French hypermarket group Carrefour is laying off thousands of employees, CEO Alexandre Bompard announced today. His new transformation plan, focused on e-commerce, is intended to turn Carrefour into the “global leader in food transition”.
The new transformation plan, called "Carrefour 2022", is based on four pillars. First of all, the organization should become simpler - at the cost of 2,400 jobs at the Paris main office. Secondly, increased productivity should lead to two billion euro annually thanks to cost-cutting measures. That money will go straight into an investment envelop. More money will also flow to e-commerce (an investment of 2.8 billion should help grow online food sales to 5 billion euro by 2022) and 2,000 new convenience stores. Finally, its product range should become better (more organic food and private labels).
Carrefour would also like to invest more in new partnerships, like its recent collaboration with Fnac-Darty and Showroomprivé. To illustrate that desire, it immediately signed a deal with Chinese Tencent, which should enable it to make huge strides in what is potentially the world’s largest online food market. Tencent will also invest in Carrefour China in return.
This is CEO Bompard’s view: "I have a great ambition for Carrefour: To become the leader of the food transition by offering our customers, every day and everywhere, quality and trustworthy food at a reasonable price. To do this and return to a conquering dynamic, we must revamp our model, by simplifying our organization, opening ourselves up to partnerships, improving our operational efficiency, investing in our growth formats, building an efficient omnichannel model and developing our fresh and organic products offer, notably under the Carrefour brand. This is the meaning of the 'Carrefour 2022' transformation plan that we are unveiling today, and that the Group and its employees will implement with ambition and determination.”
Cuts at HQ, growth online
Carrefour’s French employees were hit hard by the (somewhat expected) news: 2,400 out of 10,500 jobs will be cut at its main office and the new building in Essonne (near Paris) has also been cut. Jobs in French hypermarkets howerer are not that much under threat, as Carrefour says it will not close any hypermarkets in France. Their total store size will drop by at least 100,000 sqm and five hypermarkets will undergo management change. 273 former DIA stores will be sold or closed, and instead there will be more investment in convenience stores and cash & carry: the latter should become more important in Brazil (20 new stores annually), Argentina (16 Maxi stores), France (Promocash stores) and the rest of Europe (“further experiments”).
The French company has put its faith in online: over the next five years, its omnichannel investments will go up by a factor of six and its online food sales have to reach five billion euro. Carrefour’s French market share should surpass 20 % as well. It will open 170 new stand-alone pick-up locations, called Drives, and half of its stores should also double as a pick-up location. The group has started collaborating with the French postal services, growing its home delivery capabilities. By the end of the year, home delivery should be possible in 26 French cities, with an express one-hour delivery service in 15 of those as well. All these services will become part of the Carrefour.fr brand.