carefour purchasing strategy and plan

Reinventingthe Hypermarket to Delight & DifferentiateJOSÉ CARLOS GONZÁLEZ‐HURTADO

3

Building the future

4

HOW MANY ?

HOW MUCH ?++ HOW

OFTEN ?

‐ 0,8%p.y.

‐ 2,3%p.y.

+ 1,0 %p.y.

The hypermarket challengein Europe

Sales / m² : ‐1,7% p.y.Sales / m² : ‐1,7% p.y.

5

What did consumers & customers tell us?

50 000 European consumers researched

6

The voice of the consumer

HYPERS ARELESS COMPETITIVE

“Prices are not much better than in supermarket”

“I prefer to go to the specialist”

HYPERS ARE LESS ATTRACTIVE

“All hypermarkets are the same”

“It’s boring”

“It’s a hassle”

LOWER RATIONAL BENEFIT

LOWER EMOTIONAL BENEFIT

7

Carrefour has a huge opportunity to recreate the destination store

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DDDELIGHT

PRICE

FRESH & QUALITY

MULTISPECIALIST

DIFFERENTIATE

EVENTS

SERVICES

COMFORT

Our answer

&

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DDELIGHT

PRICE

FRESH & QUALITY

MULTISPECIALISTD

DIFFERENTIATE

EVENTS

SERVICES

COMFORT

Our answer

Increase price competitiveness and improve price image

PRICE &

10

•Communicate prices like a specialist

Increase price competitivenessand improve price image

FMCGFMCG

PromotionsPromotions

MarketNon FoodTextile

MarketNon FoodTextile

DELIGHT PRICE

11

Price perception Price visibility

Before (Jan 10) After (Jul 10)

+7% +12%

Improved price image scores in remodeled hyper in Belgium

DELIGHT PRICE

12


•Consistent low prices & fewer and deeper promotions


DELIGHT PRICE

13

• Invest in price competitiveness



DELIGHT PRICE


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•More Carrefour‐branded products in consumer basket

• Invest in price competitiveness



DELIGHT PRICE


15

Our answer

DELIGHT DIFFERENTIATE

PRICE

FRESH & QUALITY

MULTISPECIALIST

EVENTS

SERVICES

COMFORT&

The Market specialist: freshness, choice & quality

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+ 33% space + 5% Consumer needs ‐ 13% SKUs+ 33% space + 5% Consumer needs ‐ 13% SKUs

DELIGHT FRESHNESS & QUALITY

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HamHam CheeseCheese FishFish

VegetablesVegetables BakeryBakery SushisSushis


18

80

100

120

140

124

Ecully

128

Venissieux

106

Belgium

118

Spain

Before Planet After Planet

Encouraging sales growth in fresh food


19

Our answer


PRICE

FRESH & QUALITY

MULTISPECIALIST

EVENTS

SERVICES

COMFORT&

MULTISPECIALIST

20

El PinarEl Pinar AlcobendasAlcobendas EcullyEcully VénissieuxVénissieux Mt St JeanMt St Jean

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Space: + 40%# Consumer needs: + 10%

Space: + 40%# Consumer needs: + 10%

DELIGHT MULTISPECIALISTBeauty

22

Space : + 5 % # Consumer Needs: +20%


DELIGHT MULTISPECIALISTFrozen

23



DELIGHT MULTISPECIALISTOrganic

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Space : ‐ 15 % # Consumer Needs: +20%

Space : ‐ 15 % # Consumer Needs: +20%

DELIGHT MULTISPECIALISTHome

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Space : + 3% # Consumer Needs: +9%

Space : + 3% # Consumer Needs: +9%

DELIGHT MULTISPECIALISTBaby

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Space :‐ 12% # Consumer Needs: ‐10%

Space :‐ 12% # Consumer Needs: ‐10%

DELIGHT MULTISPECIALISTFashion

27

Space : ‐5% # Consumer Needs: +15%

Space : ‐5% # Consumer Needs: +15%

DELIGHT MULTISPECIALISTElectronics

28

Our answer


PRICE

FRESH & QUALITY

MULTISPECIALIST

EVENTS

SERVICES

COMFORT&

A “new store” every 10 days

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Now in EcullyNow in Ecully

DIFFERENTIATE EVENTS

30

Seasonal area

Events

7 seasons/ year

7 seasons/ year

28 events / year28 events / year

• A new store every 10 days

• 2 000 m² at the entranceof the store

DIFFERENTIATE EVENTS Discovery pole

31

Our answer


PRICE

FRESH & QUALITY

MULTISPECIALIST

EVENTS

SERVICES

COMFORT&

All you want, all you need…

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300 scan machines per store15% of the sales in self scan300 scan machines per store15% of the sales in self scan

