global-indian retail scenario & marketing strategies by carrefour's
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Welcome to WASS
10/11/2010
Global- Indian Retail Scenario &
Marketing Strategies by CarrefoursBy Dr. Chandan A Chavadi
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Global Retail
Summary
Over 50 of the Fortune 500companies, and around 25 ofthe Asian top 500 companies,
are retailers.Market value
The global retailing industry grew by
1.5% in 2009 to reach a value of
$10,539.9 billion.
Market value forecast
In 2014, the global retailing industry
is forecast to have a value of$14,175.6 billion, an increase of
34.5% since 2009.
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Market segmentation I
Food and Groceryis the largest segmentof the global retailing industry,generating total revenues of $5,637.8billion accounting for 53.5% of theindustry's total value.
Market segmentation II
Europeaccounts for 37.4% of the globalretailing industry value.
Market share
Wal-Mart Stores, Inc. is the leading
playerin the global retailing industry,generating a 3.8% share of theindustry's value while Carrefour has amarket share of 1.1%
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The performance of the industry isforecastedto accelerate, with ananticipated CAGR of 6.1% for the five-year period 2009-2014, which is
expected to drive the industry to a valueof $14,175.6billion by the end of 2014.
The global retailing industry groupgenerated total revenues of $10,539.9billion in 2009, representing a
compound annual growth rate (CAGR)of 4.3%for the period spanning 2005-2009.
In comparison, the European and Asia-
Pacificindustry groups grew with CAGRsof 3.8% and 4.2%respectively, over thesame period, to reach respective valuesof $3,940.1 billion and $2,673.1 billionin 2009.
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The global retailing industry group is
defined here as the sum of six
segments, each comprising only
business to consumer (B2C) sales forthe following groups of products.
1) The apparel, accessories, and luxury
goods segmentincludes menswear,womenswear, childrenswear,
footwear, watches, jewelry and
related products.
2) The food and grocery segment
includes food, beverages, tobacco,
household care, personal care, and
related products.
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3) The electricals and electronics segmentincludes audio-visual equipment, fixedand mobile telecommunicationsequipment, computers and peripherals,domestic appliances, photographic
equipment, games consoles, and relatedproducts.
4) The house and garden segment includescarpets and floor coverings, domesticfurniture, garden products, home
improvement products, and related goods.
5) The media products segmentincludes books,newspapers, stationery, recorded music andvideo, and related products.
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6) The sports and leisure segment
includes sports and fitness
equipment, traditional toys andgames, and related products.
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Share of Organized Retailing in Countries
Country/Region Share of Organized Retailing
USA 80%
Western Europe 70%
Malaysia 50%
Thailand 50%
Brazil 40%
Argentina 40%
Phillippines 35%
Indonesia 25%
South Korea 15%
China 10%
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Indian Scenario
According to a McKinsey & Company reporttitled 'The Great Indian Bazaar: OrganizedRetail Comes of Age in India', organizedretail in India is expected to increase from 5
per centof the total market in 2008 to 14 -18 per cent of the total retail market andreach US$ 450 billion by 2015.
Indias retail industry accounts for 10percent of its GDP and 8 percent of the
employment to reach $17 billion by 2010.
Indias retail growth was largely driven byincreasing disposable incomes, favorabledemographics, hanging lifestyles, growth of
the middle class segment and a highpotential for penetration into urban andrural markets.
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Major Retail Chains in
India
Shoppers Stop
Big Bazaar and Future
Bazaar RPG group
Lifestyle
Trent Retail
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Major Players category-
wise
Apparel retailing ( Westside, owned byTatas Trent and Shoppers Stop ownedby the Raheja Group).
Food retailing ( Foodworld by RPG
Group and Food Bazaar of PRIL) Music and Entertainment ( Music world
of RPG Group and Planet M of Times ofIndia Group)
Book retailing ( Crosswords, Landmarkand Oxford bookstores)
Watches and jewelry retailing( Tataowned Tanishq and Titan)
Home Furniture ( Durian and GautierIndia)
Luggage (VIP & Samsonite)
Footwear retailing ( The Loft and Bata)
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Organized Rural
Retail Stores
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Carrefour Background Carrefour is the world's second largest
and Europe's largestretailerof groceriesand consumer goods.
