Carrefour's Strategies in China

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Case Details:

Case Code : BSTR246
Case Length : 30 Pages
Period : 1995-2006
Pub Date : 2007
Teaching Note : Available
Organization : Carrefour
Industry : Retailing
Countries : China

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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"Carrefour has gotten it right in China - and, in fact, they're doing mass retailing globally much more successfully than the iconic Wal-Mart, earning twice Wal-Mart's revenue. What Carrefour is doing right (in additional to grabbing and building as many retail outlets as it can in the big cities) is simple: They're selling in a Chinese way to Chinese consumers. You can pull your own seafood from tanks. You can select from bins of fresh produce. It's more like a Shanghai outdoor market than a Paris indoor one. That's the customer experience the Chinese consumer wants."¹

- Paul K. Ward², CRM Consultant, in 2005.

"China represents a huge market when it has acquired its WTO membership. But it's no easy way to stand out a winner here. China is nearly as big as Europe and each area differs from any other. We have to keep on learning something new. We must know customers' wishes and expectations, therefore offering them more added values."³

- Jean-Luc Chéreau, Chairman, Carrefour China, in 2004.

The 'Great Mall' of China

In 2006, France-based Carrefour Group (Carrefour), the second largest retailer in the world, successfully completed eleven years of its operations in China (Refer to Exhibit I for the top 25 food retailers in the world in 2005). As of September 2006, Carrefour operated in China through its 80 hypermarkets⁴ and around 250 hard discount stores⁵. China was Carrefour's sixth largest market, with sales of over €⁶ 2.06 billion in 2005 (Refer to Table I for the top six markets of Carrefour).

Being one of the first foreign companies to enter the Chinese retail industry, Carrefour played a major role in bringing about a retail revolution in the country.

It leveraged on its experience in the international markets and introduced a few of its global best practices into the Chinese market.

Carrefour had adopted a decentralized management structure, where all store managers in China operated stores with complete freedom. Carrefour sold private label products and designed the stores according to the convenience of Chinese customers.

By procuring the majority of its products locally, Carrefour was able to ensure their freshness, an attribute considered important by Chinese consumers.

In China, where vast economic, social, and cultural differences existed among different provinces, Carrefour was able to cater to the needs of different customers successfully.

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1] Paul K. Ward, "Goofing up Global CRM,"www.crm2day.com, September 06, 2005.

2] Paul K. Ward is known for his work in the area of CRM, Perceived Customer Value, branding and strategy in China.

3] "No Easy Way to Win in China: Carrefour,"People's Daily Online, March 31, 2004.

4] Carrefour's hypermarkets occupied floor space between 5,000 sq meters and 20,000 sq meters. They offered more than 70,000 food and non-food products like household products, medicines, and clothes.

5] Hard discount stores occupied area between 200 and 800 sq meters and sold a range of 800 food products. Carrefour's hard discount stores were named Dia, Ed, and Minipreco.

6] As of October 24, 2006, 1 Euro = US$ 1.254.