---
title: "Carrefour 'Marries Down' to Suning: New Variables in the Retail Landscape?"
description: "On June 23, Suning.com announced that its wholly-owned subsidiary Suning International plans to acquire 80% of Carrefour China for 4.8 billion yuan. The deal will make Suning the controlling shareholder, enhancing its omnichannel and FMCG competitiveness, while Carrefour Group's stake drops to 20%."
author: "新经销刘少德"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2019-06-24"
language: "en"
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# Carrefour 'Marries Down' to Suning: New Variables in the Retail Landscape?

> On June 23, Suning.com announced that its wholly-owned subsidiary Suning International plans to acquire 80% of Carrefour China for 4.8 billion yuan. The deal will make Suning the controlling shareholder, enhancing its omnichannel and FMCG competitiveness, while Carrefour Group's stake drops to 20%.

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**Carrefour finally found a new home!**
On the evening of June 23, Suning.com announced that its wholly-owned subsidiary Suning International plans to invest 4.8 billion yuan to acquire 80% of Carrefour China.
After the transaction, Suning.com will become the controlling shareholder of Carrefour China, further improving its omnichannel and full-category layout, enhancing competitiveness in the big FMCG category, and bringing users a more scenario-based and valuable shopping experience. Meanwhile, Carrefour Group's stake will drop to 20%.
**Carrefour's desperate move to survive**
Founded in 1959, Carrefour is Europe's largest retailer and the world's second-largest international retail chain, operating in over 30 countries and regions.
Since entering the Chinese market in 1995, Carrefour has opened 210 hypermarkets, 24 convenience stores, and 6 warehousing and distribution centers across China, with a total floor area exceeding 4 million square meters, covering 22 provinces and 51 large and medium-sized cities.
However, in recent years, with the development of e-commerce and the internet, this global retail giant has been struggling.
Since the second half of 2017, Carrefour, which has underperformed in the Chinese market, has been mired in rumors of a "sale." On January 18 this year, more rumors suggested that Alibaba and Auchan would acquire Carrefour China's hypermarkets. Earlier, Carrefour had announced that Tencent and Yonghui would potentially invest in Carrefour China, and had signed a letter of intent for potential investment.
Additionally, Carrefour unveiled its "Carrefour 2022 Plan," aiming to adjust its business model and management structure to achieve a transformation in food consumption. At that time, Carrefour said its French headquarters would cut 2,400 jobs through voluntary redundancy, aiming to save 2 billion euros in costs, and shift its focus to e-commerce and organic products.
All signs indicate that Carrefour's growth has hit a bottleneck.
Selling out or exiting the Chinese market has undoubtedly become its best option. But in reality, Carrefour is not the only one facing a development bottleneck. As the main format in FMCG retail, large supermarkets generally face declining sales per square meter, weakening profitability, and sluggish growth.
In 2018, among the top 100 enterprises primarily operating large supermarkets, average sales growth was 2.5%, and average store count growth was 3.6%, both significantly lower than the average growth of the top 100. Meanwhile, operating costs for large supermarkets continued to rise, with employee compensation up 13.0% and rent up 10.6%, with costs as a percentage of sales at a relatively high level among all formats.
In this context, "King of Land Warfare" RT-Mart partnered with Alibaba, while Yonghui reached a strategic cooperation with Tencent. **In the entire retail industry, a pattern of alliances has formed, essentially just choosing between Tencent and Alibaba.**
**Why Suning?**
The connection between Carrefour and Suning may have started with Dia.
Since announcing its plan to open 5,000 stores in 2018, Suning has been active. Multiple formats such as Suning Xiaodian and Suning Jiwu have been opening stores. On April 3, 2018, to quickly complete its store layout plan, Suning bought Dia China in one go.
On the evening of April 3 last year, Dia, listed in Spain, announced that it had reached a purchase and sale agreement with Suning.com regarding the sale of 100% of Dia China's equity. However, neither party disclosed the transaction amount. In a subsequent official release, Suning.com only stated that after the acquisition, it would output smart retail solutions to empower and upgrade Dia in multiple aspects, accelerating the layout of Suning Xiaodian in Shanghai.
Dia, a community supermarket chain brand, originated in Spain and originally belonged to Carrefour. In 2011, Dia was spun off from Carrefour for overseas listing. Dia entered China in 2003, but over 15 years, its development was unsatisfactory and expansion was difficult. In 2014, Dia withdrew from Beijing and only held on in Shanghai, once facing the dilemma of Chinese investors exiting due to severe losses. As of now, Dia has nearly 300 stores in Shanghai with 2.5 million members.
