Carrefour's Exit from Greece

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Excerpts

After World War II, the Greek economy had experienced rapid growth mainly due to foreign investments, development of industries like chemicals, tourism, infrastructure, etc. In 2001, Greece became a member of the eurozone. In 1999, it was not allowed to become a part of the eurozone as the country's inflation was high and so were its debts. But Greece met the stringent criteria stipulated by the eurozone. Some of the criteria were bringing the budget deficit to below 3% of GDP and debt below 60% of GDP. At that time, Wim Duisenberg, President of the European Central Bank, warned Greece that it would need to improve its economy and control inflation....

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Consumer spending in Greece declined dramatically in 2010. (Refer to Exhibit VI for retail grocery sales by category 2006 and 2011.) Job losses and squeezing taxes restrained Greek customers from spending. In 2011, the retail food market in the country slumped by 10%. Despite Greeks being traditionally brand conscious, economic instability forced them to change their shopping behavior and look out for low priced products. Consumers' purchases were highly influenced by the price of the products. They started preferring private label items that offered high quality at low prices.

Carrefour, which had been the leading hypermarket operator in Greece, felt the impact of the shift in consumer behavior, as its sales and revenues started dropping after 2008. It was also facing tough competition from hard discounters like Lidl . Since 2011, the retailer faced liquidity problems and delayed payments to suppliers, who in turn refused to supply the required goods. As a result, Carrefour hypermarkets became dull and suffered from inventory problems. The majority of products were out of stock. In the first quarter of 2012, the company's turnover dropped by 15.9%...

Exhibit I: Carrefour Store Formats
Exhibit II: Carrefour Marinopoulous SA Financials
Exhibit III: Market Share of Top Retailers in Greece
Exhibit IV: Carrefour - Stores in Greece (2000-2010)
Exhibit V: Rating Scale
Exhibit VI: Retail Grocery Sales BY Category