Abstract

The case discusses the entry of France-based retailer Carrefour SA (Carrefour) into Greece and its subsequent exit. Carrefour entered Greece in 1991 by investing in the ‘Continent’ hypermarket in the country. In 1993, it entered the food retail segment in Greece by acquiring food supermarket chains owned by the local retailer Marinopoulos. With the acquisition of Promodès in 1999, Carrefour became the second largest retailer in the world in terms of store count, next only to the US-based Wal-Mart. The acquisition of Promodès brought supermarkets, discount retailers, and corner shops like Shopi, Dia, Score, Pryca, Promocash, Puntocash, Champion and 8 à Huit into Carrefour’s fold. Later in 2000, Carrefour formed a 50-50 JV with Marinopoulos and formed the Carrefour Marinopolous SA supermarket chain. After the establishment of the JV, Carrefour renovated all the stores and improved the services offered in those stores. Carrefour negotiated with the vendors and suppliers and made the products available at low cost to its customers. By 2002, it operated a total of 382 stores in different formats in Greece. After the 2004 Olympic Games, Greece found itself in trouble due to the global economic downturn coupled with the weak local economy. It initiated austerity measures that included a freeze on salaries and higher taxes. The spending power of customers declined drastically. The recession hit customers refrained from visiting the hypermarkets and supermarkets, preferring instead to shop at hard discount stores and convenience stores. However, Greece economic condition deteriorated further, and by 2010, the country became debt ridden. More austerity measures were initiated and Greece received a bailout package of approximately €110 billion from EU authorities to extricate itself from the crisis. Even then, the country could not solve its financial troubles. A second bailout package was offered by the EU in 2012, specifying more austerity measures. The government was dissolved in 2012 because of allegations. Political leaders suggested various possible ways for Greece to emerge out of the crisis. The New Democracy Party supported the bailout package from the EU, with its severe austerity measures. On the other hand, the Syriza party wanted Greece to exit from the eurozone and maintain its own currency whose value could be determined by the country’s government. In the elections held in May 2012, none of the parties achieved a majority, and a new government could not be formed. This coupled with the financial crisis, raised speculations that Greece would cease to be a part of the eurozone in a few months. These events impacted Carrefour, the largest retailer in the food and non-food segment in the country, and it decided to exit the market. The decision was announced just one week ahead of the elections scheduled for June 2012, which were considered crucial in determining the economic fortunes of the country.

Learning Objectives

The case is structured to achieve the following Learning Objectives:

• Understand the challenges posed by an economic crisis.
• Study how the economic environment affects businesses, especially during a crisis.
• Analyze Carrefour’s entry and expansion strategies and the factors that supported Carrefour’s business initially in Greece.
• Understand the Greece economic crisis and its impact on the retail industry.

Keywords

Carrefour, Greece, Carrefour Marinopoulos, Eurozone, European union, Recession, Bailout pacakage, Austerity measures, Retail, Exit, Dia, Hard discounter, Hypermarket , Convenience stores, 2004 Olympic Games, European commission, Elections