Following the departure of Phil Clarke, to be replaced in October by Unilever’s Dave Lewis, there have been a number of parallels drawn between Tesco and Carrefour. Both have undergone fairly seismic bouts of underperformance in their home markets, outflanked by more nimble price-led competitors while struggling with what appears to be a burden of hypermarkets on the brink of obsolescence. Both have embarked on expensive and arguably ineffectual remodelling exercises in these larger boxes. Both have faltered overseas, with once global empires slashed to a more regionalised approach through a succession of closures, joint ventures and disposals. Both have suffered boardroom turbulence. Both have slid from grace in their respective stock markets.
The key distinction between the two is in leadership and its direction of change.
Tesco’s stumble occurred while under the stewardship of a dyed-in-the-wool retailer. Phil Clarke, who undoubtedly took charge of a creaking business beset by underinvestment in its home market, failed to turn around the retailer’s performance, with many key metrics varying from underwhelming to catastrophic. It could be said that his attempts to remedy the hypermarket issue and to establish a firm value identity for Tesco in the UK were less than successful. The dyed-in-the-wool retailer is to be replaced by an acclaimed FMCG marketing supremo.
Carrefour’s stumble occurred while under the stewardship of an acclaimed FMCG marketing supremo. Lars Oloffson, who undoubtedly took charge of a creaking business beset by underinvestment in its home market, failed to turn around the retailer’s performance, with many key metrics varying from underwhelming to catastrophic. It could be said that his attempts to remedy the hypermarket issue and to establish a firm value identity for Carrefour in France were less than successful. The FMCG marketing supremo was replaced by a dyed-in-the-wool retailer.
That dyed-in-the-wool retailer, Georges Plassat, with a track record of business turnaround, has seemingly worked his magic again. The scalpel was wielded on a complex mosaic of international activities, with many tertiary and/or unprofitable activities spun off or disposed of. At home, where Carrefour had been consistently outperformed by value operators such as Leclerc, firm action and communication on price has stemmed the flow of shoppers and market share. The expensive hypermarket remodelling programme was brought to a halt, with focus shifted instead to remastering retail basics like availability, service and excellence in fresh.
Carrefour’s French hypermarket business is still under a degree of pressure, however, with like-for-like sales only recently seeing a hint of recovery after many quarters of decline in both food and non-food. The failure of the Carrefour Planet concept has been well documented. The stores were beautiful (although more than slightly akin to grocery shopping in a nightclub), but were relatively expensive to deploy and also appeared expensive to shoppers, who clearly equated opulence with higher prices and defected to Leclerc and Auchan at an even quicker rate.
The Planet stores have all been rebadged back to plain old Carrefour, although the some of the more successful elements of Planet (fresh, baby, health & beauty, aspects of general merchandise) live on in some new and refurbished stores.
A few months ago, Carrefour opened a new hypermarket in Villeneuve-la-Garenne (a Paris suburb), with a new concept that can be seen as representative of the retailer’s current thinking over what the hypermarket of the future might look like. Many aspects of the store are breath-taking and likely to be commercially beneficial; other components are more run-of-the-mill but dead-certs to be commercially beneficial; some parts of it can probably be filed in the ‘technology for technology’s sake’ bucket; and other elements raise serious questions for me.
The retailer describes the store, which opened in April 2014, as ‘friendly and innovative’, featuring a range of connected services and allegedly offering its customers ‘a new way of shopping.’ Eric Bourgeois, Executive Director for Carrefour hypermarkets, said at the time: "Hypermarkets have been constantly innovating over the last 50 years in an ongoing drive to meet consumers' wishes and requirements", said. “The Villeneuve-la-Garenne hypermarket is the perfect example of this."
The store’s total sales area is 11,300 sq. m., spread over two floors, of which 6,100 sq. m. on the ground floor is allocated to grocery. There are one million shoppers in the store’s catchment area, with Saturdays accounting for 30% of sales, with the store welcoming 12,000 shoppers.
The undoubted highlight of the store is the fresh department. Unlike the Planet concept – sexy, but gloomy – the fresh department in Villeneuve-la-Garenne is sexy and light. With plenty of light-coloured fixtures and ample illumination, the ‘market-style’ section is incredibly spacious and an utter joy to shop. There are probably too many highlights to record here, but those that linger most in the memory include the fish counter, produce section, meat counter and the Spanish charcuterie section.
What really made it were the people. Folk were on the shop floor and behind counters actually trading the space: dishing out samples, literally shouting about special offers and talking shoppers through their areas of expertise. The overall effect, while initially slightly alarming for my shy and retiring British sensibilities, was like being in a street market – theatrical, immersive and an experiential delight that simultaneously engaged at least four senses. Wonderful, wonderful retailing.
Other sections of the ground floor were all executed well. Health & beauty, household and ambient grocery were all handled with aplomb. Booze (wine and spirits in particular) was superb, with some great branded displays and useful technological enhancements, such as cocktail and sommelier digital touchscreens. Private label was pretty good throughout too, with shoppers offered strong alternative to brands and the opportunity to switch, trade up or down. Carrefour Baby seems to have improved over the last year or so and the PL brands implemented in health & beauty are a distinctive and stylish addition to the mix.
In addition to the well-signed and easy-to shop category aisles and departments, there was an effective use of difference multi-category zones too. The typically French practice of lumping a ton of promotions together in one place was used to great effect, as was the deployment of a Course Eco zone – essentially a mini-discount store with cut-price products across ambient, household, H&B, chilled and frozen.
Tech was used across the store, including: the aforementioned touchscreen in BWS; welcome kiosks for loyalty card holders to get their hands on bespoke special offers; navigation touchscreens that enabled me to pinpoint the Haribo shelves before I started shopping; the ‘C-où’ app that enables customers to prepare their instore shopping route in advance and scan items for product information; a giant digital shopping wall to select and order domestic appliances and electronics items; and a digital customisation service for t-shirts, mugs, cushions and smartphone covers through the MyDesign offer.
A lot of these tech touches were actually useful. The app and navigation screens were quite handy and I can see a good few shoppers using these. Likewise the BWS touchscreens: a user-friendly way of helping shoppers through categories that can be confusing and rather intimidating. The giant touchscreen for buying a washing machine was slightly less convincing, while the MyDesign service looked like a fairly expansive and expensive way of allowing shoppers to knock out a phone cover with a picture of their cat on it.
The only grave misgiving I have with the store is concerning its overall physical structure. One of the massive issues confronting hypermarkets is non-food. Some categories (books, DVD, music) are dwindling at a breakneck speed as shoppers buy and consume digitally. Other categories (electronics) are being ravaged by online. Other categories (clothing) will only be worth doing in a major way if a retailer can create a killer range (brand) and back it up with equally high standard of merchandising and marketing.
In single-floor stores, a hypermarket has a fighting chance of shoppers drifting into general merchandise by accident or by design. A two-floor hypermarket faces an almighty challenge. In the absence of a specific non-food shopper mission, how awesome does the upstairs GM offer have to be to get time-pressed, economically-challenged shoppers to go to the effort of pushing a trolley up a travelator to look at stuff they probably don’t want or need?
The two-floor/GM caveat put to one side, one can regard this store as a wonderful case study of how Carrefour’s recovery in grocery is likely to continue. Excellence in fresh, stupendous merchandising, charming people actually trading the store, some half-useful technology and superb design combine to create a food store that nearly makes me want to live in Paris.
Range: 10 for grocery, 6 for upstairs, so call it an 8
Store design: 9
Customer service: 10
Private label: 7
Total score: 41