DIFFERENTIATE SERVICESSelf scan

33 40

Virtual make up consultantVirtual make up consultant

DIFFERENTIATE

10 minutes/10 Euros10 minutes/10 Euros

SERVICES Beauty Bubble & EZ Face

34 39

DIFFERENTIATE SERVICESNursery

Unique in food retailUnique in food retail

35 42

Unique in food retailUnique in food retail

DIFFERENTIATE SERVICESCooking Coach

36 41

Baby expert in storeBaby expert in store

DIFFERENTIATE SERVICESNurse / Baby advisor

37

Enhancing shopper experience with online before, during and after store visit

Enhancing shopper experience with online before, during and after store visit

Touchscreen for product informationTouchscreen for

product information

Contactless pod to get couponsContactless pod to get coupons

Specific AppsSpecific Apps

DIFFERENTIATE SERVICESWeb‐enabled store

38

Gold

Silver

Bronze

Unique in food retail :The more loyal you are, the more you get

Unique in food retail :The more loyal you are, the more you get

DIFFERENTIATE SERVICESNew loyalty program

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Our answer


PRICE

FRESH & QUALITY

MULTISPECIALIST

EVENTS

SERVICES

COMFORT&

COMFORT

40

New furniture

New lighting

New colors

New decoration

Look & FeelLook & Feel

DIFFERENTIATE COMFORT

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Enlarged alleys: width +20%30% of shelves lowered

Enlarged alleys: width +20%30% of shelves lowered

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Accoustic optimizationAccoustic optimization


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SignageSignage

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CartsCarts


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Snack BarSnack Bar


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Our answer


PRICE

FRESH & QUALITY

MULTISPECIALIST

EVENTS

SERVICES

COMFORT&

47

For a greener•Reduce CO2 emissions by 40% (by 2020(1))

•Recycle 70% of waste from

stores (by 2020(1))

•Reduce energy consumption

by 30% (by 2020(2))

•Reduce packaging weight

of Carrefour‐branded products by 20% (by 2012 (3))

BRAND

(1) Vs. 2009 / Vs. 2004 / Vs. 2007

48

An important market potentialBRAND

Specific range brands

Core Market

DiscountRange

Potential40 + %Potential40 + %

PRICEPRICE MARGINMARGIN

49

INNOVATIONINNOVATION

Delighting & Differentiating with Carrefour products

50

The approach

51

ConsumersConsumers CompetitionCompetition PerformancePerformance

11Xxxxx-xx/Footer

62 % of the area is composed of modest urban households

7

Source: Nielsen Spectra : careful: the area employed in the analysis is different from the Set area

2 Consumers1 Location 3 Competition 4 Performance 5 Potential

20Xxxxx- xx/Footer

Vé nissieux mall as compared to the other malls in the area

Mapping of the competitionMapping of the competition

•In Lyon landscape, main competitorsfor Vénissieux are:

AuchanPorte des Alpes(Champ du Pont), at East close to A43 highway whichdevelops a turnover of more than€303 M and a mall of 55 stores. The commercial area benefits from the presence of Ikeaand of numerous leading fascias

AuchanSaint Genis-Laval, at South-West, with a turnover of €155 M and a mall of 70 units includingBHVdepartment store

Carrefour Lyon Part Dieu. Destination mall of more than 230 boutiques whoseattraction will increase with the «coursOxygène»mall creation project.

