Speculation that Carrefour intends to sell its China business continues. On January 18, French media reported that Carrefour proposed selling its China operations to Auchan and Alibaba, but Carrefour quickly denied the news.
Earlier, on December 21, 2017, French media Capital reported that Carrefour CEO Alexandre Bompard, who took office in July last year, had authorized three investment banks to study the sale of its China, Argentina, and Poland businesses. However, Carrefour subsequently denied this, saying the information was untrue.
In this rumor, the potential buyers Auchan and Carrefour are both French companies. Auchan operates Sun Art Retail in China. On November 20, 2017, Alibaba and Sun Art Retail announced that Alibaba would directly and indirectly hold up to 36.16% of Sun Art Retail for a total consideration of HK$22.4 billion; Auchan remains the major shareholder of Sun Art. Sun Art Retail operates 446 hypermarkets under the Auchan and RT-Mart brands in China. Additionally, Alibaba signed agreements with Sun Art Retail, Auchan China, and RT-Mart to help bring their stores online via Taobao to Home. This move is seen as intensifying competition among retail giants, putting pressure on Carrefour.
Today (January 18), Carrefour again lowered its 2017 profit forecast, the second time in six months, as new management prepares to unveil a transformation plan next week.
We understand that Carrefour, founded in 1959, is the pioneer of the hypermarket format and is Europe's largest retailer and the world's second-largest international retail chain. The group leads the market with three main operating formats: hypermarkets, supermarkets, and discount stores. In addition, Carrefour has developed convenience stores and membership warehouse clubs in some countries.
In 1995, Carrefour entered China. After more than 10 years of development, according to relevant statistics, as of now, Carrefour has a total of 269 stores in China, including 230 hypermarkets and 39 convenience stores, with e-commerce business also entering 18 cities nationwide.
Because it adopts internationally advanced supermarket management models, it has been favored and affirmed by consumers. Its concepts such as "Happy Shopping at Carrefour" and "One-Stop Shopping" have become deeply rooted in people's minds. It was the first retailer to introduce the "hypermarket" format to China in the form of a "joint venture" and also the first foreign retailer to achieve agricultural-supermarket docking in China.
Carrefour was once called the "Whampoa Military Academy" of China's hypermarket industry, and retail talents who left Carrefour are now spread across major retail enterprises in China.
However, after a period of rapid development, in 2009, Carrefour's sales in the mainland market were surpassed by RT-Mart for the first time. In 2010, its store count was caught up by Walmart, and its market share has been declining since 2012.
To reverse the decline, in 2015, Carrefour China made more changes than in the previous 20 years. Starting in March 2015, Carrefour centralized procurement rights and reorganized into six procurement centers, planning to establish six logistics distribution centers nationwide by the end of 2016.
At the same time, it launched the e-commerce business "Carrefour Online Mall" and partnered with well-known O2O platforms Meituan, Ele.me, and Baidu Takeout. In addition, Carrefour tried new formats in China, opening convenience stores "Carrefour Easy," which currently has 39 stores.
However, these achievements are not obvious. According to Carrefour's 2016 financial report, in 2016, Carrefour's profit fell sharply. During the period, adjusted net profit was 1.031 billion euros, down 7.4%, and total revenue was 78.774 billion euros, down 0.1%. Operating profit was 2.351 billion euros, down 3.8%. The main reason was poor performance in Asia and its home market France. In 2016, Carrefour lost 58 million euros in Asia, compared with a profit of 13 million euros the previous year.
In 2017, as the year of transformation for traditional retail in China arrived, hypermarket transformation accelerated. Giants were looking for financial backers. Alibaba's investment in Sun Art Retail, the top domestic retailer, caused a stir in the industry.
Rumors of Carrefour China's sale also began to circulate frequently. On December 21, 2017, Bloomberg cited a report from Capital magazine without naming sources, saying that Carrefour CEO Alexandre Bompard had hired three investment banks to study plans to divest its China, Argentina, and Poland businesses. Capital also cited internal company materials reporting that the sales decline of Carrefour's supermarkets and hypermarkets in France was accelerating.
Subsequently, Carrefour China denied the rumors about selling its China business. Carrefour China Vice President Chen Weimin revealed that Carrefour China hopes that in the future, most of its renovated stores and all new stores will operate in a shopping center model. It plans that within three years, in Carrefour projects of the shopping center type, 65% of the leased area will be experience-based industries, such as dining and entertainment, to drive foot traffic and consumption.
Looking at the domestic hypermarket landscape, all national enterprises except Carrefour have completed their alignment through sales, alliances, or equity participation. Although Carrefour China currently shows no intention of aligning with any side, we believe it has been targeted by various forces. Despite its repeated denials of a sale, these rumors will inevitably continue to appear in the future.
Compiled from: Lianshang.com, Tencent Finance -END-