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French Retailer Carrefour Set To Start Fresh Consumer Revolution Using Bricks, Clicks and Blockchain

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Carrefour, one of the largest hypermarket groups in the world and a leader in France, on Tuesday set out a new strategy to take it along the cross roads from traditional retail to the online experience.

New chairman and CEO Alexandre Bompard, brought in from specialist retailer Fnac, unveiled a strategy for Carrefour 2022 that sees it reducing the weight of the giant hypermarkets it pioneered and embracing the online and home delivery sector with its Carrefour.fr brand and site to secure the market ahead of French fresh expansion of Amazon.

To distinguish itself from discounters as Aldi and Lidl, Carrefour will focus on food quality and transparency.

Founded in 1958 with a store at a crossroads (Carrefour in French) near Annecy, it now has some 1,500 large hyperrmarkets around the world with food and non-food goods and many private label products.

Bompard announced a plan combining cost cuts at headquarters with alliances and investments in digitalization.

While groups like Carrefour, Casino and Auchan attracted many consumers away from the small retailers and food shops in towns and cities to their large sites in the suburbs with large product offerings and cheap prices, Bompard now wants to go back to have food quality at the center of business.

“Intensive production methods have reached their limits. Consumers have never been so concerned about what they eat. They rightly want more information, quality and transparency across the entire food chain. Carrefour, a historical player of the mass consumption movement, now wants to lead a new battle: that of the food transition for all,” the company said.

“This ambition rests on strong commitments: To guarantee to our customers accessible and affordable products, to act for the democratization of organic products, to strengthen our fight against food waste, to improve the sustainability of packaging and above all, to ensure food safety. Recent events have demonstrated the need to put our organizations in marching order to address the crucial issue of food safety,” it added, in the wake of a recall of tainted baby milk by a French producer.

Headquarters cut

Carrefour will downsize its headquarters in all countries, cutting 2,400 jobs at its French HQ on a voluntary basis, closing its corporate headquarters in the Paris suburb of Boulogne-Billancourt and abandoning plans for a new large HQ in the Essonne region.

In France, it aims to partner with Fnac Darty, the company where Bompard executed a merger against initial opposition from the Darty white-goods retailer, and the online private sales group Showroomprivé.

In China, Carrefour is partnership talks with Tencent and Yonghui, a retailer specialised in small stores and fresh food.

Carrefour aims to cut costs by two billion euros on an annual basis by 2020, slashing the product range by 10 percent, negotiating lower prices, improve logistics and reduce structural costs.

It will put a focus on growth formats such as supermarkets and convenience stores, as well as cash & carry in Brazil (Atacadão), Argentina (Maxi) and Europe (Promocash in France)

It plans for two billion euros in annual investments from 2018, mainly in IT and digitalisation and the creation of preparation platforms for online delivery. Some smaller ex-DIA deep discount stores will be sold and some hypermarkets will see their sales area cut.

Food e-commerce

Carrefour set a target of five billion euros in sales in food e-commerce by 2020 and aims to have a market share of 20 percent by 2020, offering more and faster home delivery, improved “Drive” service where clients pick up prepared shopping bags, as well as “click and collect”. For last mile deliveries, Carrefour signed a partnership with a unit of La Poste.

“The power of the Carrefour brand must be fully exploited to serve the ambition of an omni-channel food offer of reference in the 33 countries in which the Group is present. In France, to strengthen its digital identity, the Group will launch in 2018 a single website, Carrefour.fr, which will include all its generalist shopping offering. This single website approach will be rolled out in all geographies,” it said.

To promote food quality, Carrefour also unveiled several initiatives, including

- Carrefour Quality Lines to represent 20% of sourcing by 2020 in France;

- The launch of an agroecology plan as of 2018;

- Promotion of local products, by ensuring their predominance in certain areas;

- Financial and sustainable support for the conversion by farmers to organic farming: Carrefour partners with WWF to finance the conversion to organic, with the creation of specific WWF labeling;

- The mobilization of the Carrefour Foundation to finance organic farming projects;

- Multiply by two the number of employees trained on fresh food in France in 2018;

- Generalization of Blockchain technology to improve product traceability beginning this year.

Giant versus dwarves

The total package is a lot to chew on and is set to disrupt the French sector once again.

Rival Auchan was in talks with Amazon for food delivery, organic and regional food supply and retail stores and cooperation’s are springing up all around the country while specialised quality food online platforms are having a big success among the higher earning consumers.

The plan ticks the boxes for current consumer interest with fresh food, online, food security, traceability, organic foods, less pre-packaging, smaller stores as well as cash & carry for people with tighter budgets.

The gamble is whether Carrefour is better suited as a giant to do all this better, and at a decent profit margin, than the many specialised dwarfs connected via local communities or the big online information sharing platforms.

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