The global grocery retailing trend of cutting back the range on offer does not serve customers’ expectations.

That’s the conclusion from an address by the chairman of Carrefour’s management board, Jose Luis Duran who admitted the giant France-based multinational made a mistake when it culled its supermarket product ranges.

Culling ranges, he inferred, reflected a lack of respect for the customer.

In a message relevant to retailers all over the world, Duran said the company was now undoing the damage, expanding its range by 15% annually, with an even balance of branded and house brand products.

Duran told delegates at the 51st CIES World Food Business Summit in Shanghai last week that between 2000 and 2004 the company had significantly reduced the number of SKUs on its shelves. It had also rolled out its own house brand lines.

But he said customers had responded negatively to that policy and Carrefour now understood and recognised that choice was a major expectation of its customers.

His comments will no doubt be reviewed with interest by Australia’s retail giants, Coles and Woolworths, both of which have been culling masses of SKUs during the past year primarily to make room for house brands. Lines positioned at numbers four or five in a category were being dumped often leaving a brand leader, a number two, sometimes three and one or two house brand alternatives.

In a surprisingly frank and open address, Duran explained the core current philosophies of Carrefour, which the week of the conference opened its 99th hypermarket in China and boasts 300 million customer worldwide annually.

Duran said Carrefour respected three core consumer rules today: “Just for me, right now and at my price”.

“We’re moving to (an era) where to a certain extent the price is dictated by the customer.

Adjusting costs and margins is the retailer’s problem. Will we change or are we going to die?

There are those retailers who are not able to change and they are going to become a part of the (current) consolidation process country by country.”

“Respect the customer”

Today’s retailer, said Duran, had to respect 100% the customer base and exceed the customer’s expectations to create a viable differentiation.

Carrefour has a base contract with its customers comprising food safety, price and ensuring product availability.

House brands, he said, had to be launched in balance with name brands. They had to demonstrate innovation and quality, not be me too products.

“Range extension has to be equally balanced between own brand and name brand.”

Another mistake Carrefour had made was to underestimate the importance of customer relationship management.

“We used to believe CRM was not a high priority. Today we have to be much more flexible.”

Today Carrefour maintains a database of millions of households through the countries in which it trades and communicates divided it into different customer segments to communicate products and promotions.

Carrefour, he said, had learned to deliver multiple formats under different banners and adapt its offer to the different communities – and nationalities – which it serves.

It accepts full corporate responsibility policies relating to sustainable development, food safety and energy saving. In China, for example, it aims to reduce energy consumption of its stores by 20% from 208 and has just opened a ‘green store’ in Beijing which uses 25% less.

It works closely with farmer suppliers and supports initiatives to benefit local supplier communities.

Carrefour also accepts that it has a shared responsibility with its suppliers, said Duran.

“With great power comes more responsibility.

“We have to accelerate innovation. I urge all manufacturers… to fill in their pipeline of innovation.”

Duran said retailing in the future would only get more difficult.

“We all have to change to set an example. We have to change some of our old habits.

“Changing face is going to demand a change in culture and changing culture is the real challenge of a people business.”

Former Woolworths CEO Roger Corbett asked Duran after his address how difficult Carrefour had found it to maintain a diversity of product range in emerging markets.

Duran said his company had to recognise that every market was completely local. In a country like China, customers demanded different product ranges by region, not just by their country.

Carrefour had met the challenge by developing strong local teams who had to work out how to transfer the company’s global know-how into a different country, and thus market.


By Robert Stockdill reporting from CIES World Food Business Summit in Shanghai. Source: FOODweek print edition, June 28, 2007.

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