ABSTRACT
In launching Planet, Carrefour has introduced an innovation by “editing”, in other words creating, a new shop, through the bringing together of elements that others had already created. However, it has combined them very well, like a beautiful patchwork, which is bound to appeal to customers.
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15 years ago, a Carrefour manager, who was taking part in a retail programme at ESADE, invited Professor Dawson and me to visit one of its hypermarkets. In the electrical household appliance section, I commented that their sales in this area could experience double-digit growth if they changed their selling methods. The manager replied that whilst this was probably true, he could not change things, because discount self-service was in Carrefour’s DNA.
In 2010, Carrefour presented a new retail concept, which constituted one of the greatest transformations in the hypermarket format. In Europe, its clientele was distancing itself – both the number of customers and the frequency of their visits were dropping. Supermarkets have improved a lot, and the main specialists (FNAC, Decathlon, Sephora, Ikea, etc.) are very experienced. A drastic change was called for. And that is just what they have achieved.
The tip of the iceberg
The most enjoyable, amazing, multifaceted shopping experience that has been achieved is only the tip of the iceberg in the re-branded, revamped retail business model that Lars Olofsson, Carrefour’s CEO, has described as having four aspects: delighting customers, enhancing internal efficiency, enriching the corporate culture and creating a chain brand focused on the idea of being positive. These objectives are designed to ensure that Carrefour is both the customers’ and the shareholders’ preferred retail firm.
The paradigms have been broken
With this new retail concept, we need to forget the traditional hypermarket format (everything under the same roof and at very low prices).
The shop becomes something like a shopping centre; a highly coordinated group of shop-in-shops. Each of these has been decorated, furnished and provided with a range of products and services all specifically designed to suit the type of purchases customers make there. Most of these shop-in-shops are specialised (with a wide range to take into account a very diverse public). However, the baby goods section breaks another paradigm by introducing a segmented store-within-a-store (containing virtually everything this specific segment requires).
Carrefour breaks with tradition and uses the retail method best suited to each specialised selling area: self-service, vendor-assisted sales, personal behind-the-counter sales and even vending.
The most conventional area is in the “canned and dry foods” (shelf-stable goods) section with aisles of tall shelving, self-service retailing and a discount feel, albeit with less visual pollution than usual.
The shabby look does not sell (as much)
Some analysts say that Carrefour Planet is too attractive, and that this will have a negative impact on their low-cost image. Mr Olofsson stated clearly that: just because a store has low-cost and competitive pricing, it does not have to look like a garage. Inditex and many others have proven this to be true. This risk of the false perception of it being a pricy store is reduced further, if customers visit it frequently.
The people at the very heart
At Carrefour Planet, family shopping trips are much more fun than before. But there are other individuals that Carrefour wants to look after – their own team, in other words the staff. Carrefour’s brand values also apply to them. “We are committed, caring and positive”. A real declaration of principles that deserves to be followed.
Action speaks louder than words
In a scenario in which gross profit margins for the sector appear crazy (food gross profit margins are sometimes higher than non-food ones), the greatest improvements have been made in the non-food sector, in other words the one in which people shop less frequently. Despite this, the best Planet stores, such as the one we studied, have seen their figures rise by 9.9% in terms of both customer numbers and sales.
More food for thought – in the only non-specialist, segmented (baby goods zone) shop-in-shop, the increase was 73%.
The analysts, who say that pilot shops are expensive, do not understand the role they play in R+D. Later stores will operate on a tighter budget.
The results are promising and the concept is due to be rolled out in several counties, including Spain. Carrefour’s shares will probably rise due to the company’s new shops short-term results and especially because the brand is being strengthened.
Innovate or edit
In launching Planet, Carrefour has not reinvented the hypermarket, a format that was in dire straits in Europe. It has simply done something different, and done it better. It has introduced an innovation by “editing”, in other words creating, a new shop, through the bringing together of elements, or business parts, that others had already created. However, it has combined them very well, like a beautiful patchwork, which is bound to appeal to customers.
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Lluis Martinez-Ribes
