Carrefour: Retailing and Carrefour Essay

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CARREFOUR EXITS RUSSIA
Four months after its first store opened in Russia, the second largest retailer in the world, Carrefour revealed that it was going to exit the Russia market. Analysts stated that the two main reasons for the exit decision were Carrefour’s failing acquire of Russian-based grocery chain Sedmoi Kontinent and shareholder’s pressure on the company to focus on its core business. And for the other international retailers such as Wal-Mart and Tesco, their plan to enter the country has been influenced by the exit of Carrefour, according to Industry analysts, who had observed the Russian market closely.

BACKGROUND NOTE
In 1960 Carrefour was founded by Marcel Fournier and Louis Defforey and they firstly opened a 2500 square meter store in Saint-Genevieve Bois in 1963. It occupied enough space to park more than 400 cars and provided a wide range of goods including self-service grocery at discount prices, and clothing, sporting equipment, electronic goods and auto accessories. The store was acknowledged as “hypermarket” for its huge size and the lowest price compared to its competitors.
After opening 2 hypermarkets in 1966, the company planned to enter international markets since some laws to restrict the development of large stores had been passed. In 1988, Carrefour entered the US market by opening a 33000 sq. ft. hypermarket in Philadelphia and another one was set up in 1991. Until 1992, Carrefour announced its sales of €17.86 billion and a net income of € 271 billion. Concentrating on establishing larger stores since then, Carrefour’s European movements prevailed across Italy, Spain, Turkey, Greece and Portugal and the number of stores in South America has increased to 60 by the mid-1990s. According to the list of global powers of retailing, Carrefour became the second largest retailer in the world and the largest retailer in Europe in 2008. By operating 15430 stores all over the world with different store formats such as hypermarkets, supermarkets, convenience stores, hard discount stores and “cash & carry” outlets, Carrefour’s revenues were at €108.629 billion for the year ending December 2008.

CARREFOUR’S PLANS FOR RUSSIA
Commenting on the criteria for entering new markets, the Chairman of the Management Board of Carrefour, Jose Luis Duran said that it was only under these conditions that they would expand their scope of operations, which were capturing the leading market position within the medium term, establishing their brand quickly and securing a return on investment. Actually back to the mid-1990s Carrefour has opened a representative office in Moscow and finalized two prime locations. However, it was the financial crisis in 1998 that exited Carrefour from the country.
In June 2006, Carrefour planned to enter the Russian retail market again. After a series of movement like spending considerable time studying the market, looking for locations, interacting with other retailers and meeting officials, Carrefour announced its intention of entering the Russian market in June 2007. However according to Maria Sulima, a retail analysts with Metropol, Carrefour was rather late in coming. Because at this time Auchan and Metro had established a significant presence in the country with already developed logistics and distribution networks. In order to effectively step up its presence, Carrefour made a non-bidding offer to a local grocery chain Seventh Continent valuing it at US$ 1.25 billion in February 2009. But before Carrefour could conclude the deal, the owner of Seventh Continent ran into financial problems and went in for debt restructuring. Finally, Carrefour failed to acquire Seventh Continent because Valdimir Gruzdev decided not to sell the company.

OPENING STORES AND PULLS OUT
In June 2009 Carrefour opened its first store in Moscow and announced that it believed in the long-term potential of the country and considered the Russian market to be strategically important for the development of
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