---
title: "The Vanishing 'Carrefour's"
description: "Although store closures have been the main theme for traditional supermarkets in China in recent years, Carrefour China has been hit even harder. According to Suning.com's announcement on May 31 regarding its response to the 2023 annual report inquiry letter, as of the end of May this year, only four Carrefour China stores remained operational. Once a glorious leader and 'godfather' of local retail, it has now become a cautionary tale. Just four years ago, Carrefour China still had 228 stores, but that number has drastically declined."
author: "戈多"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
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published: "2024-07-01"
language: "en"
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---

# The Vanishing 'Carrefour's

> Although store closures have been the main theme for traditional supermarkets in China in recent years, Carrefour China has been hit even harder. According to Suning.com's announcement on May 31 regarding its response to the 2023 annual report inquiry letter, as of the end of May this year, only four Carrefour China stores remained operational. Once a glorious leader and 'godfather' of local retail, it has now become a cautionary tale. Just four years ago, Carrefour China still had 228 stores, but that number has drastically declined.

Although store closures have been the main theme for traditional supermarkets in China in recent years, Carrefour China has been hit even harder. According to Suning.com's announcement on May 31 regarding its response to the 2023 annual report inquiry letter, as of the end of May this year, only four Carrefour China stores remained operational.

Once glorious, now fallen. It was once the 'godfather' of local retail enterprises in China, but now it has become a cautionary tale. Not to mention ten years ago, even four years ago, Carrefour China still had 228 stores. In addition to the significant reduction in store count, its operating performance has been dismal. Data shows that its revenue dropped from 20.9 billion yuan in 2021 to 3 billion yuan in 2023; net profit attributable to the parent company from 2021 to 2023 was -3 billion, -2.5 billion, and -1.2 billion yuan respectively.

So, what exactly did Carrefour China, which once monopolized China's retail market for a long time, go through to end up in such a state? And what lessons does it offer to China's retail industry?

**Glory Days**

It is no exaggeration to say that Carrefour is the 'pioneer' of hypermarkets in China. It was the first foreign supermarket chain to enter mainland China.

Since entering the domestic market in 1995, Carrefour introduced a new retail format that was completely different from small shops, grocery stores, wholesale markets, and department stores. Shopping at a supermarket was no longer just a shopping activity but gradually became a family lifestyle. At that time, China had just integrated with the international community. As the country opened its doors further, a wealth of foreign goods flooded in, and large supermarkets like Carrefour carried people's imagination of a middle-class life, much like today's enthusiasm for membership stores such as Costco and Sam's Club.

In 1996, due to tight monetary policies, consumer demand tightened, and department stores in China hit a low point. Three years later, as many as 62% of large department stores experienced negative profit growth, and 30% even fell into losses. While department stores were in decline, Carrefour continued to advance, opening 26 stores in 14 cities across the country.

Moreover, Carrefour was favored by consumers for its advanced supermarket management model, commitment to providing quality goods at reasonable prices, and excellent service. After 2000, Carrefour earned the reputation of the 'Whampoa Military Academy' of retail for establishing the Carrefour China Training Center in Shanghai.

Strike while the iron is hot. In 2001, Carrefour headquarters stated that **'the pace of business expansion in China will be maintained at more than 10 new hypermarkets per year.'** Judging from its development, Carrefour did not break its promise. In the following decade, it basically achieved this, spending 4-5% of annual sales on opening new stores.

From 2002 to 2006, in just four years, Carrefour's hypermarkets in China increased from 35 to 100, nearly tripling, with an average of 16 new stores per year. In 2007, Carrefour surpassed the 100-store mark, with more stores than Walmart and far more than Auchan, Tesco, Metro, etc. This made Carrefour the 'dominant player' in China's retail market.

By 2008, Carrefour had become the top foreign supermarket retail enterprise, with an average revenue of 252 million yuan per store. According to a former Carrefour executive, **at its peak, most stores had sales exceeding 300 million yuan, and store managers with lower figures were too embarrassed to attend performance meetings.**

Although Carrefour China now has only four stores and continues to suffer losses, its peak development was the envy of other brands. At its height, it had over 300 stores and annual revenue reached as high as 33.82 billion yuan, ranking first among foreign supermarket retailers at the time. However, those glory days are now in the past, especially after being acquired by Suning, it has been on a continuous decline.

**Selling Out**

In French, 'Carrefour' means 'crossroads.' This is why Carrefour always opens stores at intersections, with the ambition to welcome guests from all directions. However, it seems that at every crossroads, Carrefour has not taken the right path.

**In any industry, what can kill you is not only your competitors but also people from different industries and fields.** Just as WeChat killed the SMS business of the three major telecom operators, no one expected e-commerce to become the strongest rival to supermarket retail.

In 2011, Singles' Day officially became the 'Double 11 Shopping Carnival,' sparking an online shopping frenzy. In 2012, the CEO of Carrefour Asia said at a media appreciation event, 'Facing the impact of e-commerce, just do well in our hypermarkets; the rest is not a concern.' While peers were embracing the internet transformation trend, Carrefour remained seated on its throne, indifferent to the busy 'ants.'

In 2015, China's hypermarket format experienced its first 'negative growth,' and e-commerce contributed more and more to retail sales. It was only then that Carrefour belatedly began to test O2O business, but it had already missed the optimal timing. In contrast, Walmart and RT-Mart, which had already laid out online businesses, successfully caught this wave of dividends. Although the offline development of Walmart and RT-Mart has been unsatisfactory in recent years, their online operations remain stable. For RT-Mart, online business revenue has exceeded one-third of total revenue.

