A check to Carrefour's expansion
Carrefour SA, the giant French hypermarket chain and world’s second-largest retailer (after Wal-Mart), recently announced that it would retreat from Japan, only four years after staking out a position there. Its stores, which involved no local partnering, never caught on. The retailer said it would sell its eight locations to Japanese retail chain Aeon. Aeon owns and operates 256 supermarkets in Japan and 450 general merchandise stores. One consolation is that Carrefour’s’ global rival Wal-Mart is also stumbling in Japan.
Carrefour also announced it was pulling out of Mexico, where it has 29 hypermarkets. It is selling them to Grupo Chedraui, a Mexico food retailer. Wal-Mart is a major, aggressive competitor, #1 in Mexico and with 695 stores across the country.
Carrefour owns stores in 30 countries in Europe, Asia, and Latin America. In addition to Hypermarkets, it owns a number discount stores, supermarkets, and convenience stores. Its stores are actually doing rather well in China, where it owns over 200 stores and plans to open 150 more.
The firm has other problems. Its CEO resigned recently, and it is also pulling out of operations in the Czech Republic. Sales in its flagship French stores declined last year, losing shares to discount-oriented competitors like Aldi and Leclerc. In addition, profits were down 15%. The company’s new CEO has announced new price cutting measures and dedication to rebuilding its slipping European markets. It may soon have another competitor on its home turf : Wal-Mart is planning to open its UK-based Aada stores in France.
The point is that expanding an idea multinationally is not always easy, not even for the biggest firms. Even Wal-Mart has stumbled badly at times. But even when the specific company backs off, the basic concepts get imitated by more agile companies.
