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Turmoil has erupted in France when Carrefour‘s plans to save its ailing hypermarkets were leaked. Several non-food departments will be closed and more stores will be franchised.
Non-food on its way out
Hypermarkets represent about a quarter of Carrefour’s turnover on the domestic market, but their popularity is waning and their profitability is under pressure. The non-food departments are suffering from competition by specialists and e-commerce. At the announcement of the transformation plan in January of 2018, CEO Alexandre Bompard had already announced that larger stores would become smaller, non-food would come to make way for fresh and organic products and loss-making hypermarkets would be franchised to independent entrepreneurs.
According to Reuters and Linéaires, some of Carrefour’s concrete measures for 2019 can be deduced from documents released by a union (CGT). The non-food aisles will be the first to get hit: in time, the in-house photography, electronics and jewellery departments will be closed entirely. In some cases they will be outsourced to specialist companies such as Darty, but not everywhere. This year, they will turn into self-service departments to save expenses on staff. On the other hand, Carrefour will be running more tests with two promising new departments: pet products and para-pharmacy.
New store concepts
Last year, five sales outlets were franchised to independent entrepreneurs. Now ten or eleven hypermarkets face the same fate (Carrefour uses the term ‘location-gérance’). The chain will open eight new pickup points for online orders, while 67 existing ones will be enlarged. 90 of the 230 hypermarkets will be able to deliver at home, and 200 stores will start to use automatic checkouts. Carrefour also wants to add ten more discount stores for unsold goods, on top of the eleven already in existence. The group believes that there are too many managers and is looking to reduce the number of executives.
Finally, the retailer will be testing out three new concepts to save outlets in trouble: a low-cost model named ‘Essentiel’, a model that grants more local autonomy to the store manager (called ‘Rebonds’) and a model mainly focused on food that includes a restaurant department (‘Next’).
