Knight Vinke wants Olofsson out and Carrefour split, unions protest

Lars Olofsson

American investment fund Knight Vinke has launched a personal attack on Carrefour CEO Lars Olofsson, who currently also holds the position of chairman of the board of directors. The Americans say Olofsson is responsible for the “débâcle” of the last few years and want the company to be generally split in two – to which the unions object fiercely.

Five profit warnings in one year

The Americans, representing 1.5% of all Carrefour's shares, demand Olofsson's resignation and the installation of two separate CEOs: one for Europe and one for Asia and America. In a letter in French newspaper Le Monde, Eric Vinke claims that Olofsson is “not independent enough” and that he is responsible for the terrible state the world's second largest distributor is in.


The French group has known some difficult times of late, including five profit warnings in one year, a number of musical chairs sessions at the top and – most important for Vinke – a 45% drop in shares since January.

Start of a complete spin-off?

The European Workers Committee has protested heavily against Vinke's proposals: they think a structure with two CEOs implies a will to break the Carrefour group in two. Representatives of all Carrefour trade unions, meeting in Bucharest, fear a split into a (stagnating) European branch and an 'emerging markets' branch might put European jobs at risk. Their opinion is that Carrefour now needs stability and a clear focus on the Planet format, the plan to revamp the decaying European hypermarkets.

Knight Vinke earlier lead a (successful) rebellion against Carrefour's plans to sell its property branch. In this battle, Vinke and the unions fought side by side. Carrefour refused to comment on this new attack on its strategies and its chairman and CEO.


» Read more


Albert Heijn opens second Belgian store later this month

Dutch retail chain Albert Heijn will open its second Belgian store in Stabroek on October 26th.RetailDetail had already announced the location in March (link in Dutch): like the first Belgian AH in Brasschaat, the new one is owned by Nathalie and Marco Van Ende.


Just like Brasschaat, Stabroek is located between Antwerp and the Dutch border, an area where many Dutch people have settled. The new store resides in an almost completely renovated complex that also holds 20 flats and retail space for chains like Hubo, Zeeman and Standaard Boekhandel. Albert Heijn started its international operation in Belgium in March, with a move to Germany set to follow in 2012. The first Belgium store attracted a lot of attention from the media, but local competitors say many customers have already returned to their normal stores for their shopping.

» Read more


Tesco leaves Japan after fairly disappointing results

Tesco, the world's third largest distributor, published very mixed semi-annual results yesterday. The British chain managed to grow during the last six months, but feels the constraints of the economic crisis – especially in its home market Britain.

Double figure sales rise in Europe and Asia

Tesco's total turnover increased by 8.8% to 35.5 billion pounds (45 billion euro), especially especially because of excellent results in Europe (excluding the UK: +12.4%) and Asia (+11.7%). The British stores saw turnover rise by only 0.5%, but the total British turnover rose +7.1% if new stores are also included.

The chain's profit rose nicely to 1.9 billion pounds (2.4 billion euro, +12.1%), causing CEO Philip Clarke to be “pleased that excellent growth in Europe and Asia, as well as an encouraging performance in the US, has supported further progress in the first half, despite the challenges of subdued demand in the UK, particularly in non-food categories”. Two thirds of the group's profits still come from the UK, although the other markets grow considerably faster in terms of profit (UK: +4.5%, Europe +11.8%, Asia +18.7%, US +23.2%).

Leaving Japan, expanding online

Still, not everyone at Tesco is completely happy with the results and the company promised to “invest in price and promotions, ranging, service and store environment” and bring “substantial changes to our core UK business to sharpen competitiveness”. One of those investments (although not in the UK) was announced yesterday: the expansion of a webshop for Tesco's clothing brand F&F to 21 European countries.

Still, the most important news was that Tesco would be exiting the Japanese market, after “having decided we cannot build a sufficiently scalable business there”. The group now has 5630 stores left, half of which (2865) are in the UK and 21% (1172) are in the rest of Europe: the Czech Republic (215), Hungary (209), Poland (383), Slovakia (103), Turkey (131) and Ireland (131).

» Read more


Sainsbury's eager to improve price image

It is clear that its price image can make or break a retailer. Britain's third largest retailer Sainsbury's has experienced that problem first hand – and therefore now launches a new slogan: “Live well for less”.  

A subtle approach to appeal to consumers

Sainsbury's, well aware of their relatively unfavourable price image, specifies what it means in the first ads bearing the new slogan: “Helping you live well for less isn’t about saying that our food will always be cheaper than other supermarkets (we’ll never compromise on quality and are committed to bringing you products sourced responsibly), but it will cost less that you thought at Sainsbury’s. Sainsbury’s will never scream its value message in the way Asda and Tesco do, instead taking the more subtle approach to appeal to shoppers emotions.”

