PARIS — A few months into a wide-ranging restructuring program, Carrefour continues to emphasize partnerships in its battle to secure relevance in a digital age.
Following this week’s announcement of a high-profile tie-up with Google, which came on the heels of scores of other alliances ranging from Tencent in China to the French post office, the group has plans for more.
“We can no longer do things on our own — we need to equip ourselves, team up and find the best,” said Carrefour chairman and chief executive officer Alexandre Bompard at the annual shareholder meeting held in an industrial neighborhood dotted with warehouses and television studios on the outskirts of Paris.
Carrefour, the world’s second-largest retailer after Walmart Inc., last week announced it has linked with Google to tackle the French grocery market with an agreement to develop new distribution models together, marking a key development in the retail industry’s conversion to online commerce.
Analysts said the move should help push Carrefour forward in its game of catch-up in a fast-changing grocery market.
“We continue to be impressed at the proactivity, openness to new ideas and execution skills this management team demonstrates,” UBS said in a note to clients earlier this week.
The retailer has been a “laggard” online and when it comes to using data for pricing, merchandising and marketing, it noted.
“It’s a sign that Carrefour is back at the highest level when it comes to competing globally,” added Bompard, referring to the deal with Google.
“Google and Carrefour will work hand-in-hand to redefine the client experience,” he said.
The move comes as retailers around the world look to outside players to bring them up to speed on a number of fronts.
“In areas such as automated replenishment, subscription, artificial intelligence, voice technology and digital assistants, traditional grocers are lagging the leaders,” said the UBS analysts.
Bompard on Friday emphasized the importance of the data front, saying the retailer intends to better exploit data with outside help.
The group plans to invest 2.8 billion euros into developing its digital and omnichannel expertise between this year and 2022, six times more annually than in 2017.
Carrefour has struggled under the weight of its sprawling big-box stores, or hypermarkets, a model invented by the group in the Sixties that brings everything from dish soap to washing machines under the same roof.
“The model is suffering in all of our regions, sales per square meter decrease each year, along with operating results,” Bompard noted. While five years ago, a loss-making hypermarket was an exception, “this is no longer the case today,” he added.
The first step is to reduce the size of stores no longer adapted to their areas, he said.
The company aims to reduce around 1 million square feet of store space in Northern France, and use the space for activities with high potential.
The group has used space to open outlet stores, discounting goods by as much as 70 percent. This helps unload stocks of non-food items and serves to drive traffic to stores, according to Bompard.
On the non-food side, Carrefour has work to do, Bompard suggested.
“We need to go further and seek partnerships for non-food products, where we have fallen behind because of e-commerce competition,” he noted. The executive earned a reputation in France as a corporate whiz kid for securing a digital future for book and electronics retailer Fnac by merging it with Darty, which sells home appliances.
Among partnerships orchestrated by the executive since he took the reins of Carrefour last year is a purchasing alliance with Fnac Darty.
After a lengthy meeting animated by whistling and booing from union members in bright orange vests, shareholders approved resolutions renewing terms for board members and the appointment of four new directors, Aurore Domont, Amélie Oudéa-Castéra, Stéphane Courbit and Stéphane Israël.