Carrefour will open in India, will spend money on Malaysia


Paris – Carrefour SA

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Chief govt Lars Olofsson referred to as off the sale of the corporate’s Malaysian shops and stated the retailer would spend money on them as a substitute, sustaining its grip on the rising market.

Carrefour, the world’s second largest retailer after Wal-Mart shops Inc.,

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is specializing in its European companies, the place the corporate is already a serious competitor. As a part of this technique, the corporate final week bought its enterprise in Thailand, the place a number of rivals have been sturdy, for €868 million ($1.17 billion).

Merchandise displayed on the shelf at Carrefour Hypermarket in Malaysia.

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However the focus on Europe has raised eyebrows, as stagnant shopper spending and financial troubles within the area dampened the expansion prospects of most corporations.

Mr Olofsson stated in an interview on Wednesday that the Malaysian unit’s deliberate public sale didn’t yield bids that will have taken applicable motion. Because of this, the corporate determined to have a Malaysian enterprise and two shops in Singapore. Carrefour didn’t say what he anticipated to get for the shops.

“We are able to create loads of worth by doing it ourselves,” stated Mr. Olofsson. “Now we have some very encouraging development prospects in Malaysia.”

Rising markets account for 30% of Carrefour’s gross sales, and Mr. Olofsson stated he expects spending energy for shoppers in Asia and Latin America to develop as they develop. “Rising markets are going to be a serious engine of development for our firm within the medium and long run,” stated Mr. Olofsson.

Nonetheless, the Swedish govt will not be turning its again on Europe. Mr. Olofsson in September unveiled a €1.5 billion redesign of Carrefour’s hypermarkets, which promote a variety of merchandise from hamburgers to {hardware}. He expects the funding to spice up gross sales.

“If you wish to be sturdy elsewhere, you need to have a robust base at house,” he stated. “Whenever you’re stable and calm, that is when you may make investments.”

Carrefour was one of many early main retailers to increase its footprint in Asia and different rising markets. Within the mid-Nineties the corporate opened its first shops in nations akin to Malaysia, Thailand and Turkey. However through the years, the corporate has been taking again a few of these markets. For instance, Mr. Olofson’s predecessor bought unprofitable companies in Japan and Mexico.

Mr Olofsson, who joined the retailer two years in the past from Swiss meals firm Nestle SA,

has targeted on markets the place Carrefour might be one of many prime two opponents. That is why Carrefour pulled out of Russia final 12 months, simply 4 months after opening its first retailer.

And whereas Carrefour was the primary main retailer to open in Thailand, the corporate misplaced that lead by not investing sufficient, Mr. Olofsson stated. Different opponents, together with Britain’s Tesco plc and France’s Groupe On line casino SA, streamed in Thailand, pushing Carrefour’s place to fifth with 42 shops. “Whenever you go to a number of nations, the sources aren’t limitless,” he stated. “As an alternative of going deep in a single nation, we have been skinny in lots of nations.”

The situation is totally different in Malaysia, the place Carrefour has 23 shops, as Carrefour has grabbed the No. 3 spot. Mr Olofsson stated the corporate may break into the highest two. Because of the proceeds from the Thai sale, “we’ve got extra monetary power to develop quickly, particularly in Malaysia,” he added,

Mr. Olofsson stated he would additionally think about investing in different components of Asia. Carrefour has a number one place in Indonesia, the place its greatest competitor, PT Matahari Putra Prima, is on the market. “I do not assume it is an amazing alternative, however we’re seeing it,” he stated. Carrefour’s first retailer in India is anticipated to open by the tip of the 12 months.

Mr Olofsson stated he has determined to stay in different markets the place Carrefour will not be within the prime two, together with Poland.

In the meantime, Mr Olofsson is fixing his costly hypermarket makeover in Europe. 4 of the 5 pilot shops in France, Spain and Belgium are doing nicely, however Mr Olofsson stated one retailer in Acully, close to Lyon, France, fell wanting expectations. They’ve pushed again the reworking of 5 French shops to January to keep away from interfering with Christmas gross sales. The main renovation work on the five hundred shops will start in April, he stated.

write to Mimosa Spencer at mimosa.spenser@dowjones.com and Christina Passariello at christina.passariello@wsj.com

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