With this explanation – recognising that Sainsbury's does not have the best of price images – the retail chain hopes to make sure that the subtle message reaches the customers – and hopes that those customers will understand it. Using its new slogan, Sainsbury’s wants to improve its price image without compensating in the quality department. “Live Well for Less aims to deliver products that meet customers' needs for both quality and price, all for less than customers think”, as the retailer states in a
press release.

Similar to Tesco and Asda?

Sainsbury's “Live well for less” campaign is directly aimed to confront Tesco and Asda, but the question remains whether “Live well for less” is so different from the slogans used by those two. Tesco's “Every little helps”, widely recognised as one of the best slogans in the world, is directly linked to the huge growth Tesco has experienced since the slogan was first used in the 1990s – an eternity compared to the six years an average Sainsbury's slogan lasts.

Walmart's Asda is more straightforward: “Saving your money every day” is the slogan they have been using since 2009. The same year the chain used “Good food costs less at Asda” for a temporary promotion – a direct copy of one of Sainsbury's previous slogans and creating a minor controversy.

... or rather similar to Aldi?

“Live well for less” seems to be mostly like Aldi UK's slogan, but exactly the opposite: cast into Aldi's “Spend a little, live a lot” format, the Sainsbury's slogan sounds like “Live a lot, spend a little”. It is exactly Aldi's (and Lidl's) success in the UK that led Sainsbury's to revamp - together with (or fuelled by) the difficult economic climate in Britain. While the rebranding is specifically aimed at Tesco and Asda, the group knows for sure it will not harm to use the British discounters' tricks as well.

Brand Match and own brand to help new slogan

To reinforce its message, Sainsbury's also uses “Brand Match”: a programme now tested in Northern Ireland, that continuously compares prices at Sainsbury’s with those at Tesco and Asda. If Sainsbury’s is more expensive, customers receive the difference... in coupons they can spend at Sainsbury’s only, of course.

Along with the new slogan, the revamp of Sainsbury's own brand “By Sainsbury's” is instrumental in the retailer's new direction. This initiative started at the end of last year and was officially announced this May. By improving the quality of its own brand, which serves as a less expensive alternative for A-brands, Sainsbury's wants to improve its average price-quality ratio. The chain aims to have 6,500 products in its new label by 2013.

» Read more


Aldi Nord finally embraces modernisation

Aldi Nord, the more conservative of two separate Aldi companies, is secretly testing a new generation of stores, very aptly named Aldi New Generation. RetailDetail already reported about the secret pilot store in Mariakerke (Ghent), but with the discovery of a second 'New' store in Putte (Mechelen) the existence of a New Generation is no longer in doubt.

New folder strategy leads to new store design

Make no mistake: Aldi's assortment and pricing will remain the same – only the perception changes. Still, these changes will be quite significant: a different logo, more daylight in the store, product displays with a picture and a more surveyable design should make sure customers have a more agreeable shopping experience.


The first signs of change were already visible in January, when Aldi left its eternal leaflet strategy to push temporary promotions on the first three pages. The chain also started experiments with special weeks with focus on Spanish, Italian or Asian products: the first step towards highlighting quality as well – not just its image as hard discounter. 


“A sensible choice, as Aldi's market share has been under a huge pressure from Colruyt and Delhaize's private label strategies”, as retail expert Jorg Snoeck explains. Indeed, Aldi Belgium's turnover went down for the first time last year– even if only by 0.5%. Not only the big two's private label strategy, but also the sharp promotions on A-brands proved to be a big threat for the German hard discounter.

More light, more colours, more comfort

The new store design is the next step for Aldi's modernisation, and one can say that its new leaflet style has been used to upgrade the stores as well. Apart from the larger windows and the new displays (grey instead of orange), the new stores will have wider aisles, modern materials, shades of blue instead of the omnipresent brown and lower shelves. The “look and feel” also benefited greatly from Aldi's decision to place huge pictures next to certain types of products – think of a delicious picture of ice cream in the freezer section... 


Another delightful novelty is the baking machine, which bakes smaller bread rolls on the spot. Aldi Süd introduced this machine months ago, now the more traditional Aldi Nord also features it in the Mariakerke pilot store – despite bakers' protests who claim this “baking machine” is merely heating up the bread rolls while the actual production is done by baking companies in other places. This German trial is still pending – but clearly Aldi Nord did not wait for the results.

Excellent results... but what in the long run?