For Carrefour, which is constantly cutting costs, Dia China had become a burden. At that time, Carrefour stated that Dia stores were in trouble and that Carrefour had started procedures to find a company to take over. If no buyer was found, these stores would be closed.
A retail industry expert analyzed that Dia's difficulties in China were mainly due to its focus on private labels, a model whose competitive advantage in China was not obvious and not suitable for the country's conditions. Because Chinese manufacturing is strong, many products can be made with good quality and low prices.
Suning.com taking over is a blessing for Dia: **Being sold is better than being closed.**
Regarding why Suning acquired Dia China, Bian Nong, Vice President of Suning Retail Group, said that Dia's stores are densely distributed in Shanghai's main urban areas and are basically in community business districts, consistent with Suning Xiaodian's community positioning. Such store networks are scarce, and acquiring them at once can significantly reduce Suning's time costs and resource investment. On the other hand, Dia China has a relatively mature operating system, which will also help Suning Xiaodian quickly enter the Shanghai market.
In other words, Suning values Dia's store network layout. After all, in Suning's plan to rapidly expand 5,000 stores this year, Suning Xiaodian plays a very important role. Under the pressure of opening 1,500 stores a year, acquisition is one way to quickly achieve the goal.
**Being "abandoned" is inevitable**
Undoubtedly, in the process of "new retail" in online supermarkets and hypermarkets, Carrefour has completely fallen behind.
Since the concept of new retail was proposed in 2016, Alibaba has laid out Hema, and Alibaba Retail Link has proposed a plan to open one million Tmall stores; JD.com proposed unbounded retail and began vigorously promoting JD 7FRESH offline, with countless projects like JD X Supermarket and unmanned convenience stores; Yonghui used Super Species as an entry point to carry out various retail formats offline.
Although Carrefour opened "Carrefour Easy," the pace was clearly too slow, with only 30 stores so far. Whether it's RT-Mart, which joined Alibaba, or Yonghui in the Tencent camp, their new retail attempts are much faster than Carrefour's. In this sense, Carrefour has already lost. **On this, Wang Jun, an expert in the new retail industry, said:**
"
Regarding large supermarkets, Carrefour's withdrawal is not surprising.
The decline in sales of large supermarkets, especially foreign brands, is almost a foregone conclusion.
Suning taking over Carrefour, on the one hand, continues to show a capital-driven M&A path, and on the other hand, continuously improves its diversified sales channels.
So an interesting space for imagination is: what form will Suning grow into in the future?
A super retail giant covering online and offline?
A typical centralized retail institution that simultaneously owns department stores, large supermarkets, appliance chains, community supermarkets, convenience store chains, and e-commerce platforms.
Who is its benchmark company, and what is the market value growth potential?
Suning's core competitiveness is increasingly becoming a capital player.
And whether Suning's corporate culture and organizational strength can become the core competitiveness to support Suning's all-around development may be the Achilles' heel for Suning to achieve this big goal. The integration of the back-end supply chain has become a huge cornerstone supporting the imagination.
Looking at Carrefour's battlefield in China, besides entering early and gaining brand recognition among white-collar workers, it made attempts at innovation such as e-commerce and small-format convenience incubation, but they were not successful. The most critical issue is the lack of follow-up momentum.
Its sales share has been continuously eroded by e-commerce and small-format chains.
Unable to come up with good solutions, the only way out is to cash out and retreat.
In the entire large supermarket format, local leading brands with regional dominance have gradually found the code for survival and competition in adversity. The most common result is strong vitality in local markets, making it difficult for foreign brands to compete successfully. The large supermarket and community supermarket formats have become very prominent.
Behind this, it represents that Chinese brands have better understood consumers' upgrading needs, supply chain services, and retail experience.
On the other hand, as the world's largest consumer market, foreign brands still hope to occupy a place. This year, Aldi and Costco both chose Shanghai as their first stop. They made a lot of operational adjustments for the domestic market, seemingly learning from peers' lessons, but unfortunately, they showed another kind of acclimatization problem. Where is the promised low price? Where is the promised discount? It seems that overseas executives still can't give up five-star hotels and familiar environments. Your discount stores' main battlefield is really not in Shanghai. The Chinese market is too large and developing too rapidly. For foreign brands, it has become even harder to understand Chinese retail.
"


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