In the spotlight - Carrefour at a crossroads
The plot thickens. Just days after speculation emerged that Carrefour planned to sell up in Thailand, Singapore and Malaysia, the world's second-largest retailer today (9 July) insisted it would keep its stores - but only in two of the markets.
Carrefour refuted the rumours that it planned to close its outlets in Singapore and Malaysia but made no mention of its operations in Thailand.
Earlier this week, the French retail giant was said to be looking to sell off its stores in the three Asian markets, with reports claiming the company raise around US$1bn from the disposals.
The likes of Big C Supercenter, pan-Asian retailer Dairy Farm International Holdings, Japanese retailer Aeon and UK retail giant Tesco were linked to stores in one or more of the markets and the stage looked set for months of speculation of who would buy what Carrefour stores.
Today's partial rebuttal from Carrefour has raised eyebrows among industry watchers.
First, for Carrefour to insist it is keeping its business in Singapore is surprising, given the retailer runs only two stores in the market. Singapore is a tiny part of Carrefour's global business and the retailer, on paper, is present in markets with greater potential.
Carrefour's business in Malaysia is bigger. It runs 22 hypermarkets in the country and the retailer has set out ambitious expansion plans for the market - by 2012, it wants to have 40 hypermarkets in Malaysia. Nonetheless, Malaysia remains a relatively small market for Carrefour.
And what of Carrefour's business in Thailand? Do we assume that Carrefour's silence on that market suggests the retailer is looking to leave that market?
It would not be a surprise if Carrefour did decide to quit Thailand. Citing Planet Retail data, RBS retail analyst Justin Scarborough said Carrefour is not even among the five largest retailers in Thailand, where it runs around 40 stores.
As such, these markets, to varying degrees, look like prime candidates for a company that continues to undergo a period of transformation under chief executive Lars Olofsson.
Since the former Nestlé executive took the helm at Carrefour at the start of 2009, he has taken a fresh look at the entire business.
Olofsson set out plans to cut costs by EUR4.5bn (US$5.71bn), to improve its operations in its so-called G4 markets (France, Belgium, Italy and Spain) and step up investments in high-growth markets like China and Latin America.
The Carrefour chief executive has pressed ahead with breathing fresh life into the retailer's domestic business, through measures including the roll-out of the Carrefour Market store format and the launch of a new entry-level own-label product range.
Carrefour's operations in Belgium and Italy have been restructured, while, in Spain, the retailer has expanded its Carrefour Express format and rolled out the own-label line first unveiled in France.
It is clear, then, that a clear priority for Olofsson and Carrefour are those G4 markets in western Europe.
Carrefour is also sticking with - quite rightly - its operations in China, still a market with huge potential for multinational retailers.
The retailer also appears to be standing by its business in Brazil, another key emerging market, and where it is neck and neck with Wal-Mart and local domestic giant CBD.
Carrefour, which is second place to CBD in Brazil, in terms of market share, earlier this year announced plans to spend BRL2.5bn (US$1.42bn) to expand its presence in the country.
Despite last year's pressure from investors to quit markets in Asia and Latin America, Carrefour is right to stick around in certain key strategic markets.
To stand by markets like Brazil and China, while considering exiting markets like Thailand, is sound business sense - both in the short term and in the long term.
Restructuring the business and reducing costs will help profits in the short term but, to grow in the long term, Carrefour needs a presence in markets like Brazil and China.
Looking at today's announcement, Carrefour clearly believes in the potential of markets like Singapore and Malaysia, too.
However, if the retailer does decide to cut and run from those markets, few should be surprised.
The road to long-term growth for Carrefour is more likely to lead to places like Shanghai and Sao Paulo than Singapore.
Canada-based seafood group High Liner Foods has made a EUR340m takeover bid for Icelandic Group, a seafood supplier to retailers including Tesco and Marks and Spencer....
- How Danone aims to meet its 2020 objectives
- Why Mars rice plan not just crop-ticking exercise
- Greencore's food-to-go focus paying dividends
- Interview: Ritter sees growth potential in US, EU
- ConAgra Foods split - what could happen next?
- Pinnacle to buy Boulder Brands in $975m deal
- Genius Foods buys UK gluten-free firm Chapel Foods
- Maple Leaf Foods to cut over 400 jobs
- Nestle combats Thai seafood supply forced labour
- Hovis plans cuts amid anxiety over UK bread demand