Gigantic task awaits Bompard at Carrefour

Alexandre Bompard will need to perform another gargantuan task at department store group Carrefour. After he managed to get Fnac back on track, he will need to do the same for Carrefour.

Successful successor

Starting on 18 July, he will succeed CEO Georges Plassat, who had indicated he would like to step down and the board should start looking for a successor. Alexandre Bompard was chosen and the board backed the decision, but he still be CEO at Fnac Darty until the end of the year.

Georges Plassat’s 44-year old successor has already achieved a lot: he managed to revive the dying Fnac brand, halting thunderous Amazon’s progress through cost-cutting measures and a focus on online sales. In 2011, Fnac’s online sales contributed 12 % to turnover, but that has now grown to 50 %. Excluding Amazon, Fnac’s website is France’s most popular website.

He also convinced several important suppliers, like Samsung and Apple, to build shop-in-shops at Fnac stores and managed to cut 300 million euro in costs, more than expected. His final performance was to acquire competitor Darty, empowering the group even more. Fnac’s stock value tripled, from 22 euros in June 2013 to 66 euros now.

Herculean feat

Carrefour’s board hopes the Ecole Nationale de l’Administration graduate can do this all over again, because it is also struggling: its well-known hypermarkets are also facing incredible pressure from its online competitors.

According to Barclays’ financial analysts, we will have only see the possible Bompard effect at the end of 2018. Any policy change could also have a detrimental short-term effect. Carrefour is larger and more complex than Fnac and its hypermarkets have been losing market share at a steady pace. If he is to stop that slide, the company will need to invest considerable sums in its pricing strategy.

Labour unions could also pose a problem: cutting costs can lead to strikes and temporary store closures, especially as they have already publicly stated they were not thrilled with Bompard’s appointment. He was also the one who cut into Fnac’s wage structure and the unions fear he will do the same here.

Barclays is not optimistic about the results of Carrefour’s first six months, which will be revealed on 27 July. Its market share decline in France seems impossible to overturn and exchange rate fluctuations are also damaging to its Brazilian activities.