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Retail Business Environment

Notes In 1969, Carrefour opened its first hypermarket store outside France, in Belgium. Although
French consumers welcomed the hypermarket concept, smaller stores lobbied against the
spread of hypermarket stores in the late 1960s and early 1970s, and in 1973, the French
legislature passed the Royer Law, which restricted the introduction of more hypermarkets.
Carrefour had no choice but to expand internationally. It first moved to neighbouring
European countries: Switzerland in 1970; Britain and Italy in 1972; and Spain in 1973.
However, Carrefour soon withdrew from the Belgian and British markets, focusing mainly
on southern European and Latin American countries where the distribution system was
not yet modernized. In 1975, it expanded its format outside Europe, to Brazil. Carrefour’s
internationalization strategy further accelerated in the 1980s and 1990s (see Exhibit 3.1A).
Carrefour’s international strategy is based on the hypermarket format with local
adaptability. For example, while the store format is the same anywhere around the world,
the company sells hot meals to French customers in France and pasta in Argentina and
Italy, and has sushi bars in most Asian countries. The success of Carrefour’s export of its
hypermarket concept is due, at least in part, to its careful choice of countries and to its
ability to adapt its format to local business environments. As shown in Exhibit 3.1A, most
countries are emerging economies with a growing urban middle-class population that
find the hypermarket concept appealing.
The international concept of Carrefour is based on:

A simple and clear idea: People in major cities prefer to do all their shopping under
one roof. Carrefour’s logic is based on the belief that choice, self-service, free parking,
and low prices have universal appeal. Although these principles might seem simple,
the introduction of free parking in South Korea and Singapore was considered
revolutionary, given the high cost of land in these countries.

Evolving ideas: Each hypermarket around the world is expected to keep reinventing
itself to meet the demands of local customers. For instance, the company has
introduced organic food in France, optical shops and tyre fitting in Taiwan, and
petrol stations in Argentina.
As shown in Exhibit 3.1A, different formats are present in different countries. While the
hypermarket model is the only format in emerging economies in South America (with the
exception of Brazil and Argentina) and Asia, different formats exist in European countries.
This is mainly due to: (1) planning restrictions on building hypermarkets in Western
European countries; and (2) historical growth through acquisition of small outlets. In
addition, in contrast to its standard entry mode by ownership, Carrefour entered several
countries—the United Arab Emirates, Madagascar, Qatar, Romania, the Dominican
Republic, and Tunisia—through a franchise partnership.
Most Carrefour stores are still located in Europe. However, the importance of non-
European markets has been steadily increasing. For instance, the number of Carrefour
stores in Belgium fell from 483 to 120 in the ten-year period of 1999–2009, while the
number of stores in Italy fell from 912 to 494. At the same time, the number of Carrefour
stores in Brazil increased from 193 to 476, while the number of stores in China increased
from 23 to 443.

3.1 Internationalization and Globalization

The motives underlying retail globalization are then explored. While in the past much
prominence has been placed on a reactive interpretation of globalization, namely that retailers
only move outside the domestic market when opportunities for growth at home are severely

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