Click 'Read the original text' for more details. Currently, there are many retail formats. There are traditional supermarket formats represented by Carrefour and Walmart, traditional e-commerce formats represented by Taobao and Tmall, and new retail formats represented by Hema Fresh and Super Species. Initially, traditional supermarket formats almost dominated the entire retail market. Later, due to the impact of traditional e-commerce and new retail formats, traditional supermarkets lost their former glory. As the first traditional supermarket to introduce the concept of "hypermarket" to China, Carrefour once monopolized the Chinese retail market for a long time. However, in recent years, Carrefour China has been retreating in the retail market. Now, the once-heroic Carrefour China has lost its former glory. So, what exactly did Carrefour China go through? What caused Carrefour China to fall from its peak? After the fall, what layout adjustments did Carrefour China make? What lessons can Carrefour China's development bring to the retail industry? To answer these questions, we need to start with the development history of Carrefour China. Under Changing Retail Formats, Carrefour China's Glorious History and Declining Status Carrefour, founded in 1959 in Boulogne, France, is a French supermarket chain. In 1963, Carrefour pioneered a new retail format—the hypermarket—and became popular worldwide. Once, Carrefour had over 9,200 stores in 31 countries and regions, making it an international retail enterprise. In addition, Carrefour was once recognized as Europe's largest retailer and the world's second-largest international retail chain. In 1989, Carrefour opened its first Asian store in Taiwan, China. From the end of the 20th century to the beginning of the 21st century, Carrefour began to sweep across mainland China on a large scale. When it first arrived in China, Carrefour was invincible and triumphant. Since entering mainland China in 1995, Carrefour used internationally advanced supermarket management models, committed to providing quality goods at reasonable prices and excellent service, thus winning the favor of consumers. It is understood that within just a few years of entering China, Carrefour stores opened almost all over China, from Harbin in the north to Haikou in the south, from Urumqi in the west to Shanghai in the east. At that time, no matter how great a domestic retail supplier was, they were proud to have their products on Carrefour's shelves. After all, as a new format at the time, the "hypermarket" almost monopolized all retail traffic with its unique advantages. In other words, being on Carrefour's shelves meant a double guarantee of traffic and profitability. Therefore, Carrefour China succeeded with lightning speed, becoming Carrefour's global cash cow and a model for China's retail industry. In the early 21st century, e-commerce platforms like Taobao and Tmall began to impact the entire retail market. Carrefour China's halo gradually faded, and it lost in the new historical competition. However, since 2012, Carrefour China's market share has been declining. According to Kantar Worldpanel data, as of September 8, 2017, Sun Art Retail held 8.20% of the national retail market share, ranking first; China Resources Vanguard held 6.40%, ranking second; Walmart held 5.10%, ranking third; and Carrefour China only held 3.30%, ranking fourth. In just a few years, Carrefour fell from first to fourth in domestic market share, with a gap of 4.90% compared to the first place. In fact, Carrefour China not only failed in market share. In terms of sales and store numbers, Carrefour China was gradually overtaken. As early as 2009, Carrefour China's sales in the mainland were surpassed by RT-Mart. In 2016, RT-Mart's per-store performance of 264 million yuan completely beat Carrefour China's 158 million yuan. Carrefour's financial reports show that from 2012 to 2017, Carrefour China's same-store sales declined. In addition, Carrefour's financial reports also show that from 2010 to 2016, Carrefour China experienced varying degrees of store closures. It is understood that in 2010, Carrefour China's store count was overtaken by Walmart. Indeed, Carrefour China's defeat in store numbers is an indisputable fact. The successive defeats in the retail market have made Carrefour China no longer the darling of China's retail industry; the once-heroic Carrefour China has lost its former glory. Under Dual Pressure from Internal and External Factors, Why Did Carrefour China Fall from Its Peak? Carrefour China's fall from its peak over the past few years is truly lamentable. At its root, Carrefour China is no longer the leader in the retail industry because of the dual pressure from internal and external factors. Four Internal Concerns: First, in business management, the French headquarters intervened heavily in Carrefour China's management, disrupting the original management ecosystem. Initially, when Carrefour China was at its peak, the headquarters provided the China region with hypermarket management skills and advanced experience. In addition, it gave regional heads in China great autonomy. Except for some imported