* More autonomy for store managers
* Decentralisation vital to winning back customers - CEO
* Non-food goods remain a challenge
By Dominique Vidalon and Pascale Denis
PARIS, March 12 A cultural shift is underway at
Europe's largest retailer, Carrefour, as bosses at its
French stores get more freedom after years of control from
headquarters near Paris.
Empowering local managers is part of retail veteran Georges
Plassat's 10-month old effort to revive the monolithic retailer,
under siege from more agile competitors such as Leclerc and
Last week Carrefour reported results which showed the first
fruits of his turnaround efforts, and said more could be
achieved as he now had the cash to renovate
His vision is on display at Carrefour's 12,000 square metre
Bercy hypermarket in Charenton Le Pont, an affluent eastern
Paris suburb, where decisions on ordering and displaying
merchandise are now up to manager Thierry Excoffier.
Departing from past practice, when top bosses mandated how
much floor space would be devoted to products such as TV sets,
Excoffier now can scale back to just the best-selling models on
offer to cut down on unsold stocks and costs.
"There is a change in culture," Excoffier told Reuters
during a visit to the store, which was renovated last summer.
"We have specialists in the store who know what is selling,"
he said, explaining that top management was now listening to
store staff best-placed to know which items were in demand.
When Plassat took over as CEO in May, his diagnosis was that
Carrefour, which has 220 hypermarkets in France and 524
elsewhere in Europe, suffered from "excess centralisation
preventing it from delivering results".
He made handing back power to store managers in France a key
component of his plan to revive the fortunes of the world's No 2
retailer after Wal-Mart.
He wants to push the idea throughout the group but is
starting in France because that is the largest market and one
where local managers have found their autonomy particularly
Plassat, whose French revival also relies on cost cutting
and lower prices, has said he needs three years to turn
Carrefour around and most analysts are expecting a long and
gradual recovery amid a tough economic climate in Europe.
But they say the former top executive at Carrefour's top
listed rival Casino, has already made a difference,
"The results demonstrate how CEO Plassat's initiatives -
empowerment of local management, cost reduction, more targeted
advertising spend, change in assortment (the range) - have
already started to pay off," Morgan Stanley analysts said in a
Despite a sprawling empire spanning from Brazil to China,
domestic hypermarkets still accounted for about a quarter of
Carrefour's 86.6 billion euros ($113 billion) of group sales
last year, and investors are eager to see whether their overhaul
can be replicated elsewhere.
In Britain, Tesco, the world's third-largest
retailer, has also been engaged in a revival plan in its home
market, investing in more staff, revamped food ranges and
smartened stores that give more space to food..
Plassat has said that restoring power to store managers was
vital to winning back clients from unlisted rivals like Leclerc
or Systeme U, which operate as cooperatives of independent store
owners who are in control of their day-to-day operations.
"We have to deal with local competitors who have a closer
relationship with customers, who are often very much
decentralised," Plassat said.
Carrefour is battling years of underperformance in its main
European markets, where hypermarkets have been hit by
competition from specialist stores like Zara and
Decathlon as well as inroads by online shopping.
The solid growth of these rivals spotlights the benefits of
granting managers more autonomy, analysts say, although the
differences are not always completely clear cut.
Leclerc's price policy is decided at national level and
negotiations with national suppliers, advertising and IT budgets
are also centralised at Systeme U.
Last year, Carrefour underperformed its local rivals with a
1.5 percent French sales decline against a 0.8 percent drop for
Casino. Leclerc grew sales by 7 percent, Intermarche
by 7.4 percent and Systeme U by 3.5 percent.
Giving managers more flexibility is only "part of the
solution" because Carrefour's hypermarket problems are deeper,
said PlanetRetail analyst Gildas Aitamer.
Lower prices are still the most important factor in winning
over shoppers with smaller budgets in an economic slump.
Reducing the price of essential goods has also been part of
At the entrance of the Bercy store, there are two trolleys
containing 40 staples such as yoghurt, shampoo or detergent with
a sign guaranteeing that its prices are below those of nearby
The price gap is of about 9 euros in favour of the Carrefour
trolley worth, a significant difference for French consumers.
"My main criteria is price, that's what I watch out for.
Since it was renovated the store has sushi bar and feels more
spacious but I don't really care about that. I want to do my
shopping as fast as possible," said Malek Mabrouk, 56, a
But non-food products such as electronics, which comprise 30
percent of revenue, remain a trouble spot for the company as
shoppers cut spending on all but essential goods or go to more
"We need to see more evidence of improvement in the non-food
offer to be comfortable that management can retain overall
hypermarket attraction and footfall," said Exane BNP analyst
John Kershaw in a note on Friday.