Fashion

Fashion

Another profit warning upsets Carrefour shareholders' meeting

This week is going to be crucial for Carrefour, the world's second biggest supermarket chain. On Tuesday 21 June, its Ordinary and Extrordinary General Shareholders' Meeting will take place in the Carrefour du Louvre in Paris. The meeting is expected to be turbulent, as the Carrefour group issued a profit warning for the third time in less than a year.

 

35% drop in profits

While the problems in Belgium appear to be settled after a painful reorganisation, the French troubles are going from bad to worse. On the home market, representing 43% of Carrefour's turnover, the battle with Auchan and Leclerc have a big negative impact on both market share and profitability – sending the company's profits down 35% for the first half of 2011.

Carrefourtopman Lars OlofssonCEO Lars Olofsson, heading Carrefour France since James McCann's departure, has appointed 51 year old Noël Prioux – who has been working at Carrefour for 27 years – to steer the French branch clear of trouble with another recovery plan.

 

Short-lived managerial expansions

Olofsson worked for Nestlé until he was asked to lead Carrefour in 2009, and he has reorganised quite a bit since then: he bought Vincente Trius from Wal-Mart and James McCann from Tesco, reorganised the Belgian branch and introduced with great speed the restyling of Carrefour's hypermarkets to Planet stores.

The managerial acquisitions were not long-lasting: Trius has already left to lead Canadian supermarket chain Loblaw and McCann's departure at Carrefour was as sudden and unexpected as it was strange and unexplained. Olofsson had to take control of Carrefour France himself, endangering the planned divestiture of Carrefour Property.

 

Delay of real estate plans angers Louis Vuitton

The delay in bringing the real estate branch to the stock exchange has angered quite a few stockholders, who considered this operation as a perfect way to compensate the losses in value their participation had suffered over the last few years. Among the fiercest proponents of such a divestiture – and therefore among the most angered shareholders – are Bernard Arnault, chairman of luxury holding LVMH, and investment firm Colony Capital.
 
The stock markets were disappointed in the profit warning: Arnaud Joly of brokerage house Cheuvreux thought that “a split in the Carrefour holding now belongs to the possibilities, especially if the plan to modernise 500 European shops fails”. Last week, the Carrefour shares

had already dropped 10% when bank UBS labeled Carrefour's shares “one of the least attractive in the retail sector”.

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Fashion

EHEC: who is responsible?

The EHEC crisis will have caused billions of euro in damage to farmers throughout Europe and to the EU itself, but what is there to learn from this hysteria?

Facts first. So far, 23 people have died in the whole of Europe – as many as die in traffic each five hours – and just 1% of those infected. While matters of public health are always important, this one is no cause for such a planet-wide hysteria. A hysteria which the German governments helped to spread by pointing not once, not twice, but at least three times to “the source of the infection”... only to be disproved a day later. So far, the real cause has not been found. But their communication blamed cucumbers, peppers, soya, ... up to a  potato restaurant in Lübeck, leaving their image damaged internationally.

The consequences of these decisions to communicate suppositions instead of waiting for proof has been deadly for vegetable producers around Europe. Not only because for several days, nobody in Europe dared to eat cucumbers or peppers (or in a later instance: soya), but especially since the miscommunication had Russia – the main importer of European vegetables – impose an immediate and total ban on every vegetable from the EU. Once again, Europe witnessed the destruction of mountains of vegetables, only this time, they were perfectly edible – just not saleable.

Spanish farmers estimate their loss at 200 million euro per week, not including the damage on their image. Dutch and Belgian farmers, probably along with most of European countries, will join the Spanish in their damage claims against the Germans.

Without any positive leads to the source of the contamination – although several scientists point out that EHEC bacteria usually lives in cattle, not on plants – it is difficult to say what retailers can do to limit damage in such cases. One thing that retailers should never do, is search cheaper ways to track the origin of vegetables. Metro Group for instance has announced the introduction of the GS1 Databar just last week, enabling it to follow the complete road from origin to store of vegetables and fruit, which are normally difficult to trace. If retailers have to remember one thing from this crisis, it is that they should look again at the balance between the costs of tracing systems... and the costs of crises like these.


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Fashion

Is the cashier threatened with extinction?

Rewe zelfscanIn many countries, retailers are running experiments with automatic scanning and payment. In theory, the system would guarantee no theft, no errors and no cashiers to pay out.

 

Revolutionary inventions in France and North-Germany

Self-service checkpoints have existed for some time now, but retailers everywhere are announcing new tests to improve the scheme – like Auchan in Tourcoing, a French city just across the Belgian border who would introduce a self-service checkout where customers can pay cash.

German Edeka announced it will try a system with debit cards, where customers first add money to the card and then pay up to 20 euro without having to use cash. If successful, Edeka will expand the project to bigger amounts.

 

...and a scanning tunnel in Cologne

Rewe, another German company, will open a “scanning tunnel” in a Cologne supermarket, where scanners on each side of the tunnel will read the products' bar-codes. In this system, a cashier would still be necessary to scan heavy products that can not go through the tunnel – and oddly enough, for paying as well. Rewe thinks the new system will save the supermarket a lot of man-hours, which it will invest in customer service. The latter is remarkable, because most chains want to apply self-service checkouts to reduce man-hours and improve business margins.

A threat to social cohesion

Edeka selfservicekassaTrade unions in the UK and many other countries are worried, because aside from the Rewe example, automatisation is used to do the same work with fewer people. This can also be in other areas than the tills: Tesco has been testing an automatic navigation system for their customers. The fact that searching customers no longer have to bother employees during their work is estimated to be such a big cost reduction, that it would more than make up for the loss in impulse purchases that the system would cause.

