1. Assignment <br /> On<br />“International Business”<br />Submitted To: Submitted By:<br />Prof. Uddeepan Chatterjee Mohit Malviya<br />Abhishek Pratap Singh<br />Anup Vijayan<br />INTRODUCTION TO THE SECTOR<br />Retail industry: There are two basic forms of retailers: wholesale and specialty. Wholesale retailers, also known as quot;
big boxquot;
retailers or department stores, are companies like Carrefour, Wal-Mart and Target that sell a wide variety of items at discounted prices. Specialty retailers offer a limited scope of products in order to serve a smaller market more effectively, such as consumer electronics retailers like Best Buy or office supply retailers such as Staples. the majority of the revenue in the retail industry is generated by companies that run retail quot;
chainsquot;
. The biggest retailer in the world is Wal-Mart, which generated over $344 billion in revenue in its last fiscal year.<br />Off-Price Retailers: Off-price retailers purchase retail merchandise directly from suppliers, taking advantage of manufacture over runs and cancelled orders to acquire retail goods at an opportunistic discount. They also utilize quot;
packawayquot;
, items purchased at discount at the end of a season, then held in inventory until the next appropriate season for sale. The off-price retail sector as a whole is growing faster than most other retail segments, with a CAGR greater than 10% over the past five years, well above the 4% average annual growth rate for apparel retail. Each country has a retailer that is its biggest and best, and when comparing the biggest and best retail chains from each company, the Global Powers of Retailing list emerges. From the 13th annual “Global Powers of Retailing” report compiled by Deloitte Touche Tohmatsu and STORES Magazine, this is the list of the retailers who are leading the way for the retail industry in each of their 32 homelands. The “Global Powers of Retailing” list ranks global retailers according to total revenue. In 2010 the list reflects the revenue that was generated in 2009, which was the early part of an intense global retailing recession. Despite that, the changes from the last Global Powers list are surprisingly not all that dramatic. Most of the world’s largest retailers positioned in the top half of the list moved very little in their rankings, if at all. Wal-Mart is still, by far, the largest retailer in the world. France’s Carrefour is still #2. Germany’s Metro AG overtook the United Kingdom’s Tesco chain and claimed the #3 position on the list. The top retailers in the top countries managed to maintain relative stability on the global retailing stage. There were a few big notable shifts in the world’s largest retailers, however. Norway and Lithuania became global powers of retailing, joining this year’s list at #88 and #221, respectively. Iceland fell off the list completely after its Baugur Group became a recession casualty. Russia fell from the #15 position to the #107 position, the largest drop for any one country. China’s ranking fell from #63 to #90, and a new largest retailer emerged in that country. Spain, Finland, Chile, South Korea, and Brazil also had new retail companies assume the position of being their country’s largest retailer. <br /> <br />Product Cycles: One of the most influential growth factors for retailers is product cycles. In many cases, newly innovated products (such as new flat-panel TVs or an updated line of iPods are released with high prices to maximize profits early on. Competition between consumer retailers and increased supply from manufacturers drive down prices over time until each retailer makes little profit by the end of a product's life cycle. How quickly product cycles mature drives the profit a retailer makes. There are many product cycles co-occurring at any given point in time, and these product cycles vary between retail industry sub-sectors; for example, an important product cycle in consumer electronics retail currently is flat panel HDTVs).<br />Credit Crunch: The 2007 credit market squeeze caused by the subprime lending crisis has hurt consumer confidence which has begun to make significant negative impacts on retail sales. A range of retailers such as Target, Office Depot, Dick's Sporting Goods, J. Crew Group (JCG), and AnnTaylor Stores (ANN) have reported falling same store sales and challenging selling environments due to the economy's struggles. Also, trouble in the US housing market has intensified due to the credit crunch. Downturns in the housing market hurt retailers like Home Depot and Lowe's directly, but also hurts consumer electronics retailers like Best Buy and Circuit City because consumers who have recently purchased a home are more often to purchase new home theater and entertainment products to complement their new residence.<br />Importance Of Retail Sales: The Retail Sales report is an important leading indicator because it gives us a glimpse into what the upcoming quarterly Gross Domestic Product (GDP) number—a number that gives an idea of how fast the economy is growing or shrinking—might look like. Consumers make up approximately 70 percent of the United State's GDP. So if consumers are out there spending their money, GDP will probably show that the economy is growing, and vice versa.<br />HYPERMARKET<br />Hypermarket is a superstore which combines a supermarket and a department store. The result is a very large retail facility which carries an enormous range of products under one roof, including full lines of groceries and general merchandise. In theory, hypermarkets allow customers to satisfy all their routine shopping needs in one trip.<br />Hypermarkets, like other big-box stores, typically have business models focusing on high-volume, low-margin sales. Because of their large footprints — a typical Wal-Mart Supercenter covers anywhere from 150,000 square feet (14,000 m2) to 235,000 square feet (21,800 m2), and a typical Carrefour covers 210,000 square feet (20,000 m2) — and the need for many shoppers to carry large quantities of goods, many hypermarkets choose suburban or out-of-town locations that are easily accessible by automobile.<br />INTRODUCTION TO THE COMPANY<br />The Carrefour group: a world leader in distribution<br />Carrefour means quot;