•Territory well served commercially withaggressive competitors in terms of area development

•Very powerful downtown in all tradesoffer

•Suburb with destination specialties

3 Competition2 Consumers1 Location 4 Performance 5 Potential

30Xxxxx-xx/Footer

In 2008, the turnover is mostly achieved with clients of the close areaExcept clients outside the area, the annual spending is penalized by a much lower frequency than the average

Split of the number of clientsSplit of the number of clients

Split of 2008 turnover, tax included

Split of 2008 turnover, tax included

Annual spending per clientAnnual spending per client

279€517€559€

1 155€

0

1 000

2 000

0-10 min 10-20 min 20-30 min Outside area

ƒ

x

Number of annual visits per clientNumber of annual visits per client

579

21

0-10 min 10-20 min

20-30 min

Outside area

Average client basketAverage client basket

55€70€64€55€

0-10 min 10-20 min

20-30 min

Outside area

12% 13%

18%18%

70% 66%

203

Storeturnover

3%

Total Carrefour turnover

0-10min10-20 min20-30 minOutside area

31% 41%

24%16%

38%45%

274 590

Store HHactive clients

4%

Total Carrefour clients

Source: SET; BCG analysis

29 15 12 5

Moy.: 116 000

France1 1 385€ 859€ 692€ 259€

47€ 58€ 60€ 48€France1

France1

4 Performance2 Consumers 3 Competition 5 Potential1 Location

7Xxxxx- xx/Footer

The area close to the store is characterized by low revenue indexes whilemore distant areas are wealthier, in particular the secondary area

Source: SET / INSEE

Revenue indexes (100=France)

Revenue indexes (100=France)

Zone IZone IIZone IIITotal

73100

9693

1 Location 2 Consumers 3 Competition 4 Performance 5 Potential

23Xxxxx-xx/Footer

Fruits andVegetables

Pork meat prod. / CheeseDelicatessen

Meat Poultry

Fish

Bakeryproducts

Household care

Soft drinks

Self-service fresh products

Frozen foodGrocery

Wines, AlcoholsBeers

Hygiene Toiletries

Market and small stores for fresh products; Auchan for FMCGare the main substitution fascias

DepartmentDepartment

TFP

Substitution fasciasSubstitution fascias DepartmentDepartment Substitution fasciasSubstitution fascias

FMCG

Auchan4%

Grand Fr ais 16%Market 52%

Grand Frais 5%Auchan 11%

Small s tores 55%

Small stores 19%

Market 24%Auchan 27%

Leclerc 2%Auchan 7%

Small s tores 76%

Market 10%Auchan 20%

Small s tores 22%Champion 7%

Small stores 17%

Auchan 31%

Auchan 12%

Thiriet 13%

Picard 30%

Small stores 10%

Aldi 10%

Auchan 30%

Ed 6%

Wine merchant 9%

Auchan 19%

Auchan 9%

Nocibé 17%

Yves Rocher 20%

Auchan 7%Pharma. 26%

Parapharma. 32%

x%Source: SET October 2008 wave

49%

28%

17%

45%

19%

13%

9%

17%

23%

Para-pharmacy

59%

26%

11%

10%

FMCG

Ed 12%

Aldi 12%

Auchan 28%

Ed 9%

Lidl 13%

Auchan 26%

% of clients not or rarely buying at the store

3 Competition2 Consumers 4 Performance 5 Potential1 Location

28Xxxxx- xx/Footer

Turnover decreasing by 2,5 % per year since 2002,despite a stable surface

T/Otax excl. (€M)Surface (m²)

13 659 m²13 659 m²13 659 m²

211 M€218 M€222 M€222 M€

230 M€231 M€224 M€

0 m²

10 000 m²

20 000 m²

30 000 m²

2000 2001 2002 2003 2004 2005 2006 2007 2008100 M€

150 M€

200 M€

250 M€

T/Otax incl. outside fuel ( €M)Surface (m ²)5.5% -2.5%

198M€208M€

+21%

Source: 1998-2008 data of Carrefour Controlling

Remodeling of AuchanSt Priest

Opening year: 1966Recent extension: Sept. 2000; ~2 500m²

Opening of SimplyVénissieux1200 m ²

Opening of NettoVénissieux300m²

Remodelingof non-food

Extension of CFRMarket Vénissieux

Opening of Grand Frais

MionsRemodeling of CRFVaulxen Velin

4 Performance2 Consumers 3 Competition 5 Potential1 Location

35Xxxxx-xx/Footer

Performance lower than cluster average for general merchandiseStationery and automobile excepted

Note: Rhône region stores: Ecully, Vénissieux, Mably, Givors, Feurs, Francheville, Vaulx-en-Vel in, Part-Dieu, VilleurbanneSource: CRF Controlling

