New Carrefour CEO Plassat may become involved in a price war in a bid to lift sales and combat perceptions that the retailer is less competitive than its rivals; to offset 2% price cut, sales would need to rise 8% to €1.4B, says analyst
January 31, 2012
– In a bid to boost sales and combat perceptions that French hypermarket chain Carrefour SA is less competitive than its rivals, Georges Plassat, Carrefour’s new chief operating officer, may become involved in a price war, Fox Business reported Jan. 30.
CA Cheuvreux analyst Arnaud Joly said that, in order to offset a 2% price cut, Carrefour sales would need to rise 8% to €1.4 billion (US$1.848 trillion).
Over the past twelve years, a consistent strategy has not been implemented at Carrefour’s French superstores stores, Joly noted, and the chain has suffered as a result.
In a note dated Jan. 29, Joly wrote that “[r]adical decisions” are needed in order to combat the trend; “[a]n option could be to implement a more aggressive policy, which means launching a price war.”
Natalie Berg, the global research director at researcher Planet Retail in London, said that Carrefour could potentially introduce limited edition or exclusive products, install in-store kiosks in place of some non-food items, and make some of its larger stores smaller.
Carrefour currently controls 21% of the grocery market in France Carrefour superstores located in France constitute 24% of Carrefour’s total sales.
Rival hypermarket chain E.LeClerc, which currently controls 17.7% of France’s grocery market, has announced that it intends to overtake Carrefour within the next two years by opening more drive facilities where customers pick up goods that they had purchased online and keeping prices low.
The primary source of this article is Fox Business, New York, New York, on Jan. 30, 2012.