crossroadsquot;
in French. The group was created by Marcel Fournier, Denis Defforey and Jacques Defforey. Carrefour S.A. (Euronext: CA) (French pronunciation: [kaʁfuʁ]) is a French international hypermarket chain. Headquartered in Levallois-Perret, France, Carrefour is the largest hypermarket chain in the world in terms of size, the second largest retail group in the world in terms of revenue and third largest in profit after Wal-Mart and Tesco. Carrefour opened its first supermarket in Annecy, Haute-Savoie, France in 1960. Over the past 40 years, the Carrefour group has grown to become one of the world’s leading distribution groups. The world’s second-largest retailer and the largest in Europe, the group currently operates four main grocery store formats: hypermarkets, supermarkets, hard discount and convenience stores. The Carrefour group currently has over 15,500 stores, either company-operated or franchises. In 1999 it merged with Promodès, known as Continent, one of its major competitors in the French market. In April 1976, Carrefour launched a private label Produits libres (free products -- libre meaning free in the sense of liberty as opposed to gratis) line of fifty foodstuffs, including oil, biscuits (crackers and cookies), milk, and pasta, sold in unbranded white packages at substantially lower prices.<br />An international retailer<br />A pioneering entrant in countries such as Brazil (1975) and China (1995), the group currently operates in three major markets: Europe, Latin America and Asia. With a presence in 34 countries, over 57% of group turnover derives from outside France. The group sees strong potential for further international growth in the future, particularly in such large national markets as China, Brazil, Indonesia, Poland and Turkey.<br />Promoting the growth of local economies<br />Wherever it has a presence, Carrefour is actively committed to promoting local economic development. Since retail activities are all about contact with people, the group consistently emphasizes local recruitment plus management and staff training on the job wherever they work.Typically, the Carrefour group will be one of the leading private employers in any country where it operates. Naturally, this is the case for France, where the group was originally founded, but it is also true of such countries as Brazil, Argentina, Colombia, Italy and Greece. The group also seeks to support local suppliers, with some 90-95% of the products on its shelves sourced locally, depending on the country.<br /> <br />Carrefour around the world in September 2007<br />Countries where Carrefour Group is present:<br /> Directly owned Under franchise<br />Asia<br />In 1989, Carrefour became the first international retailer to establish a presence in Asia when it entered Taiwan through a joint venture with Uni President Enterprises Corporation. It leveraged the experience it gathered in Taiwan to expand into other Asian markets. Carrefour also operates in the United Arab Emirates and Jordan in a joint venture with Majid al Futtaim. In March 2007, Carrefour opened a store in Kuwait in the Avenues mall. In Oman, Carrefour opened a store in 2003 on the outskirts of the city of Muscat. Carrefour also has 11 franchise operated hypermarkets in Saudi Arabia, with 5 of them being in the capital Riyadh itself. In 2007, expansion accelerated outside France, particularly in Asia, with the building of 36 new hypermarkets, including 22 in China - where the Group broke its record for store openings in a one-year period. Carrefour has also opened a franchise owned branch in the Bahrain City Centre in 2008. However, In 2006, Carrefour decided to sell all 16 stores in Korea to WalMart and exited their business in Korea.<br />CountryFirst storeHypermarketsSupermarketsHard DiscountersChina1995163--Indonesia19986614-Bahrain20081--Japan20007--Jordan200713-Kuwait20072--Malaysia1994225-Oman20002--Pakistan20091--Iran20091--Qatar20003--Saudi Arabia200411--Singapore19972--Syria20091--Taiwan198964--Thailand199639--United Arab Emirates [3]1995112-<br />Africa<br />CountryFirst storeHypermarketsSupermarketsHard DiscountersEgypt200243-Morocco20092--Tunisia200112-Algeria2005Closed--<br />Carrefour has left Algeria in 2009, and opened in Morocco.<br />Europe<br />CountryFirst storeHypermarketsSupermarketsHard DiscountersConvenience StoresCash & CarryAzerbaijan201033---Belgium200056280-257-Bulgaria20094----Cyprus200676---France19602181,0218973,245134Greece199128210397216-Italy199359485-1,01520Monaco--1---Poland199772277-5-Portugal1991--365--Romania20012223---Spain1973161872,9123-Slovakia19984----Turkey19931999519--United Kingdom/Ireland------<br />On October 15, 2009 Carrefour announced plans to sell its Russian business, citing quot;
absence of sufficient organic growth and acquisition opportunitiesquot;