Gen

eral

mer

chan

dise

DIY

Books

Music

Video

Home

5.2 k€

(3.3 k€)

1.4 k€

(1.0 k€)

4.4k€

(3.9 k€)

0.9 k€

(0.9 k€)

2.6 k€

(3.1 k€)

0.0 k€

(0.1 k€)

6.4 k€

(8.6 k€)

0.6 k€

(1.0 k€)

6.9 k€

(5.5 k€)

0.8 k€

(1.1 k€)

Videogramesand Softwares

Automobile

Leisure

Garden

Stationery

20.4 k€

(23.4 k€)

2.9 k€

(3.4 k€)

10.3 k€

(7.3 k€)

3.0 k€

(2.3 k€)

4.8 k€

(3.9 k€)

0.3 k€

(0.3 k€)

4.6 k€

(3.2 k€)

0.3 k€

(0.3 k€)

7.4 k€

(5.0 k€)

2.4 k€

(1.5 k€)

4 Performance2 Consumers 3 Competition 5 Potential

DepartmentDepartment Turnover/m²Turnover/m²Half-net

margin / m²Half-net

margin / m² DepartmentDepartment Turnover/m²Turnover/m²Half-net

margin / m²Half-net

margin / m²

xx k€(xx k€) = cluster averageCluster average xx k€ < cluster average

1 Location

25Xxxxx-xx/Footer

Casino and Leclerc: not enough products compared in non-food

98

Carrefour VV*

Auchan*

Carrefour Vénissieux: more expensive in most FMCG (except TFP) and non-food departments

Self-service fresh products

Non-food

Liquids

Household care,

Toiletries, Hygiene

Grocery

DepartmentDepartment Price positioning (base 100 = Vénissieux )Price positioning (base 100 = Vénissieux )

Carrefour VV*

Source: Nielsen; cash desk scanning performed from September 28th to October 10th, 2009; * Auchan St Priest, Leclerc St Priest, Carrefour Vaulx en Velin, and Casino Vénissieux

Casino*Leclerc*

102 10496 98

Auchan*

Leclerc*

102 10494 96

Auchan*

Casino*

Leclerc* Auchan*

Casino*Auchan*

Casino*

Leclerc* Carrefour VV*

989290 106 108

102 10494 9692 106 108

102 10494 96 9892 106 108

102 10494 96 9892 106 108

Carrefour VV*

90

90

Carrefour VV*

90

3 Competition2 Consumers 4 Performance 5 Potential1 Location

14X xxxx-xx/ Foot er

In May 2009, clients identify numerous black spots regarding the store, and in particular the mall, the trolleys and the circulation…

Perception of Carrefour Vénissieuxpurchasing course criteria – client survey May 2009S c or e

Ma g a si nS c o re R é gi o n

S co r e Na ti on a l

M ei lle u r ma ga s ind e la r é gi o n

S c o r e 74 79 91 Ecul ly 129

153 134 136 Ecul ly 1790% 140 139 143 Ecul ly 1730% 124 83 74 Ecul ly 1500% 115 98 106 Ecul ly 1440% 107 77 88 Ecul ly 1340% 96 93 97 Salai se sur sanne 1360% 85 84 127 Gi vors 1590% 71 84 103 Ecul ly 1290% 67 67 71 Ecul ly 860% 66 36 53 Ecul ly 700% 65 28 39 Gi vors 920% 62 73 89 Ecul ly 1410% 26 30 44 Lyon par t dieu 48

