STORES Magazine - April 2015 - (Page 66)

n END CAP Carrefour Maps Out Strategy in Poland by GILDAS AITAMER Gildas Aitamer is a retail analyst with Planet Retail Last year was a difficult one for Carrefour Poland and new Managing Director Guillaume de Colonges. The European Union's Russian trade embargo created a food production surplus, triggering a fall in food prices and fueling greater competition in a market already renowned for its tough trading environment. Colonges, however, sees light at the end of the tunnel. "Looking ahead, we believe that in the coming months we will still face further deflation, which should eventually turn into soft inflation in the second half of the year," he told Portal Spozywczy newspaper. Indeed, despite economic uncertainties, improving unemployment rates allied with a drop in the price of gas and other commodities are likely to firm up consumer confidence and increase discretionary spending to the benefit of the Polish retail industry. "When it comes to sales of Carrefour in Poland, we are seeing a positive trend, particularly noticeable in Q4 2014," Colonges noted. SELF-HELPED IMPROVEMENTS TO DELIVER Carrefour Poland is receiving a similar prescription as is being used to revive its business in France, including store refurbishments, a supply chain revision centered on store clusters and organizational decentralization. "We want to give our managers as much independence as possible, while maintaining an appropriate degree of support and control," Colonges explained. Combined with the pending introduction of a shopper66 STORES April 2015 feedback database, Carrefour still has a strong hand to play to improve its relevance and thus its efficiency. This implies that manufacturers should expect an enhanced adaptation of listed products to reflect a wider variety of store assortments relevant to Carrefour's specific stores. The rapid expansion of Carrefour's smaller formats translates to an increased need for smaller package sizes and convenience foods. That said, suppliers will have to keep in mind that assortments are likely to be more price-focused at rural Carrefour Express stores, while their urban counterparts are expected to showcase more premium products. Likewise, to help its hypermarkets appeal to a biggerspending customer segment, the retailer has joined the government-backed large family program, granting cardholders up to 10 percent off purchases. BETWEEN A ROCK AND A HARD PLACE As far as pricing is concerned, it is vital for Carrefour to assert its stance as competitors are attacking it on several fronts simultaneously. Supermarkets and small boxes will come under mounting pressure from dominant discount operators Biedronka and Lidl. Both are moving determinedly into urban centers, offering more convenience products, premium features and traffic-generating non-food categories. This is probably why a number of Carrefour Market stores have introduced basket comparisons and price guarantees with these aforementioned discounters, instead of fellow supermarket operators. For now, we do not expect Tesco to present a major threat given the serious issues in its home market, and capital expenditures and cost reduction in Central Europe and Poland in particular. The temptation could be strong for the French retailer to lower prices, as advertised last summer, but a retaliation from Schwarz Group's Kaufland would likely be almost instantaneous. The latter takes its price leadership very seriously and will not hesitate to massively undercut competitors' prices if deemed appropriate. Last but not least, Auchan has substantially increased its presence in Central Europe of late, and in Poland specifically. This new scale, combined with its international purchasing alliance with Metro Group, will likely mean improved buying conditions, leaving greater room to maneuver should Auchan opt to compete head-to-head on price. NRF.COM/STORES http://www.NRF.COM/STORES

Table of Contents for the Digital Edition of STORES Magazine - April 2015

A Most Complex Game
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STORES Magazine - April 2015