Carrefour's Exit from Japan

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Case Details:

Case Code : BSTR185
Case Length : 16 Pages
Period : 2000-2005
Organization : Carrefour
Pub Date : 2005
Teaching Note :Not Available
Countries : Japan
Industry : Retail

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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Background Note Contd...

In 1973, Carrefour opened its first hypermarket in Spain under the 'Pryca' brand while the first hypermarket in Brazil started functioning in 1975. In 1989, Carrefour opened its first hypermarket in Asia, in Taiwan. By the late 1980s, Carrefour had a significant presence in a major part of Europe and had established its stores in North America, South America and Asia.

In 1990, Carrefour diversified into the oil business by establishing 'Express Oil'.⁴ In 1991, Carrefour acquired two French hypermarket chains - Euromarche and Montlaur. It acquired 'Felix Potin' (convenience store chain in France) in 1996 and 'Catteau' (supermarket chain in France) in 1997. The company had established a strong presence in international markets by the late 1990s. To strengthen its presence in the domestic market, the company acquired the French retail group Promodes⁵ in 1999. This made Carrefour Europe's #1 retail group and second in the world behind Wal-Mart in terms of global revenues. In some countries, for instance, in China, it surpassed Wal-Mart with regard to the number of stores to become the #1 retailer.

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The acquisition of Promodes also enabled Carrefour to wield considerable buying influence on its suppliers. This, in turn, helped the company to price its products substantially lower than its competitors.

In 2000, Carrefour, Sears⁶ and Oracle⁷ created the first worldwide online marketplace called GlobalNetXchange for retailers connecting 50,000 suppliers, partners and distributors. In the same year, the company also launched its online supermarket Ooshop. In December 2000, the company opened its first hypermarket in Japan. In 2003, Carrefour acquired the Hyparlo hypermarkets⁸ of Italy and purchased 2 hypermarkets in Poland. In 2004, Carrefour purchased 13 hypermarkets belonging to Ahold⁹ in Poland. With this acquisition, Carrefour became the #1 food retailer and the second largest retailer operating hypermarkets in the country. Carrefour had sales of € 72,668 million and income of € 1,509 million in 2004...

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4] Express Oil is a reputed automotive company, which provides a wide range of car maintenance services.

5] Promodes is a retail group which owns 614 hypermarkets and supermarkets and 987 convenience stores in France. The company also has hypermarkets in Spain, Germany, Italy, Portugal and Greece. It is the second largest retail group in France and the fifth largest in Europe.

6] Sears Roebuck and Company (Sears) is a retailing division of Sears Holdings Corporation which was started in the late 1800s by Richard Sears. In 2005, with the merger of Sears with Kmart, the company came to be known as Sears Holdings Corporation, headquartered in Illinois, US. The company is the third largest retailer in the US after Wal-Mart and The Home Depot.

7] Oracle Corporation (Oracle) was founded by Larry Ellison in 1977. It is headquartered in California, US. Oracle is organized into two businesses, software and services. It develops database and applications software to help its customers in their business operations.

8] Hyparlo is a hypermarket operator in Italy. With this deal, Carrefour acquired 2 hypermarkets of the company located in Venice and Tuscany and a proposed one in Florence. The 2 hypermarkets had a turnover of € 113 million in 2002. Hyparlo sold off the Italian stores to concentrate on France and Romania.

9] Royal Ahold (Ahold) is a retail company based in Netherlands. It was founded in the 1800s. In the 1970s, the company expanded into cosmetics and liquor stores and also changed its name to Ahold.