The 'New Generation' stores in Mariakerke, Putte and German Koblenz are rumoured to achieve excellent results, as they combine the best of both worlds: Aldi's classical no-nonsense approach and a nicer shopping experience in the stores. Though customers react very pleased to this restyling, this might be a dangerous move for Aldi Nord. Choosing for quality over price can endanger the whole discount strategy, even if the first steps are rather small. “You can not be a bit pregnant”, as discount godfather Frans Colruyt once stated. It will be a tough task for Aldi to fulfil both its discounter's mission statement and its new promise to improve quality and experience. 


Aldi consists of two separate entities with clearly distinct territories. Aldi Nord has the North of Germany (hence the name), Belgium, the Netherlands and Poland, while Aldi Süd has the South of Germany and more southern countries like Switzerland, Austria , Hungary and Greece. Strangely enough, the UK and Ireland are Aldi Süd's territory, while Aldi Nord holds France, Spain and Portugal. The chain has about 8200 stores in Europe, the US and Australia.

» Read more


Albert Heijn aims to conquer Germany

Ahold, the Dutch parent group of Albert Heijn, has announced disappointing results for the second quarter. As a counter-measure, the holding plans to invade Germany through “AH to go”, a convenience concept focussing on immediate food consumption.

Small stores, huge possibilities

Ahold believes convenience stores to be the sector with the fastest possible growth, explains Gino Van Ossel, professor at Vlerick management school. “AH to go is actually more like a food service, not unlike Exki (just less expensive): more aimed at immediate consumption than 'real' convenience stores like Carrefour Express or Delhaize Shop&Go”. 


An AH to go has three main parts: food “for now” (immediate consumption), food “for later” (still the same day though) and about a 1000 other articles like coffee or tooth paste. Due to the locations where AH to go is already present, like train stations or Schiphol airport, most of the purchases are in the “for now” department. 

Easy to expand

The average surface of a Dutch AH to go is 125 m², meaning that it is an easy concept to expand – exactly why Ahold chose this concept to use for its invasion in the German market. Van Ossel: “Locations of that size are relatively easy to acquire in Germany, as opposed to supermarkets. If you want to find good locations for supermarkets, you simply have to buy an existing one. Besides, in a market so controlled by hard discounters, there is simply no place for a chain like Albert Heijn. They have to find another way – like this service concept – to avoid entering a price war in Germany.” 


 The investments needed for the introduction of AH to go in Germany would be rather small: “there is no need for a huge number of folders or a customer card system in what is essentially a large sandwich shop. Just a small number of small, strategically well chosen shops can be enough.”

Soon also in Belgium?

Much like their Belgian strategy, Ahold first looks for cities close to the Dutch border – like Düsseldorf or Cologne. Despite having only recently been discovered by AH's “normal” stores, the Belgian market might be the next target for AH to go as well. “The concept is over ten years old and has proven its worth in the Netherlands. It is time to go abroad: there has been an experiment in the US and there still is one in Sweden, with ICA to go – administered by our joint-venture with Hakon Invest. We can not deny being interested in expanding to Belgium as well”, says PR responsible Jochem van Laarsschot.


» Read more


Thierry Garnier new director of Carrefour China/Taiwan

French supermarket chain Carrefour has appointed Thierry Garnier as executive director of China and Taiwan. Garnier was executive director for growth markets until a musical chairs scene at the top of the world's second largest supermarket chain gave that role to Pierre Bouchut.

Bouchut punished for Brazil failure

Earlier this month, Bouchut had to leave his post of Carrefour CFO after failing to secure the takeover of Brazilian Grupo Pão de Açúcar. Pierre-Jean Sivignon (former Philips CFO and vice president) took over that post and Bouchut was demoted to director of growth markets, replacing Garnier. The chain then announced it would “find a suitable position for Garnier” - which turns out to be in China. 


Garnier, 45 years old, has risen through the ranks of the Carrefour directors since 2008, when he became managing director international, before becoming executive director of “South East Asia, European countries, India and International Partnerships.” Since 2010 he has been executive director for growth markets, a position he will hold until April 2012. For Eric Legros, the man he will be replacing, a new function will be created: that of Executive Director Group Merchandise.

A kingdom of 245 hypermarkets

Present in China since 1995, Carrefour currently owns 185 hypermarkets. Last year, it strengthened its position in China by acquiring a majority of Baolongcang, a chain of 11 hypermarkets in Hebei province near Peking. Much like in the rest of the world, Carrefour has to look up to see rivals Walmart, who have near 200 hypermarkets and a new discount chain to serve the poorer rural population. 


In Garnier's other country, Taiwan, Carrefour's network consists of 60 hypermarkets and 3 supermarkets. 


» Read more