This new invention fits in the evolution that supermarkets are no longer a place where you can have a nice chat with the employees or the cashiers. The in-store staff is too busy trying to reach their productivity targets, and with the self-service checkpoint growing ever more popular with supermarket directors, there will also be no more cashiers to talk to.

 

Alcohol is the solution?


The American state of California has offered cashiers a life line as a side-effect of law 'AB 183': this proposition forbids that alcohol be sold at self-service checkouts. In California, retailers would have the choice: stop selling alcohol, or stop converting to self-service checkouts. In a strange twist of fate, alcohol just might be the saviour of many people's jobs...

 

 

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Fashion

Time for sustainable purchasing

Even though European retailers acknowledge the importance of sustainability, the ultimate recognition still has to happen: sustainability becoming a regular part of purchasing discussions.

 

After all, what is wrong with giving sustainable suppliers a better deal or with rewarding producers who help the retailer to reach his sustainability goals? Nothing at all! Still, almost every purchasing discussion only revolves around the “p” of price.

 

Wal-Mart sets sustainable example 

In 2009, Wal-Mart was the first to present the sustainability scorecard, allowing the American retail giant to measure the sustainability score of every product it sells. British Sainsbury's followed that example this month with the installation of the Carbon Academy: a training program for employees and suppliers to limit the CO2-emission caused by Sainsbury's's activities as much as possible.

 

Sainbury's follows with Carbon Academy

“We want to make sure all our colleagues and suppliers are becoming advocates in the battle against CO2-emission”, says Neil Sanchev, director of real estate at Sainbury's. “We hope to make new environmental technologies as common and usual as possible.

 

“Our diary development group is a good example how we at Sainsbury's reward sustainable suppliers. This group lets Sainsbury's reward farmers who improve animal welfare, reduce the pollution load and work more efficiently with a higher price for milk”, says Ooi. “We hope this approach will find its way into every purchasing process.

 Extra condition in purchase discussions

Nice words and targets indeed, but isn't the fastest and most effective way to accelerate the realisation of sustainability targets simply its permanent inclusion in purchasing discussions?

 

“A very interesting question”, says Sainsbury's spokesman Darragh Ooi. “I will suggest it right away.” Only a few hours later comes the disappointing formal answer: “The conditions of our contracts with suppliers is sensitive information and we can not discuss it in public”.


Sustainable purchasing is still not mainstream with retailers, but there is hope: thanks to the growing attention of sustainability monitors like Wal-Mart's, ever more people realise that both retailers and suppliers really can make a difference.

 

By Pascal Kuipers, Alsano Communicatie

 

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Fashion

Test supermarket for the visually impaired

French supermarket chain Casino has joined forces with the “Institut de la Vision” to improve access to its supermarkets for the visually impaired. The first result of that cooperation is a test store in the centre of Paris.

 

Test store for the visually impaired

The Casino in the rue Moreau (XIIth district) looks like a normal corner store, like countless others in the French capital. Yet, this is a special test laboratory, to see how the chain can help the visually impaired in their shopping.


“We want everyone to come to our stores, so we should think of this group too. And not just our physical stores, but also our web shop and our home delivery service”, says Thibault de Pompery, director of innovation, in newspaper Le Parisien. “Our partnership with the Institut de la Vision is unique and allows us to let the visually impaired test our innovations several times per month.”

 

New technologies to improve readability

Innovations include new lighting that makes small details on the packaging easier to see and a new type of label that features the most important information more clearly. “Of course, we do not intend to do this for each of our products as that would ruin creativity”, says de Pompery, “but we will apply it for the basic products that everyone uses every day.”

 

Casino also tests new technologies, like a gadget that lets the customer zoom in on labels and packaging. Another service includes a downloadable map that shows obstacles like doors, stairs and steps, ... The first test phase lasts for six more months, after which test phase two will start: opening a real supermarket that actually incorporates the ideas from the lab and the new technologies. Casino hopes to open that supermarket, also in Paris's XIIth district, in 2012. “If test phase two is a success, Casino will include its conclusions and ideas in all the Casino supermarkets”, says de Pompery.

So why does Casino go through all that effort? “Today, France counts 2 million people with a visual handicap”, says Emmanuel Gutam of the Institut de la Vision. “Many of them are older than 75. But as humans tend to live longer, that number will have doubled by 2040.” Four million people, a consumer base that a supermarket can not afford to neglect.


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Fashion

Carrefour looking for Brazilian capital

French newspaper Journal du dimanche states that Carrefour has started negotiations with Brazil’s biggest supermarket chain CBD about a possible merger of CBD and Carrefour's Brazilian activities. The French chain would have asked Bank Lazard to explore this possibility.

 

Biggest Brazilian food retailer

Carrefour has been looking for new capital for some time and has earlier been trying to introduce its real estate branch and a discounter brand to the stock markets. Its new target, the "Companhia Brasileira de Distribuição", is the biggest Brazilian food retailer with 1800 stores and 140,000 employees. The Diniz family (famous for its Formula One driver Pedro and one of the richest in Brazil) would join Carrefour's capital. 

 

French obstacle

The main obstacle in joining the 30 billion dollar group and the "disappointing" activities of the French chain lies in another part of France: Carrefour's rival Casino holds 35% of CBD's shares, about as much as the Diniz family does. Neither of the European chains wanted to comment the possible merger. 

 

Papin dropped out of French director position

It looks like Lars Olofsson, general director at Carrefour, has to take charge of Carrefour's French activities somewhat longer, as the main candidate for his succession has dropped out. Serge Papin, strong favourites with analysts, would stay on as CEO of Carrefour's competitor Système U - that has just taken over 46 Carrefour franchisers. 

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