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The Carrefour Group the First 25 Years

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The Carrefour Group the First 25 Years The CarrefourGroup the First 25 Years by SteveBurt University of Stirling, UK Abstract The Carrefour group has beenresponsible for introducing severalinnovative concepts to the French retoil sector - most notably the hypermarket and "no-name" products. This article charts the development and strategy of CarreJourover the first 25 years of the company's existence. Introduction Thedeath of MarcelFournier, in January1985, saw the passing of one of the leadingfigures in Frenchretailing. In collaborationwith the Def- forey family, Fournierguided the Carrefourgroup to its presentposi- tion asthe mostsuccessful hypermarket chain in France.Since its crea- tion by Fournierand Louis Defforeyin 1959,the group hasgrown to achievea 1985post-tax turnover of 44,169million francsand a net pro- fit of 520million francs(see Figure l). In addition,during the past25 years,the Carrefourtradename has appeared in no fewerthan ten coun- tries spreadover three continents. The groupacquired its tradenamefrom the siteof the first storeopen- ed by Fournierand Defforeyin 1960.This 650sq m supermarketwas Iocatedat the crossroads(carrefour) of the rue du Parmelanand rue Andr6:Iheurietin Annecy.However, it wasin 1963that Carrefourfirst madeits mark on Frenchretailing. The previousyear Fournier attend- edthe ClubMMM seminarheld at Dayton,Ohio, and became convinced that the retail techniqueschampioned by BernardTiujillo would pro- vide the way forward for Carrefour.Early in 1963,Carrefour opened the first hypermarketin Francein the smalltown of Sainte-Genevidve- des-Boisoutside Paris. This ventureproved to be an instant success, 54 | International Journal of Retailing 1,3 99 | dnotC rnofa DJ aqJ '10{r?ur eq plno/!\ l€ql uonelndoJ e dolo^ap 01 pu? lr"ler pesrlBuorEer .(1Euor1se dgerluesse se.{\ leql\ ur,(1r1ueprIeuop€u B rlsrlq€lseotr rapro uI eruuJd u1 luerudolem11oJols '0t6I ul (e1yesre61)sellortr1 te eere sales ur bs ro^o qtr^\ '996I Jo 969,9g pu€ ur (uo,$ xnarssru,o11e u bs gg6'gyrelo Jo uer€ selsss qll^{ serolstrsJrJ oql Eupedo dq 'ecuergur rel.r"lerle4reured,(q Eupeel eq1se uorlulnder strrurclureru 01 s€1rrJnoJerreJ teiet '(tg6l '1urcssno;)reed 'uolleredo lsrrJ eql Jo pue eq1,{q scuer; uolllr{u I'gt pue Jo srlluotu xls tsrrJ aqtrur scue4 uolfinu 9'gI Jo rolournl e Surlerqcealols eq1qll^\ teo 98 18 e8 Z8 18 08 6L AL LL 9L SL tL tL ZL rL 0 09 o0l o9L 002 -n 6 092B oqt t - oor 09b oo9 o99 o09 leeA z8 t8 08 6L AL LL 9L 9L iL TL 0 I OL sL d 9Zo 9e oJuururoJJadl€Jcuuuld :dnolg JnoJOJJBJeql .I a.rn8lg closely associatedwith this new form of retailing, Carrefour initiated a franchise system for hypermarkets through its buying subsidiary, Samod.The Cora group, Promomag(a subsidiaryof Promodbs),and GrandsMagasins Ardennais took advantageof this system,and by 1973 a third of the Carrefour storesin Francewere franchised. However, this franchise arrangementdid not last. Promodds, which operated three stores,left Samod at the beginning of 1974 to developits own "Conti- nent" tradename,as did Cora (nine stores)in 1975.The third franchiseg Grands MagasinsArdennais, was taken over by Carrefour in 1975,but the following year their two storeswere sold to Cora. Initial spatial penetration of the Carrefour tradenamewas also achiev- ed through the formation of a number of joint subsidiarycompanies to operate stores. In 1967 Carrefour formed Sogara on a 50:50 shareholdingbasis with Guyenneet Gascogneto developstores in the South-westof France.This venture was followed in 1972by the crea- tion of Soracmawith Docks Lyonnaisand Docks de Nevers,and Grandes Surfaceset Distribution (GSD) in conjunctionwith lAllobroge in the South-eastof France.In the sameyear Carrefour also acquiredDecr6's 49 per cent stakein Sogramo,a joint subsidiaryformed with Comptoirs Modernesand basedin the North-westof the country. As a consequenceof thesetwo developmentstrategies the Carrefour tradenamewas quickly diffused throughout most regionsof Francg par- ticularly in the North and West (Map 1). However,in 1973less than half (18)of the 43 storestrading under the Carrefourname in France were fully owned by the parent company.Of the remaining stores, 14 were franchised, and eleven operated through the joint subsidiary companies. The year 1973was an important one for hypermarketdevelopment in France. The rapid expansion of this form of retailing in the late 1960s/early1970s was bitterly opposedby the small shopkeeperorganisa- tions. Facedwith the growingmilitancy of thesegroups in the early 1970s, plus the approachof Pompidou'sreferendum on extendingthe member- ship of the EEC in 1972,and the parliamentaryelections of 1973,the governmentappeared to give way to some of their demands(Eatwell, 1982).These concessions culminated in the