Analysis: Five things we learned from Carrefour's third-quarter update

Here are five key takeaways from the grocer’s latest update:

Performance in its homeland is improving

In its domestic market, the retailer achieved like-for-like sales growth across core formats, including supermarkets and convenience.

The sole exception was hypermarkets, but even here Carrefour achieved a degree of improvement, with like-for-likes down 1% – less than some of its key competitors.

Carrefour has been working on a hypermarket improvement programme, adding more organic and health foods, increasing the core food assortment, introducing greater digital architecture in-store and focusing on operational excellence.

But, most importantly, Carrefour is increasingly focused on driving footfall through price investments and promotions – something that, although now working well, risks having a negative impact on profit margins.

Multichannel is priority number one

Carrefour is intent on ramping up its multichannel capabilities, something that will impact the shape of its business in the long term.

A greater proportion of its global sales will come from online and smaller formats.

Evidence of this multichannel drive can be seen in the acquisition of businesses like Rue du Commerce, for example, which has helped to lift the company’s digital sales.

The multichannel push has also seen Carrefour increasingly embrace and invest in new technology and digital initiatives.

In its third quarter alone, it launched a digital voucher service in Taiwan and rolled out its My Carrefour mobile app in Poland.

Dia conversions are progressing well

We can’t talk about multichannel and Carrefour’s shift to focus on smaller formats without discussing Dia store conversions – one of the biggest boosts to Carrefour’s proximity division for some time.

The acquisition has added more than 600 stores to an already fast-growing division – and the conversion programme is ticking along nicely with just over 500 stores now revamped.

This will seriously boost Carrefour’s small store division, giving it a stronger foothold in this burgeoning channel.

Latin America posts good numbers

Latin America registered good growth during the quarter, although much of this was driven by a highly inflationary environment in Argentina.

Brazil also reported some robust numbers on the back of continued decent performance from the Atacadão format, which is well adapted to the current recessionary environment in the country.

Carrefour will seek to expand the Atacadão concept as well as remodel its hypermarkets to the New Generation concept.

Carrefour could pull back from Asia

Asia is where the real concerns lie for Carrefour.

Yet again, like-for-like sales dropped sharply as its performance in China dragged down the numbers.

Even so, Carrefour does have a plan to get things moving in the right direction.

The retailer is in the midst of a major repositioning of the Chinese business and is working to expand its smaller store footprint with openings of convenience branches in Shanghai.

It is also working to modernise its shopping malls and get its internal supply chain fully operational in the six key regions.

If those measures don’t deliver the required results, Carrefour may well need to ask some difficult questions on the potential long-term viability of its China operation.