The group operates more than 15,000stores(both company-operated orfranchises) through fourmain grocerystore formats: hypermarkets,supermarkets, hard discount, and
convenience stores.
Carrefour operates in Europe, LatinAmerica and Asia.
The group is headquartered in LevalloisPerret Cedex, France, and employsaround 495,000 people.
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The group operates about 1,302hypermarket stores across the world:228 hypermarkets in France, 494 inEuropean countries outside France, 288in Latin America, and 292 in Asia.
The group operates approximately2,919 supermarket storesin 11countries under the bannersCarrefourExpress, Carrefour market, GB, GS and
Champion.
Carrefour's hard discount segment, Dia,operates about 6,252hard discountstores in Spain, France (under the Edbrand), Portugal (under the Miniprecobrand), Greece, Turkey, Argentina, Braziland China.
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The group's other activities compriseconvenience stores, cash and carryfoodservice stores, and e-commerce retailformat.
Carrefour operates about 4,813convenience stores and 144 cash and carrystores.
Convenience storesare mainly operated byfranchiseesunder the banners Marche Plus,Shopi, 8 a Huit and Proxi in France; DiperDiin Italy; Carrefour Express in Belgium andBrazil; Carrefour 5 Minut stores in Poland;Carrefour City stores in Spain; and CarrefourConvenient Buy in Thailand.
Carrefour operates cash and carryfoodservice storesunder the trade namePromocash. Most of the cash and carrystores are operated by franchisees.
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Carrefour also sells its products
through various e- commerce
websites. Carrefour operates an
online grocery store, Ooshop, aleading French online supermarket
in terms of sales.
Carrefour France hypermarket's non-food website, CarrefourOnline.com -
- offers products such as leisure
products (DVDs, games, software,
music, books and more), audio and
video, household electrical goods, as
well as music downloads and even
flower and bicycle delivery.
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Carrefours
Strategies in China
As of July 2007, Carrefour operated in Chinathrough 100hypermarket, and around 255hard discount stores.
It had 300 million customers per year and
22,300local suppliers. It is the leading foreignemployer and employed 40,000employeesduring 2007.
First foreign company to enter the Chineseretail industry (1995).
Adopted decentralized management structure,where all store managers in China operatedwith complete freedom.
Stores designed according to the convenience
of Chinese customers.
When most foreign retailers viewed China as alarge market, Carrefour saw it as many smallmarkets.
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95%of the stock soldwas procuredlocally.
Ensured freshness, an attribute
considered important by Chineseconsumers.
Formedjoint ventureswith Chinesemanagement consulting firm ZhongChuang.
In 2004, Carrefour introduced ChampionSupermarket format.
A survey made available by Carrefourshows that the company's consumergroup in China comprises mainlymedium and low-incomeurbanresidents.
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This conclusion was based on survey resultsindicating that about 28 percent of itscustomers arrive on foot, 15 percent onbicycle and 20 percent by bus.
Carrefour sold variety of foods under oneroof.
Conveniencewas another factor thatCarrefour promoted.
The basket sizein the Chinese stores wasmuch smallerthan European stores.Chinese consumers bought in smallquantities, several times a week.
Daily shopping for fresh foods was widelyprevalent in China.
Established hypermarkets in major shoppingmalls.
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Store mangeralong withdepartment headdecided on theproduct mix.
To keep flexibility in supply chain,Carrefour use bikeif its the lowestcost and most efficient.
To differentiate imported productsfrom Chinese products, flag of thecountry from which the product hasbeen obtained was displayed on itslabel.
By 2006, 11 purchasing centershadbeen established across the country.
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Carrefour stores were locatedat the center of the city with
easy access to public transport.
It did not follow a particular store format and encouraged
store managers to come out with the best format for the store
and sales plan.