.<br />Carrefour has 161 hypermarkets in Spain, is the second most important country of the Carrefour's group, also they have arround 2000 supermarkets<br />Americas<br />Carrefour has a presence in 4 countries in the Americas: Brazil, Argentina, Colombia, and the Dominican Republic. Carrefour is active in 4 types of retail distribution: hypermarkets, supermarkets and hard discounters, and convenience stores entered the Cash & Carry market in Brazil, after the purchase of Atacadão. Carrefour was also active in Mexico between 1995 and 2005, when the 29 hypermarkets opened at the moment were sold to Chedraui.<br />CountryFirst storeHypermarketsSupermarketsHard DiscountersConvenience StoresCash & CarryArgentina198259103395--Brazil197515038300534Colombia199874----Dominican Republic2000510-2085<br />FINANCIALS OF THE COMPANY 2009<br />PAST PERFORMANCE OF THE COMPANY<br />The company’s past performance was incremental. In past the company revenue has increased to 6-8% which is good for the company. In the above tables in past performance of the year 2006 and 2007 there was increase in sales in all the countries. <br />But there was an important factor to be noted was during the year of 2008 and 2009 only sales in Asia was increased and in other region like Latin America, France and Europe there sales was lowered it is due to recession. <br />The clear past performance is reflected in the financials of the company and the company is in expansion mode so they are spreading in all the regions of the world.<br />Future plan of Carrefour<br />French retailer Carrefour planning to start business in India. The giant retail chain, which has been trying to crack the Indian market for 7 years, is finally in talk with some of the leading Indian firms. Carrefour has yet not announced the name of its future partner in India. However, rumors swirl that India’s Future Group may be its possible partner. The largest retail chain in India, Future Group said it was in talks with several overseas retailers but did not specify the names. Carrefour on the other hand said it was meeting local vendors to finalize arrangements for food and non-food items. The retail giant said it plans to develop its activities in India with the “start of cash & carry activities”. Carrefour and some Indian companies have been discussing partnerships,” said the world's second-largest retailer. <br />In India since foreign firms are prohibited from owning multi-brand retail chains they are offered franchise agreements. Carrefour has set up two entities in India; Carrefour WC&C India Pvt. Ltd (to run cash-and-carry business), and Carrefour Master Franchise Company Pvt. Ltd (to run retail business). “Starting off with a cash-and-carry business gives them the opportunity to get a first-hand feel of the Indian market and allows them to build a brand name,” said Hemant Kalbag, partner with consultancy firm A.T.Kearney. “Companies such as Wal-Mart and Carrefour would rather be in retail...but with the regulations being what it is I guess they have no choice but to be in the wholesale business,” Kalbag said.<br />The Indian retail market, currently worth $450 billion, is growing at more than 20 percent a year.<br />Currently in line with China, the country has a growing middle class.<br />Carrefour profit declines<br />Carrefour reported a fall in its profit on Friday. The company posted a 70 percent decline in profit and a 1 percent in sales. Savings in selling, and administration expenses reached 540 million euros.<br />“These savings partly compensated for the effects of inflation and of expansion, limiting growth in SG&A expenses to 1.8%,” said the company. <br />“In 2010, in an environment that is likely to remain challenging, we will consolidate these gains through flawless execution of the transformation plan and strengthened sales dynamics in our key markets,” said CEO Lars Olofsson. <br />The Mint (newspaper) reported, under the agreement Future Group, India’s largest retail operator with brands such as Pantaloon Retail and Big Bazaar, has signed a deal with French retailer Carrefour. In the next five years, the mint said Future Group plans between 150 and 300 Carrefour branded hypermarkets. The spokesperson who spoke on condition of anonymity as the announcement was yet due said, “This is quite ambitious given the challenges in finding right space required for such hypermarkets. Future Group was currently identifying several Big Bazaar hypermarkets that could be converted into Carrefour stores. It plans to use space it has rented in upcoming malls for Big Bazaar outlets to open Carrefour stores instead”. <br />It may be noted that Future Group which currently runs around 125 Big Bazaar hyper markets, said they had booked 80,000 square feet space in the malls in July with plans to open a Big Bazaar store. Citing two people familiar with the development, the mint reported with one of the person saying “The company will continue to push both Big Bazaar and Carrefour brands because they cater to different sets of consumers while Big Bazaar will operate as a mass-market format, Carrefour will cater to “upscale” consumers in the country”. Future Group CEO Kishore Biyani told Reuters, referring to media reports of a possible tie up between the two , “We have not commented on this so far and whenever there is something we will make an announcement”. <br />Infact a rule that is not expected to be relaxed in the near term is that the foreign firms are prohibited from owning multi brand retail chains in India. Wal-Mart and Germany’s Metro are the top ranked which operate so called cash and carry ventures in India.<br />After India there are also plans to expand in those potential markets in the world where the company can generate revenue. <br />