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CARREFOUR
PRESENTATION : GROUP 2
MANVI CHOPRA ANUJ BUDHIRAJA
SHAILENDRA TEWARIVEDA PRADA
CARREFOUR:THE MULTINATIONAL
• French, multinational retailer headquartered Boulogne, Billancourt, France in Greater Paris
• Second largest retail group in the world in terms of Revenue : €81.271 billion (2011)
• One of the first to open a hypermarket – supermarket and departmental store under same roof
EVALUATION OF STRATEGY
WHAT WHY HOW
OBJECTIVE: DEFINING THE OPPORTUNITY
Objective is to reach the market share by 2 % in Indian retail industry through B2C channels and break even
Initiatives taken by Carrefour in India:Before FDI:• Expand B2B stores in other parts of India, mainly Pune &
Bangalore (May 2012)• Talks with Pantaloons group for Joint Venture
Assumptions:• Accomplishment of Joint Venture with Pantaloon group• Plans to open B2C stores in metro cities
GLOBAL STRATEGY OF CARREFOUR
LOCALIZATION• Biggest strength of Carrefour in the countries it operates -from local tie-ups
to hiring local executives to run stores, local sourcing to merchandising• Designed stores and launched private labels to suit Chinese consumers and
each store ran independently
SUPPLY CHAIN STRATEGIES• Mostly uses 'direct procurement strategy' in the markets it operates.• Currently works with about 90 suppliers/ farmers in Uttar Pradesh, Andhra
Pradesh, Delhi, Punjab and Haryana; directly dealing with the farmers for quality production and effective supply chain management
• Keeps its supply chain very economical and flexible - trucks to bikes depending on the need & cost
• Integrated Composite Application Network (ICAN) software to integrate its stores, distribution centres and supply chain partners in various countries
STORE OPENINGS• Decentralisation is another key strategy of Carrefour• Set up regional offices in each of the Chinese provinces and that office took
care of shops in that particular region• Adapting stores to local needs
INDIAN RETAIL INDUSTRY
Grown at a CAGR of 14.6% for the period
FY07-12Accounts 14 -15% of Indian
GDP
Indian Retail sector is the 5th largest global
retail destinationExpected to
grow from US $ 353 billion in 2010 to US $
543.2 billion by 2014
Ranked as the most attractive
emerging market for
investment in the retail sector(Source: AT Kearney's eighth annual Global Retail Development
Index (GRDI), in 2009)
Organised retail:Clothing &
Footwear – 37%Food & Grocery
– 24.2%
Government permitted 51%
FDI in multi brand retail and
100% FDI in single brand
retail
Clothing & Footwear: • Pantaloon Retail• K Raheja Group• Tata group – Trent • Landmark group• AV Birla group
Food & Grocery:• Pantaloons• Reliance• Subhiksha• Bharti –Walmart (Easyday)• RPG group - Foodworld
INDIAN RETAIL INDUSTRY- CONT
INDIAN RETAIL INDUSTRY
International competitors in India:• Walmart - 17 stores largely in the West and North –
Bharti group• Tesco – Helps manage wholesale operations of Star
bazaar – Trent Ltd – Tata Group
INDIAN RETAIL INDUSTRY
Disadvantages Advantages
APPROACHES
• Joint venture – With Future group (Pantaloons) with 51% ownership
• Franchises• Establish individual stores with Carrefour brand name
– Not possible
ENTRY MODE OPTIONS IN INDIA
JOINT VENTURE
ADVANTAGES• Establish distribution and marketing channels• Increased financial resources• Diversify risk by sharing liabilities • Increases synergies ( low labor, rent )
DI SADVANTAGES• Delays decision making • increase risk of conflicts • Limited life
Strategy
• Open stores in Tier 1 & 2 cities• Compete with local players like Reliance, Big
bazaar etc• Localisation- Local tie ups to hiring local
executives to run stores, local sourcing to merchandising
• Build awareness and Brand Loyalty
Current,Present and future strategy
• They currently operates two wholly owned subsidiaries in India, Carrefour Wholesale cash and carry India Ltd and Carrefour India Master Franchise Co. Pvt Ltd.
Differentiator
• Insurance Plans• Travel Plans• Multiplex• Kids Zone• Food Court• Gaming Zone• Gas Station• Free home delivery
Financials and future estimates
Annual Income Statement Data
Actuals in M € Estimates in M €
Fiscal Period December
2009 2010 2011 2012 2013 2014
Sales 85 963 90 099 81 271 80 627 81 136 83 566Operating income (EBITDA)
4 656 4 894 3 883 3 841 3 895 4 115
Operating profit (EBIT) 2 777 2 972 2 182 2 137 2 236 2 372
Pre-Tax Profit (EBT) 1 095 1 179 -1 238 1 469 1 605 1 913
Net income 327 382 371 830 1 015 1 161EPS ( €) 0,48 0,56 0,55 1,13 1,41 1,59Dividend per Share ( €) 1,08 1,08 0,52 0,56 0,59 0,67
Yield 5,59% 5,59% 2,69% 2,88% 3,05% 3,45%
Stock Price
• Stock listed on Euronext• CMP -€ 19.61• In one year it changed from € 17.83 to € 19.61• Stock appreciated for 9.98% in one year’s
time• We want the stock to appreciate to € 30 in 3-4
years time (over 53% increase)
Local players in FY09-10 and 10-11
Combined losses increased by 8 % to Rs 987 cr ore during 2010-11
Marketing
• Providing promotional offers to customers-giving coupons and gifts• Free home deliveries up to 5000 Rs of buying
• Provide extra services-
Giving movie tickets for shopping of 2000 Rs Customer will be experiencing the gaming zone Parking free on a purchase of 1000 and above Creating strong online presence ( offer Customized deals)
CARREFOUR : COMPETITIVE STRATEGY
Local competition• Wider range of products under one roof • Better infrastructure , ambiance • Localization
Foreign competition• Increased marketing• higher use of social networking • Decentralization• Localization
THANK YOU