Retail giant Carrefour is planning to expand in the Chinese market with a lighter, more agile model: small convenience stores named 'Easy Carrefour'. Carrefour plans to open a total of 40 Easy Carrefour stores by the end of this year.

Currently, Carrefour has opened 17 'Easy Carrefour' stores in Shanghai, and with only a little over a month left in the year, this means Carrefour will open more than 20 Easy Carrefour stores in the coming weeks. Carrefour has stated that it will take Easy Carrefour beyond Shanghai, but specific cities have not yet been disclosed.

So what does 'Easy Carrefour' look like? What's the difference from the main Carrefour brand?

'Easy Carrefour' can be seen as a condensed version of Carrefour, with the English name Easy Carrefour. It is positioned as a neighborhood community supermarket, with an average store size of 300 square meters, while Carrefour hypermarkets typically exceed 6,000 square meters. 'Easy Carrefour' offers over 4,000 products and serves more than 300,000 customers per month.

The first 'Easy Carrefour' in China opened at the end of 2014 in Minhang District, Shanghai, focusing on food and some daily necessities, including fresh produce, fruits and vegetables, rice, flour, oil, and daily chemical products. Through in-store touchscreens, customers can also order from the hypermarket.

Previously, Du Liwei, the project director of Carrefour China's new business formats, revealed that some of the Easy Carrefour stores opened so far have already achieved profitability.

In the first half of this year, Carrefour experienced an embarrassing decline in performance. According to the 2016 first-half financial report released by Carrefour France in July, the group's net profit was 129 million euros, a year-on-year decrease of about 40.8%. Among them, the China region saw the largest sales decline, with first and second quarter drops of 12.8% and 15.5%, respectively.

The main reasons for Carrefour's performance decline include the deep impact of e-commerce on China's retail industry, the lack of momentum in hypermarkets, and the absence of a robust distribution network.

At the same time, small convenience stores have been rapidly expanding on city streets at a visible pace. 7-Eleven, Haolijie, FamilyMart, and various local brands are all vying for market share from hypermarkets.

According to Nielsen's '2016 China Hypermarket and Supermarket Shopper Trends Report', the average basket amount at large supermarkets decreased from 172.4 yuan to 162.7 yuan. The decline in offline market basket value is due to changes in shopping purposes: consumers no longer go to Carrefour or Walmart for bulk stockpiling as they used to. Consumption behavior has become fragmented, and when there is a need for large items or bulk purchases, people choose online shopping.

In short, it's all because of e-commerce!

Therefore, opening small convenience stores that penetrate communities and expanding e-commerce have become Carrefour's main strategies to join the 'last mile' competition. These are also the two most important directions since Carrefour China initiated its business transformation in 2015.

Not only in the Chinese market, but the financial report also shows that in the first half of the year, Carrefour opened a total of 305 convenience stores globally. Carrefour is betting on small convenience stores to become its new growth point and drive overall revenue. The market is also validating this strategy. For example, in the French market, convenience stores and other businesses grew by 7% in the first three quarters of this year. The third-quarter financial report shows Q3 sales reached 10.2 billion euros, accounting for nearly 47% of total sales, but only grew slightly by 1.2%, mainly driven by supermarkets and convenience stores.

According to the 2015 retail top 100 list released by the China Commercial Information Network in July, Carrefour dropped from 12th place last year to 14th, overtaken by Yonghui Superstores and Vipshop. Can the smaller and more agile 'Easy Carrefour' help Carrefour regain presence in the minds of Chinese consumers spoiled by e-commerce?

Source: Huxiu.com