Under the impact of e-commerce and the overall downturn of the supermarket industry, Carrefour China's operating conditions plummeted, losing 1.099 billion yuan and 578 million yuan in 2017 and 2018, respectively. By the end of 2018, Carrefour China's total assets were valued at 11.5 billion yuan, but liabilities were as high as 13.8 billion yuan, already insolvent.

Carrefour China later tried to save itself, but the final result was selling out to Suning.com. In 2019, Suning.com spent 4.8 billion yuan to acquire 80% of Carrefour China, and the Carrefour Group officially withdrew from the mainland China market. At the time, the deal was seen externally as a win-win 'marriage' between Suning and Carrefour, with mutual traffic and support, making them stronger together.

But that was not the case. After gaining control of Carrefour, Suning first carried out extensive renovations, disrupting the overall layout of Carrefour stores. Not only did it overhaul the advantageous fresh food category, but it also replaced the grocery and textile areas on the second floor with Suning's electrical appliances.

Such renovations did lead to a brief period of profitability for Carrefour China. After Suning.com released its 2020 semi-annual report, it stated that the first phase of Carrefour's integration was relatively smooth, and Carrefour achieved profits of over 100 million yuan in the first half of 2020. Unfortunately, the profitability did not last. In 2020, Carrefour lost 795 million yuan for the full year. Entering 2021, Carrefour's total revenue continued to decline.

Apart from external factors, the overall layout of the renovated Carrefour was not only drifting away from the hypermarket positioning but also seemed more like a derivative of Suning.com. They ignored that the two came from different fields; Suning started with home appliances and lacked experience in FMCG. In the past, Carrefour stores operated a large amount of fresh products such as meat, eggs, and milk, as well as various convenience foods and hot foods like pancakes and fried rice. But after Suning.com took over, the cheap eggs, vegetables, and frozen products that once attracted surrounding consumers had already 'disappeared' from the stores.

Clearly, after Suning acquired Carrefour, the effect was not 1+1>2. There are many reasons for this, **but the main one is that Suning overestimated its own operational capabilities in the supermarket sector and underestimated the difficulty of Carrefour's transformation.** Now with only four stores left, it is only a matter of time before Carrefour completely 'disappears' from the Chinese market.

**Exit**

On May 31, Suning.com released its 'Announcement on the Reply to the 2023 Annual Report Inquiry Letter,' which mentioned the latest operating situation of Carrefour as follows:

Since 2020, domestic supermarket enterprises have faced multiple pressures from operations and the external environment, and the entire supermarket industry has gradually shown a downward trend. Since the company acquired Carrefour China in 2019, Carrefour China's business has been affected by factors such as the external environment, slowing consumer demand, and low-price competition from online community group buying, leading to continuous sales declines. At the same time, under the influence of rising raw material prices, increasing labor costs, and rising rental costs, profits have narrowed, especially in the past two years affected by the external environment, resulting in significant losses.

Since Suning's acquisition, Carrefour China's operating performance is shown in the table below. Revenue fell from 20.9 billion yuan in 2021 to 3 billion yuan in 2023; net profit attributable to the parent company from 2021 to 2023 was -3 billion, -2.5 billion, and -1.2 billion yuan, respectively. In 2023, because Suning.com's financial support failed to improve Carrefour China's effective inventory and restore supply chain relationships as expected, the company promoted the slimming down of Carrefour China's business. Ultimately, Carrefour stores were reduced from 228 at the end of 2020 to the current 4 stores.

The author learned that as of now, Carrefour China has 4 stores in operation. Among them, the Gubei and Wanli stores in Shanghai and the Siyuanqiao store in Beijing operate using their own properties, while the Chuansha store in Shanghai operates by leasing external properties.

In addition, the author also learned that Suning.com conducted impairment tests on long-term assets including goodwill in Carrefour China's books. The company hired an appraisal agency to evaluate the recoverable amount of Carrefour China's asset group at the end of 2023 and issued an appraisal report. Ultimately, the present value of expected future cash flows was used to determine the recoverable amount, and a goodwill impairment provision of approximately 895 million yuan was made. After the impairment, the net value of Carrefour China's goodwill was zero.

Therefore, the 6 billion yuan Suning spent on acquiring Carrefour not only went down the drain but also forced Suning to completely abandon Carrefour.

In fact, it is an indisputable fact that traditional supermarkets are on the decline. Over the past decade, traditional supermarkets such as Carrefour, Walmart, Jiajiayue, Renrenle, and RT-Mart have been hit the hardest and have declined most noticeably. Some have even predicted that traditional supermarkets have less than five years left.

According to data from the National Bureau of Statistics, since 2017, the number of supermarket stores in China has continued to decline, from a peak of 38,554 to 24,082, a drop of 37.5%. Among them, large chain supermarkets have seen a faster decline, from 11,947 in 2012 to 5,340 in 2020, a drop of over 55%.

In addition, according to incomplete statistics from industry media, in the first quarter of 2024, at least 31 supermarket brands closed more than 140 stores nationwide, involving well-known brands such as Walmart, RT-Mart, Yonghui, Wumart, Rainbow, Hema Fresh, and Lotus. Among them, there were also some city or regional first stores, such as Walmart's first store in Nanjing (Xinjiekou), Yonghui's first store nationwide (Fuzhou Pingxi), and Zhuji's first Wumart supermarket. **And given the current development of China's traditional supermarket industry, the decline will continue.**

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