Despite a brief appearance in the UK during the 1980s, the Carrefour brand doesn’t have much of a presence in northern Europe. But even without a foothold in two of the continent’s key markets, Germany and the UK, Carrefour is one of the three largest retailers in the world, in terms of turnover. The other two are Wal-Mart and Costco, and as such that makes Carrefour the biggest retail name in Europe. Not bad for a company that started life in the picturesque lakeside town of Annecy, in the Haute-Savoy region of France in 1958.
Carrefour operates in 34 countries, has more than 10,000 stores, employs 364,000 people, and in 2013 its combined sales were more than €100 billion. If you’ve holidayed in France, there’s a strong likelihood you’ve been in (or at least very close to) a Carrefour store, because around 50% of Carrefour’s operations are in its homeland.
Its other key European markets are Belgium, Italy and Spain. Eastern Europe is also an important region, as are the Far East and South America – specifically Brazil and Argentina.
He started by explaining the Carrefour supply chain model.
PR: It’s a really decentralised company – every country is practically autonomous in terms of the range of products it sells, in terms of its relationship with suppliers, and logistics too. So you could say our supply chain is a very local one. We have some connections with other countries, but that tends to only be in relation to certain products that are specific to a place of origin.
For example, in Italy we have developed a range called Terre d’Italia – typically it’s a range of items from niche suppliers producing small quantities of these specific products, like olive oil, pasta and so on. As this is very specific – it’s produced only for Carrefour – and we think they are high quality products, we also deliver them to Belgium, France, and South America.
The only centralised operation is for goods imported from the Far East – we have a worldwide division responsible for that.
Our optimal delivery range is typically a maximum of 100km from our stores, so we need very local warehouses. In Italy we have 12 warehouses servicing 1,100 stores of all the different sizes and formats. We’re known for hypermarkets. But it’s the smaller format stores where we see a lot of development. For example, in Italy we have 50 hypermarkets but around 800 small and very small stores; half of those are franchisee-run and half directly managed. We’ve also got around 400 supermarkets. The smallest store is around 80 square metres and the biggest 16,000 square metres.
There are more than 100,000 items available at any one time, and across the whole year it adds up to more than that, especially in terms of non-food items. We have around 3,000 suppliers at any given time and more than that across the whole of the year. We manage the full range of food products out of a network of regional warehouses, and have a national warehouse for non-food items.
eDel: Tell us about your role.
PR: Well, I am the supply chain director. I manage all the relationships with our suppliers – quantities, frequency of delivery, levels of service, condition of buying, whether it’s full track, half pallets, the logistics conditions, the flows for managing stock – does it go to the warehouse, or go directly to the stores – and so on.
I’m also in charge of managing the warehouses, transportation, and relationships with the stores – when and how we deliver to them.
There are about 400 people in my team – most are in the warehouses, with around 50 in headquarters, which is where I’m based, in Milan.
I don’t exactly have a typical day, but every week I do one or two rounds of the stores and the warehouses, and there are always regular meetings with suppliers and logistics partners, and in addition to that there are seminars I try to attend every couple of weeks.
Outside of the day-to-day, I’m on the technical committee for the GS1 organisation. So every six weeks there is a meeting where we look at traceability, new techniques, EU regulations and so on. At the moment we’re looking at the traceability of fish and meat across the whole of the supply chain.
Before this I was a consultant at Accenture for 16 years, I’ve been at Carrefour for five very interesting years.
eDel: What are some of the best things about your role?
PR: The best thing could also be described as the worst, that is to say that it is not a routine kind of role. There is always something different going on; typically, across the year, I am involved in around 100 different projects, some big, some small.
The supply chain is the cornerstone of our business – that crucial link between stores, merchandise and suppliers. So our role is to try to manage the trade off between those different needs and different pressures and ensure that everything is run to benefit the business as a whole. After all, the stores would like deliveries several times a day, whereas purely from the point of view of managing cost, we would prefer one delivery with big trucks. It’s all about finding the balance.
To excel in this kind of role you have to have a lot of different competences, to understand the store manager’s perspective, the merchandisers objectives, the need for promotions and so on.
eDel: What does the future look like?
PR: At the moment, Carrefour is mainly brick and mortar. There is not a large percentage of sales done via the net. What there is tends to mostly be in France. But while Italy generally lags behind somewhere like the UK, it is growing month-on-month and we’re watching the statistics carefully. The growth we’re seeing is mostly in non-food purchases – there isn’t a great deal of food delivery. Part of that is because it’s simply not so easy to deliver in Italian cities – there’s not a lot of space for parking. The costs involved are very high, and those that are doing it are losing money. So there’s not exactly a huge rush to do it.
However, we see omnichannel as an important area for us.
One of the big things we’re involved in is click and collect. Our customers can use our mobile app to choose which part of the day they want to collect their purchases. Most people who do this, when they come into the store, will also purchase something else. This is the model we’re pushing most at the moment, and the one we’ll continue to push in the future.
We know we’ll never be as effective in the online space as a pureplayer. But we have a significant physical infrastructure, we have 20,000 people and 1,000 stores, our big asset is the store and our customers’ relationship with the store. So we want to keep finding new and better reasons for our customers to come into the stores.
The other things we’re doing – we’ve installed some lockers, from InPost, in a small number of stores, less than 100. At the moment they are just used for customers’ other ecommerce sales, but again, they are in our stores so it’s a way to keep people coming in. It’s all about maintaining that relationship. In some stores we now sell coffee, there are clothes cleaning services, customers can pay bills, or order things we don’t stock but can get within two days.
We’re also offering free Wi-Fi in our stores to those customers with our loyalty cards, so they can receive offers while they are in the store, based on their purchase history and the promotions we’re running.
So, you can see we’re using the store as a central place where customers can find everything they need.
In terms of our customer base, there are a lot of people living in towns and a large percentage of them will be more than 65 years old over the next 20 years. Many of them won’t want to drive to get their shopping, they’ll want to find most of what then need close to home. So we’re trying to create that kind of solution in the stores.
Our future is an omni channel future – one single platform used to increase the point of contact wit the customer.
eDel: Why are you attending EDX and is there anything you’re looking forward to in particular?
PR: At the moment, as I said, we are very brick and mortar; not just in the physical way but also in our culture.
I think we need to increase the speed at which we pilot omnichannel projects. I think there are significant benefits to us not just in terms of image of the company but also because those customers who do use click and collect tend to be more loyal and to shop more frequently.
Typically in Italy people don’t return to the same store simply out of habit, they will check to see who might have a promotion and they will shop wherever the price is the most advantageous for the products they want. Obviously that increases the number of promotions in the market, and drives down margins for everyone. So we need to find reasons to keep customers with us. Adding new services and the omnichannel experience is something that could bring the customer closer to the brand. In terms of volumes it’s small now but it’s growing faster than other parts of the company.
So one of the ideas behind attending EDX 2015 is so that we can understand from those markets that are more advanced than us. I’m looking forward to the opportunity to increase our knowledge and to look for short cuts, to avoid the mistakes made by others and see what might work in our country.
If we can speed up our learning curve it will mean we can focus our investment in those things we know will produce better results in a shorter period.
Paolo’s talk (Click and Collect – delivering online shoppers in-store) will take place at 14:45 on 25 March in the Retail Delivery stream in the EDX Theatre. You can register for EDX here.