How is Carrefour China boosting its business growth?

Date : 07 June 2019

Carrefour China has been doing whatever it takes to revitalise its business to stay ahead amid fierce competition from both local bricks and mortar players and the ecommerce giants. The retailer has reported significant improvement (over €100m) in its recurring operating income in its Asia business in the last two years, mainly driven by Carrefour China.

What has worked for Carrefour China?

The retailer has benefited from its strategy on expanding new formats, digital revolution, testing and building partnerships and increasing productivity:

  • Smart store to make shopping easier - Le Marché is a new format that provides food and catering service in-store and great shopping experiences with lots of product discovery. Technology is widely used, especially at the checkout area. This store offers perhaps the most creative, energetic example of Carrefour’s retail innovation
  • Blending physical with digital - Carrefour China operates its own grocery shopping app with its stores being upgraded to fulfil orders. Take the flagship Gubei store in Shanghai for example, the store’s sales from ecommerce increased by five times last year. It also cooperates with three major O2O food delivery platforms Meituan, Ele.me and JD daojia to get online orders delivered in an hour or less. Gubei store pilots a 182m-long conveyor belt to save manual efforts required to transport goods within the store, as well as make sorting and delivery more efficient.
  • Easy a key format in the future - to get closer to its shoppers, Carrefour launched the Easy format in 2014. Starting as a neighbourhood store, it has now expanded into office locations, featuring ready-to-eat and fresh products
  • Partnerships - the partnerships with Tencent, Meituan, Ele.me and JD.com have helped the retailer attract new shoppers, brought in traffic and built capability. The retailer is utilising the data it collects from the 70m shoppers on its database and analysing them to better cluster customers and forecast demand. Recently Carrefour has partnered up with the Chinese electronics retailer Gome to open a total of 150 shop-in-shops in its hypermarkets by this July-end
  • Increase productivity and cut costs - Carrefour has improved its cost structure and reduced stock levels by piloting new technologies and upgrading its supply chain. It operates eight distribution centres and has tested technologies such as voice picking, which has increased productivity by 20%
  • Private label - last year alone, Carrefour launched 500 new private label products. These products are not just reasonably priced, but also feature imported, natural ingredients or sustainable sourcing

 

How can suppliers grow with retailers in transformation?

Like Carrefour China, many retailers in Asia are going through or starting their transformation journey. It tremendously changes the way retailers operate their businesses and how they work with suppliers. There are a few key areas suppliers need to consider when collaborating with retailers during such transformation.

  • Long-term objectives - understand the retailers’ strategies and long-term objectives of the transformation to identify common strategic interests. Find out more about your key accounts’ strategies here.
  • Channels and formats - think of the retailers’ channels holistically. How will the retailer meet shoppers’ needs through all their online and offline channels? What are the retailers’ growth formats? Stay up to date with the latest channel development.
  • Category strategy – identify the roles of your categories in different formats in the retailers’ portfolio. Within the category, how could you help curate the most effective range while providing superior customer experiences? What does best practice look like in-store for your category?
  • Supply chain – the supply chain flow and processes will inevitably be impacted. Suppliers could help retailers achieve early wins on a small scale, such as reducing out of stock rates or improve forecasting accuracy in selected stores. Strategic and practical case studies on supply chain management.

A successful retail transformation begins at the top, with the support from senior leaders. The suppliers need to involve their senior leadership and be more deliberate on their resource allocation when collaborating with retailers that are going through such transformation.