Carrefour aims to revolutionise store formats

26 August 2010

PARIS: Carrefour, the world's second largest retailer, is embarking on a new initiative that attempts to revolutionise the way it presents goods to shoppers.

The company is reacting to the changing needs of customers, who have cut back on purchasing durables in the wake of the global economic slowdown.

Many consumers no longer buy electronics and apparel in supermarkets, and visit specialist stores instead.

As a consequence, Carrefour's sales decelerated in France, Italy, Belgium and Spain, which generated around half of its €96bn ($122bn; £79bn) revenues in 2009, a figure down 2.7% year-on-year.

"The problem is that clients are not that excited by us," Lars Olofsson, Carrefour's ceo, told the Wall Street Journal. "They're either coming to us less often or shopping at supermarkets."

In response, it has opened two redesigned "Carrefour Planets" in Madrid and one in Ecully in Lyon, with a wider roll out set to begin in 2011.

This scheme forms part of a broader programme leading to the closure of 17 locations in Italy and Belgium, and the reduction in size of Carrefour's biggest European outlet, near Toulouse.

"The hypermarket hasn't changed significantly since Carrefour invented it 47 years ago, but consumers have," said Olofsson.

More specifically, the Ecully store offers clearly-defined sectors - like the "organic area", "fashion area", "frozen food area" and the "leisure-multimedia area" - alongside a sushi bar and free babysitting.

According to the company, Carrefour Planet branches reflect the requirements of Europe's ageing population, typically not well served by very large stores.

Declining birth rates mean fewer families now undertake weekly trips to stock up on essentials, and the important role women play both in the workforce and at home must similarly be recognised.

"We have chosen areas where we can be unique and it fits the clients, 70% of whom are women," said Olofsson.

In anticipation of the modifications likely in its 231 hypermarkets in France, the Ecully design has removed slow-selling products such as bicycles and trimmed the number of DIY items on its shelves.

Instead, it features extensive sections dedicated to beauty and clothing that replicate the atmosphere in boutiques.

The next French pilot Carrefour Planet, in Vénissieux, will also boast "exclusive partnerships with major brands" including Virgin and Réserves Naturelles.

Many alterations were based on a survey of 50,000 shoppers, which yielded further innovations from more spacious aisles and improved lighting to individual entrances for buying food or non-food goods.

Carrefour said it has been "very encouraged" by the performance of new stores, with apparel sales having increased by 30% under the "Planet" banner.

"The business need [for hypermarkets] is still there, but it has to be organized better," Gianni Ciserani, Procter & Gamble's chief executive in Western Europe.

However, Christopher Hogbin, senior retail analyst at Sanford Bernstein, was sceptical, arguing this model represented a "structurally challenged format."

Data sourced from Wall Street Journal; additional content by Warc staff