Just as credit rating agency Moody’s decided to downgrade Italy’s bond ratings, French retailer Carrefour has decided to expand its banking activities in its Italian hypermarkets, from 23 to 30 stores – and to a wider range of financial services.
Taking advantage of Italy’s difficulties
Moody’s decision was no surprise to many analysts and it can not have been one for Carrefour too. It might even have been a deliberate choice made by the French, to take advantage of the lack of confidence the Italians have in their politics and the economic situation.
Retail consultant and banking expert Hans Eysink Smeets thinks that this “was an excellent decision by Carrefour, as research demonstrates time and again that consumers trust hypermarkets and supermarkets infinitely more than they trust banks. Retailers, like Carrefour, are inherently consumer-minded, while banks’ talks about being customer-friendly are mostly just vague theory.”
“Helping Italian families”
Vicenzo Grimaldi, director of Carrefour Banca, explained to the Italian media that Carrefour was expanding its banking services “to help Italian families by offering them financial services at very competitive prices.” He went on to explain that “Carrefour itself is running the financial risks, not a third party”.
Carrefour has over 1300 points of sale in Italy, including 60 “ordinary” Carrefour hypermarkets and one new Carrefour Planet hypermarket. Italy is the only country outside of its home market France in which Carrefour offers financial services: in France the Banque Carrefour has existed over 30 years and serves 2.5 million customers.
Full range of banking services by 2014
Carrefour’s Italian banking services have so far been limited to offering personal loans and credit accounts for buying at Carrefour (with or without Carrefour credit card), but the chain hopes to expand its services to a full range of banking services – including debit cards and savings accounts – in three years time.
Carrefour clearly hopes to play the trust card, as confirmed by Grimaldi’s statement that the chain will closely watch their customers’ debt burden : “we will never finance over 60% of the customer’s income”, he says. The Italian economy is unhealthy, spendable income is decreasing and there is an increasing risk that customers will not be able to pay their debts. Still, Grimaldi considers this to be a good time to start a bank: “It’s a sign of optimism”, he said, just before Moody’s downgraded Italy’s bond ratings.