Group 4: Kieu – My – Duy

Carrefour & Wal-Mart’s Global Expansion

Introduction

Largest retailer in Europe Second largest retailer in the world Various retail business 22nd of the top Fortune 500 companies 11,000 stores 420,000 employees More than 30 countries and areas

US Carrefour: FAILED

1988: first US hypermarket was opened in Philadelphia

1991- second hypermarket in New Jersey 1993- Carrefour closed two stores in

America The stores too big and to overwhelming Although the product assortment was very

broad, there was little depth in some product categories, for many products, only one brand or one flavor was available

But why hypermarket thriving elsewhere?

The megastore concept is viewed as a welcome innovation, even though many customers feel loyalty to traditional family owned stores

Offering free parking in spacious lots, a lure to shoppers in countries where parking spaces are in short supply

More women enter workeforce, they have less time to shop

While US shoppers can choose from many discount stores and supermarkets, consumers in other countries find that hypermarkets are the only convenient alternative to shopping store to store.

Global strategy

Changed the names of hundreds of Promodes Pryca and Continent stores in Spain and France to Carrefour

Carrefour has pulled out of Japan, Mexico and South Korea while establishing a presence in markets with stronger potential such as China and Brazil

Expansion plans unveiled in 2006 called for opening 100 new stores each year through 2008. App. ¼ of the new stores will be in China

France Carrefour Recently, facing intense competition from Aldi

and other so-called “hand discounter” chains New chief executive “to get France right”:

henceforth, a major part of bonuses would be based on price competitiveness.

Inplemented across the board low prices 2005: Profit decline, but sales and market

share increased Improving service in an effort to win

customers from specially stores. Stores that were understaffed have added more personnel

More flexible approach to store size and design; it is trying new formats such as “Mini-Hyper” and “Carrefour Express”, a scaled-down supermarket.

Strengths

World’s second largest retailer Most internationalized retailer World leader in hypermarkets World’s sixth largest discounter Early mover into many emerging

markets Strong brand in many markets Envialbe own-label portfolio

Weaknesses

Has consistently underachieved ist own ambitious growth targets in many countries

Failed to live up to pre-merger expectations in terms of projected benefits

Still has an unwiedly portfolio of stores in some countries – e.g. France and Belgium

E-commerce development has been lacklustre

Dearth of local management/ expertise in some markets

Opportunities

Organic expansion in existing markets Acquistition of vulnerable local players Entry into new markets, especially in Asia

and South America Possible entry into selected Eastern and

Central Eropean markets Launch and expansion of supermarket and

discount store operations in markets where it already has hypermarkets

Possible major acquisition in more mature market

Threats

Continuing intensification of competition within more developed markets, especially in Europe

Economic problems in South America may lead to downturn in trading environment

Ambitious international expansion plans of major rivals such as WalMart and Tesco

Greater legislation in emerging markets to limit influence of foreign-owned large stores

Potential hostile takeover due to low share price

Wal-Mart’s Global

The world's largest public corporation by revenue in 2008.

A variety of different retail formats (discount stores, supercenters, and Sam’s club)

Reach around the world with “assault” and “invasion” words to describe for a nation company sights.

North America

In 1991,Mexico was the first foray outside of US ,with the name “ Cifra SA”, largest retailer.

The new enterprise is called “ Walmex”

1994, entered Canada with 122 stores Woolco chain.

In 1995, teamed up with “Lojas Americanas SA”

In 2000, was operating 12 supercenters, 8 Sam’s club in Brazil, 11 supercenters in Argentina.

South America

Carrefour was a big competitor for Wal-Mart.

Deals with French’s manufactures for leading local brand.

Hired local managers to develop the right product

Create the entire family shops together.

Had to adjust the approach of its Sam’s club warehouse stores.

Forced to break down bulk quantities into smaller packs or sell individual items.

Europe market

Wal-Mart wants to create a unified pan-European distribution system that will enable it to purchase centrally, distribute centrally, and thereby drive costs lower. Instead, it wants to bring to Europe many of the efficiencies it obtains in the US.

Europe market

A common currency in Europe creates an opportunity to unify retail distribution in a manner similar to what exists in the US. While pessimists point to the multiplicity of cultures and the need to offer different sizes and packaging, this ignores the potential impact that a truly pan-European retail giant could have on suppliers. If Wal-Mart, or another large player such as Metro or Carrefour, requires a big supplier to harmonize product sizing and packaging, that supplier will cannot refuse.

Europe market

At first, Wal-Mart look for opportunities in France and Germany foremost, but also consider acquisition opportunities in smaller countries (Switzerland, Belgium…) to name a few. And now, it has become clear that Wal-Mart has already had discussions with most of the major players on the continent.

Wal-mart in Germany is estimated to generate about $3 billion in annual revenue.

Europe market

Every day low pricing is Wal-mart’s pricing strategy. This means consistent prices with little promotional activity.

To compete with other big competitors such as Carrefour or Metro, Wal-Mart bases on everything but price. This could mean placing greater emphasis on high margin goods (such as fresh foods, gourmet items, prepared foods, and houseware) and on customer service

Asia market

In 1990s, Wal-Mart started to expand abroad and entered China in 1996, Korea in 1997, and Japan in 2002.

In China, Wal-Mart operated, and aggressively expanded, its retail business in partnerships, joint venture partners and suppliers.

Asia market

In 2002, company invested in Seiyu, a prominent Japanese retailing chain.

Throughout, Wal-Marts has been engaged in tough competition with other global and domestic retailers in Asia

Question 1: Which of the market entry strategy options identified in figure below has Wal-Mart utilized in its global expansion?

Question 2: What are the keys to wal-Mart’s success in the US ？ Will those factors help the company as it expands around the globe？

With a high familiarity Candadian customers and have a monetary system that is similar to the American one.

To hire local managers to develop the right product assortment and to keep a merchandising approaches with local customers.

→→ big help for company to expand around the globe.

Question 3: How do the ways in which Wal-Mart creates utility for buyers vary in different parts of the world?

It consolidated distribution, introduced leading edge technology to track inventory, linked its distribution system directly with suppliers, and by purchasing in volume, it created leverage with its suppliers. The result was a low-cost operating model that enabled relatively low prices.

It invested in its employees, worked to engender their enthusiasm, empowered store managers and compensated them accordingly, and instilled in all staff an obsessive desire to satisfy customer needs. The result was a chain of stores notable for their attention to customer service.

Q1: what is the biggest competitive threat facing Carrefour as it expands in global markets?

Continuing intensification of competition within more developed markets, especially in Europe

Q2: Carrefour is currently the top global retailer in China. What must it do to maintain its leadership position as Wal-Mart expands operations there?

Open a Daycare inside Carrefour Incorporate a fitness area into the store

for white-collar groups Discover more sales promotions to

attract customers.