If Amazon acquires Carrefour, Amazon will immediately have a very strong pedal in Europe, South America and the Middle East.
Recently, analyst Xavier Caroen at investment bank Bryan Garnier made a noteworthy remark: “If Alexandre Bompard (new CEO of Carrefour supermarket chain) does his job well, Carrefour will be the target. ideal acquisition for Amazon”.
Carrefour, a French supermarket chain, was a pioneer in building hypermarkets (big-box supermarkets, combining food and other consumer goods) in the 1960s. Now Carrefour is seek to promote e-commerce activities, as well as combine online and offline shopping experience.
Recently, Carrefour has chosen a new CEO, Alexandre Bompard (44), who has led the successful FNAC electronics store chain since 2011. Now, in Carrefour, Bompard is tasked with finding how to expand e-commerce activities, as well as seek to revive the company’s struggling hypermarkets. From Carrefour’s backbone, these hypermarkets are now becoming the company’s Achilles heel, having struggled to compete with a new set of competitors: e-commerce sites like Amazon; more flexible hypermarkets like E.Leclerc; super discount stores; and high-end groceries like Grand Frais.
Retail consultant Joelle de Montgolfier at Bain & Co. “Hypermarket model needs to be rethought from the beginning, about what value it can bring to the market, as well as what difference it has with online shopping”, says the author.
In France, supermarket chains have implemented e-commerce quite well compared to supermarkets in the US, in which Carrefour is leading this trend. The online ordering model and the click-and-collect supermarket have grown strongly in France for over a decade, and Carrefour alone has more than 500 locations that allow customers to do this. Meanwhile, Wal-Mart in the US has only adopted this model since 2014.
Bompard took office at Carrefour at the same time as the new French President Emmanuel Macron sought to reform the country’s labor laws, as well as encourage the development of a digital economy. Previously at FNAC, Bompard once made investors extremely pleased when he drove this chain of stores to develop in the direction of high technology, as well as successfully acquired Darty electric chain stores. Today, FNAC and Darty’s e-commerce site has nearly the same traffic as the Amazon site in France, based on research from Mediametrie and Fevad. The stock price of Darty FNAC has also increased about 3 times since the IPO in 2013.
Meanwhile, Carrefour’s share price has fallen about 70% from its peak in 1999. The growth of Carrefour supermarkets in Brazil and the deployment of smaller store models in inner city areas were not possible compensate for the recession of hypermarkets in France. After believing Amazon acquired the high-end Whole Foods supermarket chain in the US on Friday, the price of Carrefour shares also plummeted like many other supermarkets, before recovering slightly earlier this week.
From before Bompard’s recruitment as CEO, Carrefour also sought to boost its e-commerce segment. Since 2000, Carrefour has conducted more than 50 acquisitions, including Greenweez organic food company and online market Rue du Commerce. The e-commerce segment of Carrefour has a total value of traded goods (GMV) of 1.2 billion euros in 2016, and its predecessor Georges Plassat of Bompard has set a goal of bringing this number to 4 billion. euro in 2020.
However, Carrefour is still lagging behind in selling groceries online. The wrong strategies in the early years caused Carrefour to lose the No. 1 position in the online grocery market to rival E.Llerler (43.5% market share), while the second place belongs to Auchan (25,3%). Carrefour only accounted for 9% market share in this segment.