CARREFOUR

PRESENTATION : GROUP 2

MANVI CHOPRA ANUJ BUDHIRAJA

SHAILENDRA TEWARIVEDA PRADA

CARREFOUR:THE MULTINATIONAL

• French, multinational retailer headquartered Boulogne, Billancourt, France in Greater Paris

• Second largest retail group in the world in terms of Revenue : €81.271 billion (2011)

• One of the first to open a hypermarket – supermarket and departmental store under same roof

EVALUATION OF STRATEGY

WHAT WHY HOW

OBJECTIVE: DEFINING THE OPPORTUNITY

Objective is to reach the market share by 2 % in Indian retail industry through B2C channels and break even

Initiatives taken by Carrefour in India:Before FDI:• Expand B2B stores in other parts of India, mainly Pune &

Bangalore (May 2012)• Talks with Pantaloons group for Joint Venture

Assumptions:• Accomplishment of Joint Venture with Pantaloon group• Plans to open B2C stores in metro cities

GLOBAL STRATEGY OF CARREFOUR

LOCALIZATION• Biggest strength of Carrefour in the countries it operates -from local tie-ups

to hiring local executives to run stores, local sourcing to merchandising• Designed stores and launched private labels to suit Chinese consumers and

each store ran independently

SUPPLY CHAIN STRATEGIES• Mostly uses 'direct procurement strategy' in the markets it operates.• Currently works with about 90 suppliers/ farmers in Uttar Pradesh, Andhra

Pradesh, Delhi, Punjab and Haryana; directly dealing with the farmers for quality production and effective supply chain management

• Keeps its supply chain very economical and flexible - trucks to bikes depending on the need & cost

• Integrated Composite Application Network (ICAN) software to integrate its stores, distribution centres and supply chain partners in various countries

STORE OPENINGS• Decentralisation is another key strategy of Carrefour• Set up regional offices in each of the Chinese provinces and that office took

care of shops in that particular region• Adapting stores to local needs

INDIAN RETAIL INDUSTRY

Grown at a CAGR of 14.6% for the period

FY07-12Accounts 14 -15% of Indian

GDP

Indian Retail sector is the 5th largest global

retail destinationExpected to

grow from US $ 353 billion in 2010 to US $

543.2 billion by 2014

Ranked as the most attractive

emerging market for

investment in the retail sector(Source: AT Kearney's eighth annual Global Retail Development

Index (GRDI), in 2009)

Organised retail:Clothing &

Footwear – 37%Food & Grocery

– 24.2%

Government permitted 51%

FDI in multi brand retail and

100% FDI in single brand

retail

Clothing & Footwear: • Pantaloon Retail• K Raheja Group• Tata group – Trent • Landmark group• AV Birla group

Food & Grocery:• Pantaloons• Reliance• Subhiksha• Bharti –Walmart (Easyday)• RPG group - Foodworld

INDIAN RETAIL INDUSTRY- CONT

INDIAN RETAIL INDUSTRY

International competitors in India:• Walmart - 17 stores largely in the West and North –

Bharti group• Tesco – Helps manage wholesale operations of Star

bazaar – Trent Ltd – Tata Group

INDIAN RETAIL INDUSTRY

Disadvantages Advantages

APPROACHES

• Joint venture – With Future group (Pantaloons) with 51% ownership

• Franchises• Establish individual stores with Carrefour brand name

– Not possible

ENTRY MODE OPTIONS IN INDIA

JOINT VENTURE

ADVANTAGES• Establish distribution and marketing channels• Increased financial resources• Diversify risk by sharing liabilities • Increases synergies ( low labor, rent )

DI SADVANTAGES• Delays decision making • increase risk of conflicts • Limited life

Strategy

• Open stores in Tier 1 & 2 cities• Compete with local players like Reliance, Big

bazaar etc• Localisation- Local tie ups to hiring local

executives to run stores, local sourcing to merchandising

• Build awareness and Brand Loyalty

Current,Present and future strategy

• They currently operates two wholly owned subsidiaries in India, Carrefour Wholesale cash and carry India Ltd and Carrefour India Master Franchise Co. Pvt Ltd.

Differentiator

• Insurance Plans• Travel Plans• Multiplex• Kids Zone• Food Court• Gaming Zone• Gas Station• Free home delivery

Financials and future estimates

Annual Income Statement Data

Actuals in M € Estimates in M €

Fiscal Period December

2009 2010 2011 2012 2013 2014

Sales 85 963 90 099 81 271 80 627 81 136 83 566Operating income (EBITDA)

4 656 4 894 3 883 3 841 3 895 4 115

Operating profit (EBIT) 2 777 2 972 2 182 2 137 2 236 2 372

Pre-Tax Profit (EBT) 1 095 1 179 -1 238 1 469 1 605 1 913

Net income 327 382 371 830 1 015 1 161EPS ( €) 0,48 0,56 0,55 1,13 1,41 1,59Dividend per Share ( €) 1,08 1,08 0,52 0,56 0,59 0,67

Yield 5,59% 5,59% 2,69% 2,88% 3,05% 3,45%

Stock Price

• Stock listed on Euronext• CMP -€ 19.61• In one year it changed from € 17.83 to € 19.61• Stock appreciated for 9.98% in one year’s

time• We want the stock to appreciate to € 30 in 3-4

years time (over 53% increase)

Local players in FY09-10 and 10-11

Combined losses increased by 8 % to Rs 987 cr ore during 2010-11

Marketing

• Providing promotional offers to customers-giving coupons and gifts• Free home deliveries up to 5000 Rs of buying

• Provide extra services-

Giving movie tickets for shopping of 2000 Rs Customer will be experiencing the gaming zone Parking free on a purchase of 1000 and above Creating strong online presence ( offer Customized deals)

CARREFOUR : COMPETITIVE STRATEGY

Local competition• Wider range of products under one roof • Better infrastructure , ambiance • Localization

Foreign competition• Increased marketing• higher use of social networking • Decentralization• Localization

THANK YOU