Setting out his vision for how Carrefour can adapt its model and organisation ‘to be the world leader of the food transition for all’, the retailer’s chief executive, Alexandre Bompard, has launched the Carrefour 2022 transformation plan.
Carrefour 2022 sets out four pillar strategy
The strategy is built on four pillars:
1. Deploy a simplified and open organisation: although much will be made of reducing the headcount in France, Carrefour has highlighted how it is ‘becoming more open to partnerships, growth levers and innovation’.
It highlighted the recently signed agreement with Fnac-Darty as an example, while also announcing a new partnership with Tencent in China. The latter partnership, which could be aided by the sale of a stake in Carrefour China to Tencent and Yonghui should provide a new impetus for its operations in China, where it announced continued challenges in its Q4 results. It would support the retailer’s efforts to compete online in the country, where it has lagged rivals, especially following the announcement by Auchan of a sale of a stake in its China-based business to Alibaba.
2. Achieve productivity and competitiveness gains: Carrefour said to invest in growth and its price competitiveness it would make annual investments of €2 bn, aim to generate €2 bn of cost savings annually by 2020, invest in ‘commercial competitiveness’ and plans to reduce the number of ex-DIA stores by 273. For the latter point, buyers will be sought for the ex-DIA stores, but where they are not found, they will be closed.
The cost reduction plan would be driven by more direct purchasing. A reduction in the size of its assortment, by more than 10%, will support this, while it said it would undertake ‘negotiations at an international level to take advantage of the Group’s presence in more than 30 countries’.
3. Create an omnichannel universe of reference: the much-expected announcement around investments in digital came under this pillar. Carrefour said it would make ‘massive investments in digital of €2.8 bn by 2022’, target food ecommerece sales of €5 bn by 2022, a target that would be aided by the launch of a single online brand, Carrefour.fr, in 2018. Home delivery will be extended in France to 26 cities by the end of 2018, with one hour delivery available in 15.
The retailer said it would support the omnichannel efforts on a global basis by accelerating the expansion of the Atacadão banner in Brazil, the conversion of 16 hypermarkets to Maxi in Argentina, and the expansion of Promocash in France. Finally, Carrefour said it would look to open 2,000 convenience stores in the next five years in major cities in Europe.
In relation to its hypermarkets, Carrefour said it would reduce the sales areas of stores, ‘by a total of at least 100,000 sq. m by 2020’, bolster its ‘purchasing and selling alliances to improve the non-food offer’ and strengthen their operational efficiency. Carrefour said it planned ‘no closures’ in France, which will be a surprise to many who were expecting them.
4. Overhaul the offer to promote food quality: building on its long-standing focus on quality, Carrefour has said it is looking to provide shoppers with ‘quality food that is reliable, accessible everywhere… at a reasonable price’. To this end it is aiming to add one million shoppers for fresh food in France by 2022, drive ‘fresh food sales growth three times higher than that of FMCG by 2022’ and was targeting €5.0 bn of organic sales by 2022. Finally, it said it was looking to generate a third of its turnover from Carrefour-branded products by 2022.