Carrefour focuses on value

01 July 2009

PARIS: Carrefour, the world's second-largest retailer by sales, is to focus on promoting lower prices in its hypermarket stores and marketing communications as it seeks to attract consumers looking to trade down to cheaper products.

While Wal-Mart has been one of the few major beneficiaries of the financial crisis, Carrefour has, as yet, not matched the performance of its US rival in terms of driving revenue growth.

The French firm has a presence in 33 countries around the world, and recorded total sales of €87.0 billion ($120.4bn; £73.1bn) in 2008, but recently posted its first quarterly loss in six years.

In its home market, which contributes around 44% of revenues, the company has come under increasing pressure from heavy discounters like Aldi, the German chain, and has also suffered from perceptions of being comparatively expensive.

Lars Olofsson, Carrefour's ceo, argued one of the main contributors to this trend has been a lack of consistency in its pricing and communications.

By contrast, he said, retailers like "Ikea, Wal-Mart, Tesco, Zara, H&M" have "for the last 20, 30 years hammered on the same nail every time."

According to Olofsson, Carrefour has "one million customers a day in our hypermarkets," and through adapting its strategy "can very rapidly start, at least, to change perceptions."

To achieve this, the retail giant will introduce a wide variety of new initiatives, such as improving its "price image" through heightening its activity related to "promotions, price and loyalty".

It has already implemented the "Carrefour Competitive Pricing" scheme in Spain, and this programme is now being tested in France, where it will be fully rolled out in September.

With regard to its marketing strategy, the company has also launched an ad campaign for its store brand range, Carrefour Discount, which it plans to increase in size to 400 products by the end of September.

Similarly, the retailer has replaced the prior focus of its in-store communications, which were based on the notion of "Quality for All", with a number of different price-based messages.

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