Carrefour reinvents its approach to marketing

17 September 2010

PARIS: Carrefour, the French retail giant, is planning to support its expanded own-label range with a more sophisticated approach to advertising and in-store marketing.

Prior to the onset of the economic downturn, the hypermarket specialist focused on rolling out premium items and niche products.

Since the crisis, however, it has attempted to adopt best practice learnings practiced by direct rivals such as Wal-Mart and Tesco, alongside H&M, Zara, Uniqlo and Ikea.

In the first instance, Carrefour introduced a large number of own-label offerings, in an effort to act like a brand.

It now stocks Carrefour Discount goods covering everything from Camembert cheese to rice pudding, available for a lower rate than its high-end private-label selection, and up to 50% cheaper than national brands.

Carrefour chose nine categories in which to specialise, as well as providing the "best quality" fresh food.

"The Carrefour brand is a brand where we are known for the quality, we are able to sell at a level of price which is about 15% to 20% less than the producer brands, which is enhancing our competitiveness," Lars Olofsson, Carrefour's ceo, said.

In an indication of this shift, the company has replaced its previous slogan, "Quality for all," with a new tagline, "The positive is back."

"What's very important is price image," said Olofsson. "If I'm the number one preferred retailer … I'm the most likely to be the most profitable."

"One way of getting profitability is to raise prices. But you lose touch with the consumer and you start losing market share."

Such a move has become increasingly vital as hard discounters including Lidl and Aldi compete on cost, and as Carrefour's sales fell 2.7% last year to €96bn as shoppers cut back.

To improve perceptions of Carrefour's own-label goods, the company has assembled a marketing team, hiring executives from firms like Procter & Gamble and Reckitt Benckiser.

"We didn't have a marketing approach," said Olofsson. "We just put it on the shelf.

"We are staffing up at this point in time so we will be much more innovative, so we will come up with new products and not just products that exist already in the market."

Despite emphasising value, Carrefour's redesigned outlets - operating under the Planet banner - incorporate childcare centres and cosmetics counters echoing examples such as LVMH's Sephora.

"It's not because [a store offer] low-cost and competitive pricing that it has to look like a garage," said Olofsson.

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