goods, most other products were purchased locally by regional heads. In the early years, it was precisely this decision-making autonomy that allowed Carrefour China to expand rapidly. Later, the French headquarters began to intervene extensively in Carrefour China's management. Many regions of Carrefour China lost their autonomous management power. However, after the French headquarters took over the management of various regions, there were various cultural and operational incompatibilities, leading to business disruptions. Carrefour China gradually lost its local flavor and became precarious amid chaotic management. Second, in terms of supply chain, after so many years in China, Carrefour did not form a mature supply chain. Regarding the international supply chain, Carrefour China once thrived on Carrefour's international supply chain, but this advantage has gradually weakened. In the past, when imported goods were relatively scarce, Carrefour China used its relatively complete overseas supply chain to introduce a dazzling array of imported goods to China, which was favored by many middle-class consumers. Now, imported goods are available in almost all major supermarkets, and Carrefour China has lost its advantage in the imported product supply chain. Regarding the domestic supply chain, Carrefour China has never had a dedicated distribution center or a complete supply chain. Most products purchased domestically are delivered directly by suppliers to store warehouses, and some are even shelved by suppliers themselves. In the short term, this supply model did help Carrefour China grow rapidly, but it also weakened Carrefour China's ambition to integrate its domestic supply chain. As a result, because the supply chain was not optimized and improved, Carrefour China was often constrained in supply. The joint boycott by the paper products industry and the roasted seeds and nuts industry against Carrefour China earlier is a prime example. Third, in terms of product quality, Carrefour China has been repeatedly exposed for selling counterfeit or substandard products. 2012 was a year when negative news about Carrefour China's product quality was rampant. During that year, Carrefour was exposed for selling the same type of three-yellow chicken as both white-strip chicken and free-range chicken, with a price difference of up to double. There were also cases of repackaging expired food and changing the date for sale. In addition, toxic oilfish was sold as high-nutrition cod. These series of violations were investigated and punished by relevant authorities. During this period, Carrefour China's product quality was questioned, its corporate image was greatly damaged, and store sales were indirectly affected. Fourth, in terms of store rent, Carrefour has always rented its premises, and after lease expiration, it faces a dilemma between relocating and facing doubled rent. Nowadays, land is extremely expensive, especially in locations suitable for large supermarkets, where rent is certainly high. This was the case before Carrefour came to China, and it is even more so after more than 20 years in China. Carrefour obtains the right to use the site through leasing. After the lease expires, rent will inevitably rise sharply, and operating costs will also rise. At that time, the sudden increase in costs will bring more difficulties to Carrefour China. However, if it does not renew the lease, it must relocate. Once it chooses to relocate, Carrefour China is very likely to lose the customer traffic it has accumulated over the years. Thus, Carrefour is caught in a dilemma. Three External Concerns: First, in the early 21st century, the impact of traditional e-commerce. Looking at the past, when online traffic was at its peak, the physical retail economy continued to slump, and hypermarket retail faced severe decline. The vast majority of traffic flowed online, dealing varying degrees of blow to traditional supermarkets. At that time, Walmart, Yonghui, Lotte Mart, and other supermarkets were all affected to varying degrees, and Carrefour was no exception. Second, the rise of other traditional retail enterprises shook Carrefour China's dominant position. In the early days, Carrefour was the only leader in China. Later, domestic retail enterprises such as RT-Mart and Yonghui rose, and foreign retail enterprises such as Walmart and Lotte Mart entered. The rise and entry of these retail enterprises took away a large share of the retail market. Under the impact of these retail enterprises, Carrefour China gradually lost its leading position. Third, after entering the new retail transformation stage, new retail formats represented by "Hema Fresh" and "Super Species" once again impacted the retail market. Carrefour, which originally focused on fresh food, was hit again, and its prospects are unclear. It is precisely these internal and external reasons that have gradually pushed Carrefour China away from the center of the retail stage. Seeing Its Glory Fade, Carrefour China Transforms to a Diversified Retail Format Seeing its glory fade, Carrefour China seems to have awakened. Riding the current wave of new retail, Carrefour China has begun to