introduction of the I-oi Royer in December1973. As Fourniercommented in the nationalpress at the time ". ..One saysthat it will act to regulatean economicand social problem.I rather havethe impressionthat one wishesto regulatean electoralproblem" (Doyere,1973). Part of this legislationchanged the role of the advisoryurban commer- cial planningcommissions established in 1969,effectively providing these bodieswith the power to refuseapplications for retail developmentsof 56 | International Journal of Retailing 1,3 LS I dnoe olarrryC aqJ 'rnoJorrBS Jo fEol€lls trueudolo^epEu6ueqc oql ur pe1cogersr uorlelsrEol srql Jo lcudur eqa '(S86t 'Ug6t lgng) ql{oJE puorlesrueEroelarqce otr srelreter,{q pefoldrue sarSele-rlsoql ur saEueqcpaSernocua pu€ suorlucrldrur ural-1"roqs peq.{lpalqnopunuorlelst3el egl 'ro^a,r\oH'q}r\orE rurel-Euo1 uodn pa;ge 011]llpBq seq re,(oA Io-I eql leqt slseSSns'srurq eErel i(q rolces 'eJuerC1rc1er lelrerured^(qogl Jo ecueurruopposeercul oql pue ur ecedsrool; leryeurred,(qpue sle{JeruJed,tqgo roqunu eqtrul.qlrlorS panurluoJaqJ 'GtSt ,gOSyg7) suorssruuocesoql peleuruop 'suol1 se,rrleluoserdoJssoursnq lecol ro relr€lerIIBrus s€ dpulncrlred -zcrlddelaryeurred,{q;o Suqcolq oqtrroJ alq€roprsuocpepr, ord 'aororuuroJ Iepuelod A\ploql Jo JOtrsrurtrAIoqtr 01 eJnpecord pedde uB roJ pa^\olp uo4eyst8e1eqr q8noqrly '(64615eneg-uo^nog pup rerureg-nafneeg) '(sluelrququr slrun Eurlsrxeol ru bs 002 re^o Jo suorsuolxaroJ pu€ O99'67ue4 sselJo sounuruocur ru bs ggg'y)eere sales Jo ru bs ggg'1rarro {Aueduroaluared) rno}areJ a selueduroc rerprsqns lurof o aslLlcuerlx :Iq peleradoserols tL6I eJuEJtruI slo{rururod.{11rno;arruJ 'I dutr\tr One of the major impactsof the Loi Royerwas to raisethe costsof developmentthrough delay, increased application and appealcosts, and the creationof a marketfor authorisedsites (Rochard and Peretig l98l). In 1980Carrefour claimed that the Loi Royerhad increasedthe costs of buildinga storein Francefuom2,577 francs per squaremetre in 1972, to 3,500francs per squaremetre in 1979(LSA 757,1980).In addition, Carrefouralso felt that the companywas penalised for its ascendancy in the hypermarketsector through low successrates in applicationsmade to the planningcommissions. In an attemptto outmanoeuvrethese restrictions,since 1974 Carrefour appears to haveplaced greater em- phasis upon expansionthrough joint subsidiarycompanies and acquisition. Analysisof companyreports and storelistings provided in the French tradejournals Libre ServiceActualitds and Points de Venteshow that between1963 and lgT4,theparentCarrefour company opened 19 hyper- markets.Of thesestores, only one appearsto havebeen the resultof a takeover,the former GaleriesParisiennes store at Antibeswhich Car- refouracquired in 1973.Over the same period, twelve stores were open- ed by joint subsidiarycompanies, and only one of these,the former Centor storeat kscar, wastaken over. In contrast,the 1975 to 1985period presents a differentpicture. During this periodthe parentcompany opened a further 16stores, closed a store at Cr6teilin 1979,reduced the storeat Villeurbanneto supermarketstatus in 1977,and transferredthe Chdlons-sur-Marnehypermarket to a sub- sidiarycompany SCI Croix Dampierrein 1981.However, in realityon- . ly eightof thesestores were new openings; the otherswere existing stores that wereeither absorbed or acquiredfrom joint subsidiarycompanies. Irt 1975,the threeSoracma hypermarkets were absorbed into the parent company,as was the VenetteSuperstore hypermarket in CompiBgnedur- ing 1977.These moves were followed at the beginningof 1980by the absorptionof the hypermarketsat Givors(from GivorsInvestissements) and Rambouillet(Bel-Air), and in 1982bythe absorptionof the store transferredto SCI Croix Dampierrea yearearlier. Finally, in 1983,the hypermarketat Gennevilliers,which wasoperated through SEMGS in conjunctionwith RogerFlament, was absorbed by the parentcompany. The increasedimportance of joint subsidiarycompanies in maintain- ing Carrefour'sgrowth is illustratedby their activitiesorrer the same1975 to 1985period (seeFigure 2), during which thesecompanies opened 25stores, five of whichwere later absorbed by theparent Carrefour com- pany.GSD openedanother two stores,one of which wasthe former G6antPerso hypermarket at Chdteauneuf-les-Martiguesacquired from Soprodisin 1977;Sogara opened three stores including gaining full con- trol of the Sochadis"Rendez Vous" hvoermarket at Sovauxin 1977and 58 | International Journal of Retailing 1,3 6tS I dnotg rnotarrD1 aLlJ 'drerprsqns srql t€ql ,(1a1{uraas plno^\ 1I lulol csD eq] Jo lorluoc 'oJnluo^ 1ng permbce986I qtJ"I I ur pue lulof otu€rEoseqtr ur JoutrJBd 'seureporu Jroql sJlolduroCul eJer{slual Jed 61 e Eurrrnbce,{q 7961ug 'soJnl sorolsqcuard rroqtr Jo dgqsreumooqtr pepp[osuoc requnJ JnoJeJJeJ -ue^ osaqlJo aruos,{q pelaado seJotrsJo uolldrosqBluenbesqns
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