At a time when retailers are increasingly focusing attention on the urban dweller and city worker, no company has been more aggressive than Carrefour, the $103 billion retailer that is the world’s second-largest, behind only Walmart.

David Pinto, Carrefour, Walmart, Western Europe, Carrefour City, Gare St. Lazare, Cherbourg, Rouen

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Inside This Issue - Opinion

Carrefour alters urban retailing

November 26th, 2012
by David Pinto, Editor

At a time when retailers are increasingly focusing attention on the urban dweller and city worker, no company has been more aggressive than Carrefour, the $103 billion retailer that is the world’s second-largest, behind only Walmart.

Over a period of two years Carrefour has opened some 600 “city” stores across Western Europe, convenience stores that generally run the gamut between 2,500 and 10,000 square feet and “make life easier for urbanites who live or work nearby,” according to the retailer’s promotional brochure.

Carrefour has rolled out two versions of its city store. The first, which the retailer identifies as a “convenience” format, is located in center-town areas and features a wide range of snack food items as well as an in-store dining area.

The second, a “neighborhood” store that is located in residential and outlying areas, offers a product mix that is centered on mealtimes.

Conventional as this approach sounds, one ingredient sets it apart. All of the stores are franchised. Though they closely follow a Carrefour-developed convenience store blueprint in format, graphics, product assortment and the generous use of the Carrefour name, logo and loyalty program, they are operated and managed by independent franchised retailers. While these companies provide the store management and personnel, the staffs are trained by Carrefour.

The retailer also helps with the financing, as well as offering technical, marketing and human resources support.

The franchisees, in their turn, agree to purchase most of their merchandise from Carrefour, including the well-recognized and highly regarded Carrefour label products, which generally account for some 30% of sales in a Carrefour City store.

By all accounts, this formula appears to be working, generating revenue and shopper loyalty for the retailer while providing opportunities for the franchisees who have thus far joined the program.

Earlier this year the Carrefour City program took its latest step forward, opening its first center-city outlet in a Paris railroad station. More specifically, the 5,000-square-foot store opened in late spring at the Gare St. Lazare, one of several stations that bring commuters into Paris from local suburbs and more distant locations to the west and north, such as Cherbourg and Rouen.

By all accounts, the store has been a resounding success thus far. As one staffer put it recently: "We get business from commuters who buy breakfast on their way to work and food for lunch as well as those who stop on their way home to purchase dinner. We also get business throughout the day from people who live in the neighborhood. The location is ideal, both for people who commute to Paris from outlying suburbs and for those who live here."

The 5,000-square-foot Gare St. Lazare store is open from 7 a.m. to 11 p.m. six days a week, and 9 to 10 on Sunday. It carries some 6,000 SKUs in an assortment that features fresh produce and such prepared meals as sandwiches and salads, along with basic grocery merchandise, wine and liquor, a limited assortment of health and beauty aids — and, of course, the Carrefour brand products.

Best-sellers are its fresh assortment. ready meals, and such refrigerated items as yogurt, cheese and other dairy products. Predictably, the busiest shopping times are the morning and afternoon peak hours and the lunch period, which stretches from noon to after 2 p.m.

To the casual observer, the Carrefour City Gare St. Lazare store is remarkable only for its unremarkability. It is, simply put, a convenience grocery store.

It is, nonetheless, an ingenious creation, an immaculate store that encourages customers to shop a conveniently located, easy-to-shop retail outlet that offers a product assortment particularly well suited to a transient clientele that is drawn by the name and reputation of the retailer behind it.
That the retailer behind it isn’t technically behind it at all is perhaps what’s most remarkable.
What Carrefour should get credit for here is not necessarily the format but the success in advancing that format through the use of franchising.

That the concept works, there is little doubt. The Carrefour City stores generate between $3 million and $20 million in annual retail sales, out of fewer than 10,000 square feet of selling space. The average customer spends between $10 and $20 per trip. Depending on the format, the stores serve from 1,000 to 3,000 customers daily. And they do so with a staff that numbers between six and 25 people.

At a time when sameness in city initiatives has become a basic retail characteristic, Carrefour has chosen a different approach. The retailer deserves credit for the attempt. It deserves even more credit for the fact that this new direction is changing the face of urban retailing in Europe.