Carrefour Establish in France since 1963. Own over 5200 branch store in 26 countries and region. ...

Carrefour

Establish in France since 1963. Own over 5200 branch store in 26

countries and region. About 36.3 billion of the sale amount and

earn 7 thousand million profit. More than 240,000 thousand employee.

The sale feature of Carrefour

Hypermarket Various products (including household

appliances) Giant size Giant quantities

Carrefour in Hong Kong

Entrance in 1997 Own 4 branch store in Tuen Mun,

Yuen Long, Tsuen Wan, Hang Fa Chuen.

Unfortunately, all closed in 2000.

Carrefour in Chinese Mainland

Entrance in China since 1995. Launch 118 branch store until now. Create great profit in Chinese Market.

Question 1.

Why do you think that Carrefour withdrew from the H.K. market yet have become very successful in the Chinese mainland?

Hong Kong’s situation of Carrefour

Marketing segmentation

Geographic:

1. Hong Kong is a small city in the world.

2. About 6 million population during 1997

3. In higher population density.

4. The average living size is 450 square feet

5. Less supply of the shops over 100 thousand square feet in the commercial centre. (place for development ???)

Hong Kong’s situation ofCarrefour

Marketing segmentationDemographic: 1. High household income in 1997 but

decreasing since 1998 by financial crisis.2. Higher ratio of rent in the commercial

market.

Behavioral :1. Quality and price perspective are equally

important.

Hong Kong’s situation of Carrefour

Marketing segmentation

Psychographic:

1. The purposes of shopping in Supermarket of H.K people buy can food, soft drink, groceries.

2. Shopping in wet market everyday for fresh food.

3. Buying household appliances in the other channel e.g. Broadway.

4. Not localize in H.K.

Hong Kong’s situation of Carrefour

CompetitorsParkn Shop WellcomeCRC Shop

They create the “price cut ” try to fright back Carrefour.The same destiny of competitor “Grand Mart”

Carrefour’s Localization (China Mainland)

Buying behavior is the objective Localize their distribution to fit Chinese

tastes China is not a totally centralized country Difference region have their own taste

and rules

Carrefour’s Localization

Example 1: Middle & Western China people are more

confident of frozen fish than of unfrozen dead fish.

Carrefour change the product offered Increase 30-40% sale volume

Carrefour’s Localization

Example 2: Tsingtao beer is the famous beer brand

around the world But in Beijing, Beijing beer is the no.1

brand

Carrefour’s Localization

Example 3: Panda is the old fashion and low-quality

brand in general views But in Nanjing, 35% of television are

made by Panda

Directly Distribution

The marketer reaches the intended final user by distributing the product directly to the customer. 

There are no other parties involved in the distribution process that take ownership of the product. 

Question 2:As a manufacturer, why would some Chinese companies engage directly distribution of products in China? What kinds of problems does it reflect in China’s distribution system?

Example : GREE ( 格力電器 )

Manufacturer

consumers

No parties involved between each others GREE plays 1. Manufacturer

2. Retailer

REASONS

1. Cost 10% to 15% cheaper than others

2. Profit ↑smooth ordering, packing and delivery without intermediaries

3. Customer loyalty Protection of trademark, patent and copyright

REASONS

4. Degree of control take over all aspect transactions

( example , logistics of shipment, collecting payment )

5. People Power ( Channel Power )

customers feel more secure in doing business with you

Problems

1. More Riskylack of information about Chinese culturerequire the largest involvement in the

export process 2. Conflict Boycott of supplies

in China

Problems

3. Cost ↑

Responsible for every level of organizations

Handle all the logistics of the transaction

Gome vs Gree

Conflicts on pricing strategy between the channel leaders– Manufacturer & Retailer

Gree withdrew from Gome to develop a direct distribution (point of sale)

In 2007, Gome & Gree both are the market leader in their industries in China

Finally they cooperate again!

Carrefour Situation

A traditional distribution channel

Manufacturer

Consumer Carrefour

Agent Wholesalers

Wholesales Market

Carrefour Situation

A traditional distribution channel

Manufacturer Carrefour Consumer

Carrefour Situation

A traditional distribution channel

Manufacturer Carrefour Consumer

3 rd parties distributors

For example: Logistic Company

Question 3:

Base on the Carrefour’s distribution channel, what are the challenges and perhaps strategies for Carrefour?

Manufacturers Carrefour

The cost of distribution is high Less competiveness Time spend more through many

middlemen

農村合作社 Carrefour buy from the farmer directly The farmers are responsible for the packaging

and transportation as well Shanghai, Wuhan, Beijing and Guangzhou have

join the system

Manufacturer Carrefour

Manufacturers Carrefour

The cost of the supply chain have reduced 20 – 30%

The cost is much clear Time have saved Protect the quality of food For farmers, their income is

increased and guaranteed

Manufacturers Carrefour

Vendor Managed Inventory (VMI)

Carrefour provides information to suppliers

the suppliers take responsibility for maintaining inventory at the Carrefour's store.

Carrefour have cooperated with Nestle

Benefits of VMI

Planning and ordering cost will decrease

The overall service level is improved A true partnership is formed

between the Supplier and the Carrefour

Stabilize the timing of Purchase Orders

Share risk

The End