3 16 42 Ecul ly 66-5 16 15 Feurs 62-6 0 10 Ecul ly 20-6 5 19 Gi vors 39

-11 25 79 Gi vors 96-21 70 66 Salai se sur sanne 143-27 -45 -16 Ecul ly 15

0% -29 -21 -21 Feurs 490% -33 -48 -23 Ecul ly 10% -130 -54 -21 Ecul ly 149

Car ref our VENISS IEUX

ERR EU R PRI X RAY ON CAISSE

C ADDIESC IRCULATI OND ISPONI BILITE DU PERSO NNELPERCEPTI ON PRI X

PERCEPTI ON PRI X STA TION SERVIC E

N B : la c o u le ur d e f on d i nd i qu e l a zo n e d e s c o re

S ATISFACTI ON G ENERALE D EC LAREE

A MABI LITE HO TES SE DE CAISSE

A MABI LITE HO TES SE D'A CCUEIL

A TTEN TE EN C AISSESD ISPONI BILITE DES PROMOS

LOCALISA TION DES PRO DUITSA TMOSPHERE GENERALE

R APPORT QUALITE PRIXA MABI LITE DU PERSONNEL

D ISPONI BILITE PR ODUITS HABI TUELS

GALERIE MARCHA NDE

PRO PRETE MA GASIN

Le parcours client nouvelle formuleC ri tère s tri és p ar sc ore dé cro i ssan t ( sau f s ati sfac tio n g é né ral e )

A CCES MAGASI N

C HOIX ALIMEN TA IREPA RKING

C HOIX NON ALIMENTA IRE

A TTEN TE STAND ACCUEI L

R EPERA GE PRI X

8 4 %

5 8%

6 5 %

5 2%

68 %

7 2 %

6 0 %

61 %

6 5 %

80 %

7 1 %

7 0 %

7 7 %

63 %

6 3%

5 5 %

6 6 %

5 8%

4 4 %

4 1%

5 1%

5 5 %

5 0 %

4 0%

6 %

37 %

2 9%

3 3%

2 2 %

1 9 %

2 6 %

2 2%

17 %

6 %

12 %

13 %

7 %

8%

7%

9 %

3%

8 %

1 6%

19 %

8 %

7 %

8 %

2 %

9 %

5 %

5 %

1 4 %

1 0%

9 %

1 0%

1 6%

1 4 %

13 %

1 6%

1 4 %

1 5%

29 %

23 %

3 2 %

2 6 %

2 8%

3 4%

3 1 %

3 6 %

3 1 %

3 7 %

4 3 %

1%

1 %

0 %

0 %

0 %

0 %

4 %

1 %

3 %

1 %

1 %

3%

1%

0 %

6 %

4 %

5 %

6 %

6 %

9 %

5%

7 %

6 %

15 %

Très sat isf ait

A ssez sati sfait

Pas tel lement sat isf ait

Pas du tout sat isf ai t EXCELLENT ALERTE

-600+300 +150 +1 00 +75 +50 0

STANDAR D ACCEPTABLECIBLE DANGERS to re sco re l argely h ighe r t han th e regi ona l / nat io nal sc ore

St ore score large ly lo wer th an reg ion al / nat io nal sco re

S ource: SET cli ent barometer st udy May 2009

2 Consumers1 Location 3 Competition 4 Performance 5 Potential

Consumer profile

Catchment area

Client perception

Competition map

Alternative banners

Competitive positionning

Commercial equation

Impact of recent openings

Analyzes in the product cat.

approachThe

52

Consumer data

Consumer data

Store operational

data

Store operational

data

Competitorsdata

Competitorsdata

Magbook® Magbrick®

Store 1

Store 2

Store 3

approachThe

53

FIRST RESULTS

54

(France) (France) (France) (France)(France) (Spain)(Spain)(Belgium)

131 128 132

173

124118

126

275

80

100

120

140

160

180

200

Beauty Bio Market Frozen Baby Home Electronics Clothing

Sales evolution by pole

Year before Planet 1st weeks

First results

55

Consumer results

DELIGHT

DIFFERENTIATE

Newness (offers more to discover)

Makes you prefer Carrefourvs

other food retailers

0% 10% 20% 30% 40% 50% 60% 70% 80%90%100%

Makes you feel well

Gives you more pleasure

Makes you want to come back 94%

85%

93%

86%

With regards to before, you would say about this new Carrefour planet store, that it…?

Yes No

85%

56

First results ‐ Fidelity Program

228

151

136

121

150

223

137

80

100

120

140

160

180

200

220

240

Bio Beauty Market Frozen Home Clothing Baby

Increase in number of clients by pole

Cardholders year before

Cardholders Planet 1st weeks

57

Conclusion

We are very encouraged by the first results

We see a huge opportunityfor Carrefour to recreate the destination store

We didn’t renovate,we invented

58

EFFICIENCY

CULTURE & PEOPLE

DELIGHT An essential step to reinvent the hypermarket…

… that goes hand in hand with enhanced efficiency & committed people.

carefour purchasing strategy and plan

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