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Carrefour sold its own labelofproducts which were priced 20-40%below the market price.
Most of the Carrefours stores inChina were spread across severalfloor and ramp escalators.
The department selling fresh foodsand groceries were designed toresemble local outdoor market.
Ladies call out to customersayingCome here, this is fresh and good,
just like in street markets.
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The fresh foodsection was located
at the entrance in a clean
environment.
For selling fish, Carrefour adopted
different methodsstores located
near coastlineCarrefour sold live
fish, away from coastlineasconsumer preferred sold frozen fish.
In manyof the Carrefour stores in
China, consumers canbuy live fish,turtles and meat that was not
usually available in Europe.
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At Uighur, populated mostly by Muslims,Carrefour did not sell pork. All products soldthere (Uighur) was certified halal products.
For important festivals, Carrefour decoratedits stores according to traditional practicesand stacked with items like paper lanterns.
Carrefour promoted valuessuch asfreedom, responsibility, sharing, respect,integrity, solidarity and progress among theemployees.
Carrefour spent around 2% of its payrollcosts on training. Created the Carrefour
China Institute in 2000 in order to trainChinese staff to take positions ofresponsibility.
h d ff
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Carrefour Broad
based Strategies
Worldwide
Price: A Heightened offensive Commitment to low pricesthe core
strategy in all retail banners and in everycountry in which the Carrefour group
operates. The low price strategy hasbeen leveraged by three key strategies:purchasing synergies, price positioningand improved product presentation.
To ensure the best prices, Carrefour hascontinued to expand purchasingsynergies (pooled purchasing)with Dia.
Carrefour strives to be the price leaderthroughout the world by deploying an
ongoing and aggressive low-price policyand expanding its in-store promotionsand communications.
Th i d i f h Li Al P i
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The introduction of the Ligne Alerte Prix(Price Hotline) in hypermarkets in France inApril 2006 reflects this commitment.
The hotlinegives customers a key role in
competitive intelligence while providing themwith an opportunity to influence prices.Carrefour is committed to lowering its priceswithin 24 hoursif a customer identifies alower price at a competitors store.
In 2006, Carrefour Argentina made a strongimpression on consumers with a wide-rangingadvertising campaign. Launched on 23February 2006, the campaign helped tocement the reputation of Carrefourhypermarkets as a business committed tokeeping prices down. Throughout the country,
Carrefour promised the lowest prices on 800basic consumer goodsand invited consumerorganizations to verify its claim.
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Improved product presentation
By showcasing productsin display units or in their original
boxes rather than stocking shelves with products one by one,
stores save significantly on time and labour, resulting in lower
costs and lower prices for consumers.
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Products: An
Expanded Offering
One of the Groups strategies for
energizing sales growth is to offer a
broad, high-quality and innovative
array of both groceryand non-grocery products.
In France (2006), product ranges
were revamped andassortmentswere expandedwith 2,000 new
product listings sold under the
Carrefour name. In particular, two
new product lines for children were
added: Carrefour Kids(ages 4-10)
and Carrefour Baby (infants up to
age 2), developed in cooperation
with a committee of pediatricians.
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In 2006, Champion supermarkets in
France expanded their selection of
store-brand products, with 850 new
listings now available in stores:
Innovative fresh foods: mini fruits and
vegetables for children, microwavable
vegetables, and the first line of
cholesterol fighting yoghurt launched asa store brand.
Sophisticated gourmet products: 100
premium-quality product listings underthe Collection Champion brand name
are now competing with upscale
products from the major brands.
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Environmentally and socially
conscious products, like the many
eco-friendly household cleaning
products bearing theChampion Eco Plante name.
Carrefour and Tetra Pakhave
pioneered a consumer awareness
campaign in over 600 hypermarketsacross Europe. The scheme, which
was launched in early February, uses
Carrefour-branded milk and juice - in
specially designed Tetra Pak cartons
which provide eco-tips to
consumers. The products are on sale
in stores in Spain, France, Belgium
and Italy during EU Sustainable
Energy Week(9-13 February 2009).
