Insight: Carrefour in the trenches of the hypermarket war

Fri Aug 2, 2013 7:25am EDT
 
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By Dominique Vidalon

PARIS (Reuters) - Fifty years ago, on June 15, 1963, two French families opened Europe's first hypermarket in Sainte-Genevieve-des-Bois near Paris. Stocking 5,000 products over 2,500 square meters, it was three times the size of most grocery stores.

Today, owned by retail giant Carrefour (CARR.PA: Quote), it has tripled in size and offers 19,000 different products.

The store's growth mirrors Carrefour's global expansion, but the format - an out-of-town warehouse offering cheese, lawn mowers and almost everything in between - is shrinking as online vendors, convenience shops and discounters bulk up.

Some fear the decline could be terminal.

Not Carrefour, which pioneered the stores across the globe, making it the world's second largest retailer after Wal-Mart (WMT.N: Quote), but its attempts to revive the hypermarket in France have ended the tenure of a string of chief executives.

Not long ago, ballooning debts, falling profits and strategy U-turns such as a failed merger in Brazil led to concerns the company might be broken up. Now, with the French economy slowly crawling out of recession, it is trying again.

"I was happy when Georges Plassat took the helm at Carrefour, because he has no doubts the hypermarket has a future, so now at least two of us think that way," said Vincent Mignot, managing director for France of rival Auchan.

Plassat, who became CEO in May 2012, is streamlining an empire that sprawled from China to Brazil. He has sold assets in Colombia, Malaysia and Indonesia to reduce debt, and pledged to invest up to 2.3 billion euros to renovate or expand stores, mostly in France, which accounts for nearly half of group sales.   Continued...

 
A customer pushes a shopping trolley as he leaves the Carrefour hypermarket in Brive-La-Gaillarde, central France, July 8, 2013. REUTERS/Regis Duvignau