Introduction: Carrefour 2022

On January 23, French retail group Carrefour unveiled its new strategic plan, “Carrefour 2022,” which is based on four broad goals: deploy a simplified and open organization, achieve productivity and competitiveness gains, create an omnichannel universe of reference and overhaul the offer to promote food quality. Separately, the group announced a potential investment by Tencent and Yonghui in Carrefour China, as well as a strategic business cooperation agreement with Tencent in China. We summarize the four broad goals of “Carrefour 2022” below.

1) Deploy a Simplified and Open Organization

Carrefour aims to create a streamlined structure and open organization by:

• Downsizing headquarters across all countries in which it operates, beginning with regrouping its headquarters in the Ile-de-France region by closing its Boulogne office and aborting an office project in Essonne.
• Cutting down on its France headquarter workforce of 10,500 by offering a voluntary redundancy plan to 2,400 employees.
• Collaborating with other firms to benefit from their innovations and best practices. Carrefour’s aspirations in this regard have already materialized through recent agreements: with Fnac Darty in consumer electronics and Showroomprivé for online private sales.

2) Achieve Productivity and Competitiveness Gains

Carrefour intends to achieve productivity and competitiveness gains over the next five years. It hopes to do this by:

• Implementing a plan generating €2 billion in full-year cost savings by 2020: It hopes to optimize direct purchasing by cutting down on assortments by more than 10%, rationalize indirect purchasing by renegotiating historical contracts and reduce logistics costs.
• Divesting 273 stores acquired from DIA: As the group found these stores unsuitable for their catchment area after their acquisition, it will seek buyers on a store-by-store basis. Carrefour will close the stores that fail to attract buyers and offer roles to the store employees within the group.
• Investing more efficiently: Carrefour will choose investment projects more selectively, with a greater focus on IT and supply-chain investments. About €2 billion is set aside annually, starting from 2018, to maintain the group’s assets. It also hopes to dispose of non-strategic real estate assets worth €500 million, over the next three years.

3) Create an Omnichannel Universe of Reference

Carrefour wants to create a homogeneous experience online and in physical stores. It intends to:

• Reduce the sales area in hypermarkets based on the catchment area.
• Increase investments in growth formats for the group, which it has identified as supermarkets and convenience stores. Carrefour hopes to open at least 2,000 convenience stores, which will act as preparation or delivery centers and pick-up and return points for customers, in Europe over the next five years. It will also accelerate the opening of cash-and-carry stores in Brazil, Argentina and France.
• Invest €2.8 billion in operating and capital expenditures to build its omnichannel offer.
• Achieve €5 billion in food e-commerce sales and garner a share of 20% in the French food e-commerce market by 2022.
• Expand home delivery and one-hour express delivery to further cities, extend Carrefour Drive pick-up facilities to more cities in France and offer click and collect in over half of its stores by 2019.
• Launch a single website, Carrefour.fr, in France in 2018, for its entire offer. Carrefour has several websites for each of its formats in France, currently.

4) Overhaul the Offer to Promote Food Quality

Carrefour has three main objectives, with regard to its food offering:

• To achieve fresh food sales growth that is three times that of FMCG, and attain1 million additional fresh food customers by 2022.
• To grow its organic food sales to €5 billion by 2022 from €1.3 billion currently, by increasing ranges and expanding its sales areas in stores.
• To build its private-label offering and realize one-third of its sales through Carrefour-branded products, by 2022.

Partnerships Announced Today

Carrefour also made several partnership announcements:

• It circulated a separate press release announcing the potential acquisition of a stake in Carrefour China, by Tencent and Yonghui.
• Carrefour also unveiled a strategic business cooperation agreement with Tencent in China, to create new opportunities for food e-commerce and boost its customer traffic in the region.
• Carrefour has partnered with Stuart, a subsidiary of French postal group La Poste, to enhance its last-mile delivery.
• Carrefour has partnered with technology firm Sapient to implement the transformation of its e-commerce offer.

Carrefour said that it aims to maintain its dividend policy, with a payout of between 45% and 50% of adjusted net profit.