Job cuts, product revamp planned for Carrefour

AFP
France's Carrefour group said yesterday it is overhauling its business in a transformation plan involving thousands of job cuts and a product revamp.
AFP

France’s Carrefour group said yesterday it is overhauling its business in a transformation plan involving thousands of job cuts and a product revamp.

Carrefour, which was the world’s second-biggest retailer at the start of the century after US giant Wal-Mart, has since slipped to ninth position, according to the Deloitte consultancy, having been overtaken by Amazon and Costco.

“Carrefour has not sufficiently developed with its customers,” CEO Alexandre Bompard told a news conference.

Some 2,400 jobs will be cut in Carrefour’s French operations via voluntary redundancies, the group said.

Many of the cuts will be made at Carrefour’s 12 French headquarters, which total 10,500 employees and are, according to Bompard, staffed “out of proportion” compared to its competitors.

The job cuts move immediately drew a warning from the French government. Finance Minister Bruno Le Maire said in Brussels that “the government will be very vigilant concerning support for each staff member in the plan announced by Carrefour.”

Unions quickly lodged their protest, and Force Ouvriere, the union at Carrefour, issued a strike call for February 8.

The retailer’s product mix is to be redirected toward more organic produce, with a target of increasing sales in that segment almost four-fold by 2022, it said.

“We must revamp our model, by simplifying our organization, opening ourselves up to partnerships, improving our operational efficiency, investing in our growth formats, building an efficient omnichannel model and developing our fresh and organic products offer, notably under the Carrefour brand,” Bompard said in a statement.

The group said it will also accelerate its online development, aiming for a 20-percent market share in French online food sales, and open at least 2,000 new neighborhood outlets in its French home market in coming years.

Carrefour is hoping for 2 billion euros (US$2.45 billion) of annual savings from 2020 onwards thanks to the restructuring as it streamlines logistics and overheads.

Bompard said the group would sell 500 million euros worth of non-strategic assets over the next three years.

None of the group’s hypermarkets in its traditional outlet network would be shut down, he said, but some would be leased out.

Analysts at Aurel BGC welcomed the plan, saying it was aimed at relaunching the retailer which is “worn out from years of strong competition and the rise of digital.”


Carrefour, Tencent seal alliance

Carrefour and Tencent announced an alliance in China yesterday, joining a rush of companies trying to link the strengths of online and offline retailing.

The companies said they want to combine Carrefour’s global retail experience and the technology strengths of Tencent, which operates the popular WeChat social media platform and other services. They said they would cooperate on smart retail, mobile payment and data analysis to boost Carrefour China’s customer traffic.

They join a flurry of ventures by retailers including Amazon.com and China’s Alibaba and JD.com aimed at combining the strengths of online and offline retailing.

“Carrefour will improve its online visibility, increase the traffic of its offline and online retail activities and benefit from Tencent’s advanced digital and technological expertise to develop new smart retail initiatives,” the companies said in a statement.

E-commerce is growing with explosive speed in China, putting traditional retailers on the defensive. Online sales accounted for about 20 percent of Chinese retail spending last year but grew 32.2 percent compared with 2016 while overall retail rose 10.2 percent. Tencent and Yonghui are considering a “potential investment” in Carrefour’s China unit, the companies said. 


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