French group Carrefour is one of the world's largest retailers. It lost its long-held position as the global #2 behind America's Walmart to Tesco during 2013, before overtaking its troubled British rival again in 2014. Yet both companies, struggling to offload their weaker international operations, have in turn been surpassed by other food retailers. Although Carrefour has no presence in the US, UK or Germany, it still has significant interests throughout the rest of Europe. However, it has steadily withdrawn from what was once an extensive presence across Asia and Latin America. The group has been wrestling for years with flat performance in its biggest territory, France, which still accounts for close to half of all revenues. There were signs that Carrefour might finally have begun to resolve these problems in 2006, but that modest progress quickly became bogged down at the end of the decade and a turnaround plan launched in 2010 delivered disappointing results. To appease its increasingly restless shareholders, Carrefour spun off its discount chain Dia as an independent company during 2011. It later bought back the Dia outlets in France. Yet that move has not prevented arch-rival Leclerc from overtaking it as France's biggest grocery retailer.
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Adbrands Daily Update 21st Jun 2019: Host nation France was a late arrival at the Cannes Lions Grand Prix party, only picking up its first top award on Thursday in the Creative Effectiveness category. Publicis-owned Marcel collected the Grand Prix for "Le Marché Interdit", a campaign for Carrefour supermarkets that highlighted the absurdities of EU laws on organic produce. The retailer created dedicated "Black Market" sites within its stores to sell cereals, fruits and vegetables grown from seeds that were not historically included in the EU's official Catalogue of Authorised Species. This lists only around 3% of the seed varieties available, predominantly patent-protected hybrids that have been expensively developed by commercial suppliers. There is nothing wrong with the majority of seeds not included in the catalogue, or with the EU's original desire to ensure food safety. However, explained the judges, "little by little, the agrochemical lobby had the catalogue rules changed so that only hybrid seeds could be eligible. In 1981, they passed a law to prohibit the sale of anything that did not fit into the catalogue. Today, it no longer serves food safety; it serves business. As a result, 90% of farmable varieties have disappeared worldwide in the 20th century, farmers have to depend on pricy hybrids patented by the agrochemical industry, and consumers are deprived of a wide range of superior produces, richer in nutrients, taste, and better for the environment."
Adbrands Weekly Update 5th July 2018: In an unexpected liaison, European supermarket giants Tesco and Carrefour have joined forces in a buying partnership for own-label products, with the aim of lowering costs and raising quality. The partnership will also bulk buy certain not for sale items, such as in-store cleaning products and storage systems. As a result of its specific focus on own-label, the arrangement is being seen as a direct response to the encroachment of discounters Aldi and Lidl, who sell almost exclusively own-label products. Carrefour CEO Alexandre Bompard said the partnership "combines the purchasing expertise of two world leaders, complementary in their geographies, with common strategies. This agreement is a great opportunity to develop our two brands at the service of our customers." The initial term of the partnership will be three years, but it is expected to continue beyond that on a long-term basis.
Adbrands Weekly Update 15th Jun 2017: French supermarket giant Carrefour named Alexandre Bompard as its next chairman & CEO. He will join the group in July to take over from current leader George Plassat. It's quite a challenge. Although Bompard has developed a strong reputation as the leader of electronics retailer Fnac, he has never worked outside France or in the groceries business. Carrefour, on the other hand, is the world's second larger retailer after Walmart, with operations in 30 countries around the globe. However, many observers have drawn parallels to the extraordinary rise of the similarly youthful new French president Emmanuel Macron.
Adbrands Weekly Update 18th Jan 2017: After years of neck-and-neck rivalry, French cooperative E Leclerc has finally overtaken Carrefour as that country's biggest supermarket retailer. Kantar's latest figures for the 12 weeks to Jan 11th gave Leclerc a leading 21.0% market share, that chain's highest ever figure. Carrefour slipped back to 20.7%, effectively reversing the positions the two groups occupied in October. No other chain had over 15%.
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Free for all users | see full profile for current activities: Carrefour's principal claim to fame is its invention of the Hypermarket concept, first launched in 1963. Based roughly on the American-style shopping mall, the hypermarket (or hypermarché in France) offers every sort of product but under one roof, with discount prices and onsite parking. The business grew out of French department store chain Fournier's. Owners Marcel Fournier and Louis Defforey opened a supermarket inside one of their stores in Annecy in 1961. A success with shoppers, they decided to combine the supermarket and department store models in one giant outlet situated at a major road intersection at Ste-Genevieve-des-Bois outside Paris. (The word carrefour in French means "crossroads").
The business grew quickly in France, and spread to Belgium in 1969. By 1970, the group had become France's seventh-biggest business by market capitalisation. Because of its size, French authorities placed restrictions on its growth at home, so Carrefour turned to the international market instead, opening outlets in Switzerland (1970), the UK and Italy (1972), and Spain (1973). In 1975, the group launched a range of unbranded private-label food products. The Tex clothing brand was launched in 1982, followed by Firstline consumer electronics and household appliances in 1987.
Meanwhile, the group continued to develop the spread of its business. In 1979 sister store chain Ed l'Epicier launched in France, selling discounted foods. In 1981, Carrefour launched its own store card, signing up almost 2m customers over the next 10 years. This sideline developed rapidly during the decade. In 1984, the group added car and home insurance bureaus to its largest stores, followed by a personal savings schemes (in 1989), then monetary funds, life insurance and most recently a range of short-term and medium-term investments.