Carrefour is making good progress in
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Carrefour is making good progress inreducing energy consumption in storesand in working towards its objective of a20% reduction by 2020compared to2004.
It is deploying innovative energymanagement systems, energy savinglighting and closed freezercabinets toachieve greater energy efficiency, withregular reporting to ensure it keeps on
track with targets. Carrefour is also developing solutions
for consumers such as the sale of greenelectricity to households and thegrowing offer of energy efficientproducts. Carrefour will also continue to
raise supplier awareness and facilitateefforts to improve their environmentalperformance.
L lt P I (2006) C f
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Loyalty Programmes:
More Benefits for
Customers
In France(2006), Carrefour
strengthened its appeal by
introducing loyalty card, now carried
by some 8.7 million customers. Afterthe introduction, hypermarkets
recorded an increase in both the
average customer purchase and the
number of customer visits.
Carrefour celebrated a highly
symbolic anniversary which offered a
5% discount year-round on 8,000
Carrefour brand products.
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T it i ti t it b t
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To express its appreciation to its best
customers, the banner developed
an exceptional promotional
campaign: a mailing sent to allcardholders, a radio campaign, a
special catalogue, anniversary
terminals and in-store displays.
The purposeof the campaign was to
offer a 40% reduction on 300
products over a 10-day period. The
campaign proved an enormous
success in Carrefours 218
hypermarkets in France, which in
two years have developed the
largest customer databasein the
countrys retail sector.
A l b t it t t !
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A consumer club to suit every taste!
To keep customers coming back, GB
in Belgium and Champion in France
have introduced a new concept:consumer clubs, which offer even
more advantages to loyalty
cardholders. Beauty Club, Baby Club,
Healthy Living Club, Gourmet Club:
every customer can find a club to
suit his or her lifestyle and needs.
On the banners websites and in
brochures, club members receive
practical advice from expertsand
exclusive offers in the form of
discounts on targeted products.
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Loyalty Card Statistics
8.7 million Carrefour loyalty cardholders in France
6.3 million Carrefour El Club loyalty cardholders in Spain
5.6 million Champion Iris cardholders in France
S i A Carrefour becomes a mobile virtual
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Services: A
Growth Engine
Carrefour becomes a mobile virtualnetwork operatorin France.
On 8thNovember 2006, following theexample of its sister unit in Belgium,
Carrefour France unveiled its newmobile phone servicean economical,user-friendly, no-obligation service thatreflects Carrefours strong commitmentto its strategy of innovation at every
level for the ultimate benefit of itscustomers.
Featuring prepaid services, a fixedpricing plan for both phone calls andtext messages and a reliable network,
Carrefour Mobile relies on a transparentmarketing campaign and a partnershipwith the European operator Orange.
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Home Computer Support
Fifty percentof French householdsown a personal computer, but
many report problems with installing, using and repairing their
equipment. The solution?
Carrefour Micro-informatique Assistance(Computer TechnicalSupport), available since 8 November 2006, in 86 hypermarkets in
southwest France and the Paris metropolitan area.
Experts provide technical assistancevia telephone from 8 a.m. to 10
p.m. seven days a week or in customers homes from Monday
through Friday.
Home training sessionsfor up to five people can be arranged upon
request.
Champion Service An array of synergies with Carrefour
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Champion Service
Packages An array of synergies with Carrefour
Introduced in May 2006, the
Champion Service Packages are
mainly comprised of Group servicesand draw on the expertise of
Carrefour hypermarkets. They
operate as follows: in-store flyers
offer a range of different services to
customers, available via a specialtelephone number. These packages
include a portfolio of 11 services in
four different categories:
Financial servicesincluding the PASS
card, personal loans, life insurance
and interest bearing savings
accounts.
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Insurance coverage, including homeowners and automotive
insurance, family protection and pet insurance.
Travel services, including car rentals in partnership with Avis.
Practical information, including a care hotline for disabled
and elderly individuals. This new service will both attract and
retain new customers.
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