Carrefour's Foray in Brazil
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Case Code: BSTR329 Case Length: 17 Pages Period: 2000-2008 Pub Date: 2009 Teaching Note: Not Available |
Price: Rs.300 Organization: Carrefour SA. Industry: Retail Countries: Brazil Themes: International Business, Globalization |
Abstract Case Intro 1 Case Intro 2 Excerpts
"Currently, Brazil is Carrefour's third biggest market accounting for 10% of the company's operations."
- Datamonitor, in December 2008.
Introduction
In February 2009, Carrefour Brazil, the Brazilian operation of the France-based Carrefour SA (Carrefour), the second largest retailer in the world, announced that in spite of the global economic slowdown, the company planned to continue with its investments in Brazil. The company intended to spend about two billion reals (about US$ 866 million) in the year 2009 and 2010. Carrefour entered Brazil in 1975 by opening its first hypermarket in the country. It soon became popular and witnessed rapid growth as there was little in the way of competition.
However, it was a different story in the 1990s. Local retailers strengthened their position and started to spread rapidly, giving stiff competition to Carrefour. In 1995, Wal-Mart Stores Inc. (Wal-Mart), Carrefour's closest competitor in the global markets, entered Brazil. Carrefour also faced several challenges at that time due to the unstable Brazilian economy, which faced problems like high inflation, fluctuating domestic currency, etc. One of the major challenges in Brazil that Carrefour was able to address to some extent was related to its supply chain.
Prior to 1999, when Carrefour Brazil did not have a centralized distribution system, the store managers carried out the process of procurement individually.
Since they did not have any fixed formula to determine the order quantity and to decide on product mix, the stores started facing inventory problems. Out of stock conditions became frequent while at times, there was surplus stock in the stores...
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