In 1988, Carrefour opened its first US outlet, in Philadelphia. But the project was a failure, plagued by union problems, poor marketing and product selection. A second store opened in New Jersey in 1992, but both outlets were sold a year later. A debut store in Taiwan, launched in 1989, fared much better.
Prevented under competition laws from opening more than one or two Carrefour stores a year in its home country, the group continued to develop sister brands. Express Oil garages launched in 1990, and the group added out-of-store insurance services through new brand Carma. In 1991, it acquired rival supermarket chains Euromarche and Montlaur. That deal took a big chunk out of group profits, but didn't stop expansion plans. In 1993, Carrefour teamed up with Mexican group Gigante to open its first stores in Latin America. Three years later the group bought a 40% stake in French rival GMB Cora (later sold). Carrefour stores opened in Poland and the Czech Republic in 1997. With acquisition still on its mind, the group made a series of huge purchases in 1998 and 1989. First up was Comptoirs Modernes, which operated the Marche Plus, Commod and Stoc store chains in France, followed by Brazilian chain Lojas Americanas. Then in 1999, the group acquired one of its biggest rivals in France, supermarket chain Promodes, in a deal worth $16.5bn.
The development of Promodes since its launch in 1961 followed a distinctly similar pattern to its bigger rival. Paul-Auguste Halley and Leonor Duval-Lemonnier set up food wholesaler Promodes in France's Normandy region in 1961, and opened their first supermarket outlet a year later. As they opened new outlets they also added new brands including Champion supermarkets and Promocash cash-and-carry stores. Belatedly following Carrefour's lead, they opened their first hypermarket in 1970, under the brandname Continent. With Paul-Auguste Halley's son Paul-Louis as CEO, a selection of new formats were added during the 1970s including convenience stores Shopi and 8 a Huit.
In 1976 the first Continent hypermarket stores opened in Germany and Spain. Three years later the company launched Dia discount chain in Spain. The group floated the same year, although the Halley family retained 38% of the group's shares. In 1980, Promodes made a stab at the US market, acquiring south-western supermarket chain Red Food Stores. Although marginally more successful there than Carrefour, they also withdrew from the territory, selling the chain to Ahold in 1994. Europe was a more productive region for the group. During the 1980s and early 1990s, they opened Continent hypermarkets in Portugal, Italy and Greece, some as joint ventures; acquired supermarket chains Primestres and Codec in France, and Dirsa in Portugal. In 1994, Spanish business Continente was partly floated; two years later the group acquired Italian retail group Garosci, but pulled out of Germany. In 1997, Promodes acquired Catteau supermarkets from Tesco. In partnership with local retailer Exxel, the group paid $600m to merge Argentina's Tia supermarket chain, with Exxel's Supermercados Norte.
Following the merger of Carrefour and Promodes in 1999, the combined group agreed to sell most of its European shopping centre properties to French real estate company Klepierre in 2000 for €1.5bn ($1.4bn). The group leased back its own outlets, and used the extra cash to reduce debt and finance further expansion. Within days, it had agreed to spend €670m ($628.5m) to acquire the 72.5% of Belgium's GB supermarket chain it didn't already own. It later acquired almost 100% of Gruppo GS, Italy's #2 retail group and formed a joint venture with Greek retailer Marinopoulos to become that country's #1 retail operator.
However, attempts to integrate the Carrefour and Promodes businesses began to create problems at management and administrative level. Carrefour was forced to halve its growth forecasts as a result of delays in reducing crossover between the two giant store groups. More serious still was the stranglehold placed on Carrefour's French operations by local competition restrictions. Two laws passed in the 1990s aimed to protect small independent retailers as well as the French countryside. The Raffarin law limited the amount of new out-of-town retail space that could be developed by all the hypermarket operators, while Loi Galland prevented big groups from undercutting independents by selling branded goods at discounted prices. In addition, as a condition of the Promodes merger, Carrefour was not just limited but prohibited from opening any new stores in France for five years. This gave competitors license to exploit the full extent of Loi Raffarin to expand at Carrefour's expense.
But the most damaging development was the arrival of hard discount stores such as Aldi and Lidl, which bypassed both laws by building large numbers of smaller stores, and selling "no-label" products at substantially reduced prices, sometimes 50% or less than equivalent branded products available at Carrefour and the other giants. Carrefour responded with the aggressive expansion of its own hard discount brands, but it was not enough to prevent erosion of its overall market share. In 2001, Carrefour replaced four of the nine executive committee members in its French division in a bid to boost performance. Also that year, the group sold Picard Surgeles, its frozen foods subsidiary, for €920m ($848m) including debt, to a group of private equity companies, and sold its stake in Cora to Deutsche Bank. The group also took full control of Norte in Argentina, buying out partner Exxel.
Yet performance in Carrefour's home market has remained disappointing, and CEO Daniel Bernard came under increasing pressure from shareholders led by the Halley family in 2003 and 2004. They appointed Luc Vandevelde as their official representative in 2004. Formerly the head of Promodes, Vandevelde lost the top job at the merged group to Bernard in 1999, and had left to run troubled British retailer Marks & Spencer for several years. Back in France again, he raised the pressure on Bernard, finally leading to the latter's resignation at the beginning of 2005 after no improvement in French sales. Several other executives with responsibility for operations in France also left the company. Jose Luis Duran was promoted to lead the group, but when there was still no marked improvement in performance he too was forced out in 2008. See full profile for current activities
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