In an interview with the FT Carrefour CEO Georges Plassat has laid bare the group's strategy highlighting growth markets and decentralisation as growth levers.
More growth to capture in Brazil and China
Mr Plassat has previously acknowledged the importance of Brazil and China, the group's second and fifth markets, and has announced in this interview that the retailer's rate of growth in these regions is 'probably insufficient', with a plan to be ready for the beginning of 2014. Outside of these core emerging markets, divestments in Colombia, Indonesia and Malaysia have shown the value of non-core assets and allowed the group to focus on bigger prizes; Mr Plassat stresses the importance of long term thinking when it comes to emerging markets.
Decentralisation a strategic aim
Moves to decentralise authority, especially in French hypermarkets, have been talked about for some time. It would seem that this move is now becoming a reality, with store directors deciding how much space to dedicate to seasonal products and which products to put on promotion. There is more freedom to allocate resources, with the flexibility to move staff around the store. Local authority also has the advantage of tailoring the store to local catchment, for example with larger counters, wine areas or organic departments as well as making stock management more effective and avoiding costly end of season discounting.
IT & supply chain improvements will drive margin expansion
IT is set to become the 'spine' of the organisation with a common system across formats, and in conjunction with supply chain offers the opportunity to expand operating margins, which sit at 2.6% in France and according to Mr Plassat 'are not at the right level'. This is linked to decentralisation, with a clear cost saving to be made around the inventory, with an oversupply of stock that was 'mind blowing'. Mr Plassat's no-nonsense approach and understanding of shopper and operational drivers, especially in France, is showing early signs of encouragement with stabilising sales and market share. The group remains in transition, although is more focused, and the medium term success of the plans will hinge on the retailer's implementation skills.
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