Walmart and Carrefour Case Study PDF

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CLASS: INTERNATIONAL BUSSINESS GROUP 11: TRẦN THỊ MINH ÁNH – 4Q18 NGUYỄN TRUNG KIÊN – 4Q16 ĐỖ THANH LONG – 5Q18

CASE STUDY: WALMART OR CARREFOUR: WHO WILL BE MASTER OF PLANET RETAIL. I.

Overview

1.1.

Walmart

Sam Walton began Walmart, the world’s largest retailer, in 1962. Headquartered in Bentonville, Arkansas, Walmart was built on the policies of “everyday low prices” and a 100 percent customer satisfaction guarantee. Walton provided the lowest prices, on average, among American retailers, and directed the organization to achieve superior customer satisfaction. He had previously worked for the JC Jenney Company and it has been reported that Mr Penney once told Sam that he did not have a future in retailing. Walton’s views on retailing were iconoclastic and industry-defining in the United States. With over 3,000 stores in the United States, Walmart has begun an aggressive expansion into the international marketplace. Walmart has over 1,500 stores in Canada, Mexico, the UK, Germany, South Korea, China, Brazil, and Argentina. It also operates a small number of stores in a few other countries through joint ventures. Walmart’s recent entry into the European market (primarily through acquisition) has caused anxiety,and in some cases panic, among European retailers. Walmart is larger (sales) than its major competitors Carrefour, Metro AG, and Ahold combined. Approximately 80 percent of Wal mart’s stores are in the United States. 1.2.

Carrefour

Carrefour, the second-largest retailer in the world, was started in France in 1957when two brothers, Jacques and Denis Deforey, who were in the grocery business, partnered with Marcel Fournier, who owned a department store. The name Carrefour, means “crossroads”.

Carrefour is known for their extreme attention to detail and the ability to cater to local tastes by sourcing and hiring locally. Carrefour established itself as the major retailer in Europe and it now has over 87,000 stores in Europe, Asia and Latin America. It is important to note that Carrefour has not dared to encroach on the turf of Wal-Mart, its formidable competitor, it does not have a presence in North America. Likewise, Wal-Mart has left Europe untouched outside of the United Kingdom. The retailing mix of Carrefour varies from that of Wal-Mart. Carrefour has ventured into cash and carry operations, hypermarkets, and supermarkets, but also owns a huge number of smaller convenience stores and banking and travel centers. Carrefour’s focus has strayed away from the hypermarket format and has focused on smaller sized outlets, adding to the retailer’s versatility, but subtracting from its bottom line.

II.

Case Discussion

2.1.

Which international strategy does Walmart follow? Which international strategy does Carrefour follow? Which do you feel is a better strategy for global expansion?

- Walmart follows: Global integration strategy – conducting business similarly throughout the world (using standardize products, promotion strategies & distribution channels in every country  reduce cost), and locating company units whenever there is high quality and low cost (locating operations anywhere in the world  lower cost & higher quality).  achieves a large scale and efficient supply chain  has its own low-cost brands (e.g.: Great Value)  establishes the low prices & achieves competitive advantages - Carrefour follows: Local responsiveness strategy – responding to differences in markets in all countries in which a company operates.  customize their organization & products to accommodate country or regional differences; “stop clustering”  customers maybe willing to pay higher price for products or services that are tailored to their needs E.g.: In China, Carrefour cuts its vegetables vertically to avoid an image of bad luck among its Chinese customers.

Walmart

Carrefour

Global integration strategy

Local responsiveness strategy

- Low prices  competitive advantage.

- Fewer risks because products are aimed to

- Because of globalization, people are more

meet customers’ needs.

open with products from other cultures.

- More stable (despite globalization, local differences still hold sway over mass retailing).

 In my opinion, Walmart and Carrefour strategy are equally good for global expansion with their own advantages and disadvantages.

2.2.

Can Walmart learn anything from Carrefour? Can Carrefour learn anything from Walmart’ success? Explain

As you can see, both Walmart and Carrefour are the biggest retailers in the world. Be established in other countries, one in the US, one in France, each of them also had other ways to develop. Although two companies are the opposites, looking at reality, they also can learn something from each other. In fact, Carrefour established itself as the major retailer in Europe. Carrefour now has over 6,000 stores in Europe, South America, and Asia, and is planning expansions into the Caribbean, Africa, and the Middle East. Carrefour attempts to localize its operations as much as possible and uses few expatriates. Approximately 80 percent of store sales come from outside its home country, France. It means Carrefour put the foreign marketplace first instead of domestic area. Therefore, one of the most important things that made Carrefour become the second-largest retailer in the world is pervading to Chinese in detail and Asian market in particular. Carrefour’s global strategy involves careful study of local markets and careful attention to local customs. For example, in China Carrefour cuts its vegetables vertically, not horizontally, to avoid an image of bad luck among its Chinese customers. Carrefour has been a pioneer in the concept of “store clustering” internationally altering its product mix store facilities and prices to suit different economic regions. Carrefour is the largest foreign retailer in China and sees the Asian market as critical to its continued success. Carrefour has 226 stores in Asia, compared to Walmart’s 59 stores. One-quarter of Carrefour’s new store growth comes from the Asian market. Walmart also learned this way from Carrefour. Walmart’s headquarter in China is located in Shenzhen, the world’s fifth-largest port city. Walmart is even more forced to enter custom so as not to lose this potential market. In addition to adopt unwritten rules from the Chinese business, for the first time, Walmart broke the rule under the