clarify its future development direction and is rapidly adjusting its development. On the one hand, Carrefour China accepted investment from Tencent and Yonghui and began to lay out e-commerce. Carrefour China signed a cooperation agreement with Tencent and Yonghui, aiming to leverage Tencent's excellent technology and Yonghui's advanced operational experience on the basis of its own rich global retail experience, establish distribution centers and centralized procurement rights, and ultimately promote the digital transformation of its retail format. Tencent's investment in Carrefour also marked that, except for China Resources Vanguard, all of the top five national retail enterprises have aligned with internet giants. Shortly after reaching cooperation with Tencent and Yonghui, Carrefour China opened its first "Le Marche" smart life retail store in Shanghai. This smart life retail store focuses on catering, fresh food, and imported goods, and is a WeChat Pay smart retail flagship store. The opening of "Le Marche" marked the beginning of Carrefour's digital transformation. According to reports, Carrefour will increase its digital investment to 280,000 euros in the next five years, which is six times the current amount. On the other hand, in January this year, Carrefour released its "2022 Transformation Plan," aiming to expand sales channels and develop diversified formats. In fact, in terms of development goals, Carrefour's 2022 plan overlaps with its alignment with Tencent. If one must distinguish the relationship, aligning with Tencent can be seen as a subset of the 2022 plan. However, the 2022 plan is a comprehensive foundation for developing new formats. Specifically, it simplifies and opens up the organizational structure to improve operational efficiency, closes 273 Dia stores to reduce costs, and concentrates capital to improve product competitiveness. At the same time, Carrefour China is also adjusting its service structure, strengthening the fresh food category, with a target of increasing fresh food consumers by one million by 2022. In short, at the new retail outlet, Carrefour China has made significant adjustments. According to Carrefour China's vision, in the future, Carrefour China will no longer be just a retail enterprise with hypermarkets as its main format, but a collection of retail businesses integrating e-commerce, smart life retail, and traditional hypermarkets. Lessons from Carrefour China for China's Retail Industry: The Retail Market Changes Rapidly, and Supply Chain and New Ecosystems Are the Winning Weapons Carrefour China's development history reflects the ever-changing retail market. It seems that no enterprise can remain dominant forever in such a volatile retail market. In this regard, Carrefour China has given the retail industry the following lessons. Lesson 1: Optimizing and integrating the supply chain is very important; a complete supply chain is the foundation for a retail enterprise to operate. In the past, the lack of a complete supply chain in China was a major pain point for Carrefour China and one of the major reasons for losing its leading position. For example, a retail enterprise is like a living organism, and the supply chain is the vascular network within the organism. Only a sound vascular network can ensure blood delivery, allowing the organism to survive. Lesson 2: Correctly grasping new retail formats can give you an advantage in the new market. For example, 20 years ago, the hypermarket was a new retail format. Carrefour China once dominated the retail industry because it correctly grasped this new format. Nowadays, various new formats are flourishing in the retail industry. Whoever correctly controls the new formats will gain an advantage in the new retail market. No matter how the retail market changes, the supply chain and new ecosystems still occupy an extremely important position. At any time, continuously optimizing and integrating the supply chain and correctly grasping new retail formats are the winning weapons. The ups and downs of the once-heroic Carrefour China have always been a topic of conversation in the industry. After experiencing decline, Carrefour China has regrouped and intends to regain its position as the retail leader. However, with the rise of new retail formats and the growth of other retail enterprises, it is not easy for Carrefour China to become the number one retailer again. But one thing is certain: Carrefour China will inevitably face a fierce battle in the future. Source: Liu Kuang's public account, ID: liukuang110, first published on Kuang Chuangtou.com From October 23-24, during the Autumn Sugar and Wine Fair, the "2018 FMCG City Distribution Logistics Conference" hosted by New Distribution will be held. At that time, we will invite industry experts, FMCG warehousing and distribution experts, and distributors who have transformed to unified warehousing and distribution platforms to discuss and answer questions about the future development trends of FMCG city distribution logistics and practical cases of distributor transformation to unified warehousing and distribution, hoping to bring you different inspiration and thinking! -END-