copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written

permission. However, users may print, download, or email articles for individual use.

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