Carrefour chief says consumers will change

14 October 2009

PARIS: Consumer spending will become more "thoughtful" in the future, with supermarket own-label brands likely to be among the main beneficiaries of this trend, according to Lars Olofsson, ceo of Carrefour, the retail giant.

During the first half of 2009, Carrefour's sales volumes rose slightly, and the company also posted its first improvement in market share in a six month period for more than two years, up by 0.3%.

Over the last decade, Europe's biggest retailer had "lost focus on the consumer", its ceo said, and also suffered from restrictions on price competition imposed in its home market, France, which have since been relaxed.

"Carrefour went for quality, which I think was good for the image of the company but negative in terms of its price reputation. The pricing laws have loosened, but Carrefour from then on wasn't the most competitive."

Moreover, Olofsson argued that the organisation was inconsistent in its objectives, meaning "there has been this ambiguity between going for the bottom line or for the top line."

As previously reported, it has now adopted a "back to basics" approach in France, which delivers a considerable proportion of its revenue.

One million shoppers in the country visit Carrefour's hypermarkets every day, Oloffson said, adding that non-food products, in particular, were finding the going challenging at present.

More positively, "in Western Europe, consumers are buying more of our own Carrefour brand, which is lower in price than our supplier brands," he continued.

This trend is likely to continue in the future, as the experience of the recession fundamentally reshapes shopper behaviour.

"The consumer won't be the same tomorrow as they were yesterday. Consumer spending will be more thoughtful," Carrefour's ceo predicted.

"Even if we see uplift in the economy, the consumer has become aware of over-consumption. I'm absolutely sure a lot of customers have discovered alternatives to supplier brands. You'll probably see that our own Carrefour brand will continue to grow."

In terms of choosing which goods to stock, many manufacturers in the US have come under heightened pressure, with Wal-Mart said to be delisting less popular products in favour of its store brand range.

Olofsson similarly argued that "if the brand is making a difference, the customer will choose it. If the brand isn't, then it's not justified to be on the shelf."

With regard to the broader economic climate, he added that there were not any "significant signs of an immediate change."

“The only part of the world where they are still dancing the samba is Latin America. The economies there continue to grow quite well," he concluded.

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