Sam Walton: allowing coalitions to be formed in stores. This means enabling the third factor that managers and employees can take part in activities- a forbidden thing in Walmart before. Speaking well to speak back, Walmart still be the largest company in retailer in the world. Difference between ranking 1 and 2 depend on maintaining scale economy. Carrefour should learn this character of Walmart. Walmart grows revenue rapidly by pricing goods lower than local retailers, which pushes retailers out of the retail business. By a time, Walmart's competitors began to realize that small towns could support large discount department stores, Walmart was dominating the market. These are small towns, large enough to support a retailer with discounts. However, the two retailers offering discounts are too much for these cities. Such markets provide a safe, profitable base for Walmart. Walmart is also an innovator in information systems, transportation and human resource management practices. These strategies lead to higher productivity and lower costs compared to competitors. This allows the company to make a high profit while selling the product at a low price. Walmart leads the group of US retailers in the development and deployment of sophisticated product tracking systems using barcode and scanner technology for inspection. Information technology allows Walmart to track what is selling and tailor inventory so that existing in-store products match local needs. By avoiding over-stocking, Walmart doesn't have to keep periodic sales to change unsold inventory.

2.3.

Which retailer, in your opinion, will win the battle for global leadership?

At contemporary time, Walmart is considered as the largest retailer in the world. According to The Fortune Global 500, Walmart took the top spot on the 2020 list for the eighth year in a row, generating $4 trillion cumulative revenue over that time. The success of the corporation is based on a simple philosophy from the founder Sam Walton: Offer shoppers lower prices than they get anywhere else. This unprecedented power of Walmart has given the opportunity for the cooperation to shape labor markets globally and change the way entire industry operate. However, comparing to its direct global competitor – Carrefour, it seems like Carrefour has been one step ahead of the game in the battle for global leadership, at least for now with its efficient business strategies. While the success of Walmart has been mostly built on its domination in the North America market, the success of Carrefour, on the other hand, has been based on the international markets. Carrefour is known for their extreme attention to detail and the ability to cater to local tastes by sourcing and hiring locally. Carrefour established itself as the major retailer in

Europe and it now has over 87,000 stores in Europe, Asia and Latin America. The success of Carrefour in international markets has been built upon the local responsiveness strategy which focuses on local market conditions, variations in consumer tastes and demands in segmented markets, and to respond to different national standards and regulations imposed by autonomous governments and agencies. Carrefour’s global strategy involves careful study of local markets and careful attention to local customs. For example, the retailer insists on hiring domestic employees at all levels of operations in order to best meet the local tastes. Carrefour learnt this lesson after failing to follow that policy in South Korea and was swiftly forced out of that country’s retail landscape. Another example is in China in which Carrefour cuts its vegetables vertically, not horizontally, to avoid an image of bad luck among its Chinese customers. Carrefour has been a pioneer in the concept of “store clustering” internationally, altering its product mix, store facilities, and prices to suit different economic regions. Carrefour is the largest foreign retailer in China and sees the Asian market as critical to its continued success. Carrefour has 226 stores in Asia, compared to Walmart’s 59 stores. Onequarter of Carrefour’s new store growth comes from the Asian market. With 12 million loyalty card-holders in France, and many others in other countries, Carrefour group stores have an excellent base from which to forge closer relationships with customers. As a multi-format retailer, Carrefour can offer solutions addressing a wide variety of shopping habits. In 2009, Carrefour enhanced its knowledge of customers, with the aim of serving them better and improving its brand image. In store, the Carrefour brand will be conveyed in a way that is closer to the customers and more emotionally involving. By being more competitive, the brand will become a tool for winning customers, enhancing customer loyalty and distinguishing Carrefour from other retailers. This European retailer is considered a pioneer in adopting a strategy of differentiation by focusing on locally sourced products. Its strongest success has come from online retail operations and success in the large European markets of Spain and Poland. The variety of store formatting approaches has allowed Carrefour to outpace Wal-Mart in its entry into the promising Chinese market. However, the lack of economies might have hurt it in entering the fragmented Indian market, where Carrefour failed to make a dent. According to the Management Strategies of Global Retailers in the Crisis Report released in March of 2009, Wal-Mart has recorded growth of 1% and Carrefour posted 1.9% growth. Overseas markets are key contributors to that growth. They accounted for over half of the revenue source for

Carrefour and 30% for Wal-Mart. However, both retailers have experienced setbacks in terms of international expansion. On the other hand, Wal-Mart – the major competitor of Carrefour, has experienced less success internationally, having failed in South Korea and Germany, and remaining unprofitable in Japan. International sales account for only about 30% of WalMart’s total revenue, and its return on assets for international operations has been considerably lower than for its domestic operations. Carrefour has positioned itself as an international leader in the retail industry. Its strategies have proven to be successful, first of all, by using local responsiveness strategy, they have been able to adapt to local cultures and consumer needs as necessary. With this strategy, Carrefour has succeeded in entering new markets aggressively and gaining a large share in each market. It will take time to know whether Walmart or Carrefour or any other retailers will the global competition as the market will always surprise people. However, considering the current situation, it seems like Carrefour is leading the race to win the position of global leadership in the retail industry....