Carrefour Case Study – Sales and Merchandising

Part 1: Approaches to Merchandising Decisions of Carrefour

Retailing

Retailing involves management of physical products in relation to their retail space (Jain, 2008). Retail design involves development of a store design to ensure that each product is allocated some space and arranged well to make the store appealing and well organized. The retailing of Carrefour is appropriately designed to meet the needs of shoppers and to make it quite appealing. This is done across all the 15,500 stores of the company.

Retailing has significant strategic roles in sales and merchandising. First, retailing and retail design improves the shopping experience to become more competitive (Cox and Brittain, 2004). This enables the company to meet the shopping needs of customers, meet their expectations, retain them, and achieve competitive advantage. It is a form of differentiating the company’s stores from those of competitors in order to develop a competitive edge. Retailing also leads to development of international brands for the business in order to compete internationally and gain advantage of going international. It also reduces consumer time pressure because products are arranged in a good order so that they can access the products they need at the right time and place. It also makes the store environment to be appealing in order to improve the shopping experience of customers and encourage them to come back again.

Retailing in Carrefour has improved over time. In the past, the retailer’s design was lagging behind. For example, retailing in Carrefour during its initial days did not link the web to physical distribution in appropriately. Nowadays, Carrefour has leveraged brand equity through effective retail design in order to create value. Carrefour nowadays has an open entrance where customers can easily enter the store and make rounds within the spacious store the routes leading to upper room stores are open and wide to allow for free movement of customers. Carrefour has a Carrefour planet design with blue colours combined with candle-like red lights. Other similar stores also have other colour themes such as green, red and purple. The Carrefour planet offers a friendly animated environment with natural theme. The retail stores also have specialist areas with ventilated, wide aisles and a signage system that is simple and colour-coded so that customers can easily find shelves and speed up the movement of customers around stores. The signage also creates visual cues that make retailing easier and comfortable.

Carrefour Strategies

In terms of product range, Carrefour offers a wide range of products under one roof. These products are localized in every country where the business operates in order to meet the needs of customers in those regions. The products are mainly retail products including household goods, apparels, electronics, food and beverages. They are offered in multiple store categories including hypermarkets and supermarkets. Carrefour offers various products which are designed to meet various consumer requirements. New product ranges are produced regularly to meet the changing needs of customers.

Positioning entails identifying the target customer and providing goods that meet their needs. Carrefour uses various brands to position itself differently in different markets Cox and Brittain, 2004). In luxury markets, luxurious products are provided through the Selection brand to meet the needs of luxurious customers. Starting from the stores to the products, luxury is clearly indicated. Some brands such as the mid-range brands offer 15-30 percent cheaper products than those of other similar brands in the market and superior quality. The Carrefour Kids brand is positioned in the children’s segment in order to meet the needs of children. Prices are positioned differently depending on brands. For instance, the Selection brand which is a luxurious brand carries higher prices than Kids and mid-range brands.

In terms of merchandising decisions, Carrefour provides appropriate visual merchandising to enhance first contact with the customer, achieve product objectives, supplement the store design, and reinforce its brands. The products are presented in shelves that are clear and easily seen by customers. Lower tables also lead to easy access of products and improve visibility within the stores. It also enhances consistency and clarity. There are also off-shelf displays, especially near the entrance which attract customers through visual representation. The team responsible for merchandising in Carrefour is the sales and marketing team including brand managers, sales representatives, and promotions team.

Recommendations

The retailing and merchandising approaches of Carrefour are significantly successful, but there are still some areas that need improvement. One of the recommendations for the company is that the retail design should give the highest priority to space. In this case, the products in the stores should be arranged in such a way that they can create a lot of space for easy movement of customers within the store in order to improve their shopping experience and make them to come back again. The materials used should also reflect the needs of customers. For example, the glasses rather than wood should be used for display of ornaments. Another recommendation is that the visual merchandising approach should involve methods that can be adapted to the needs of local markets rather than the general brands of the company.

Part 2: The Importance of “Brand” and “Customer Value” to Carrefour

Meaning of Brand, Branding and Brand Management

A brand refers to the name, symbol, design, term, sign, or a combination of more than one of these to identify the maker or seller of a product or service, and to differentiate the products or services from those of competitors. A brand mark or logo is a distinguishing symbol that differentiates a product or service from those of competitors. A brand name, on the other hand is the spoken or written word that represents the brand in a unique way to distinguish the brand. A brand may represent attributes, benefits, values, culture, user or personality of the producer. Branding is therefore the process of creating, maintaining and protecting products and services of a company. Brand management refers to the managerial activities of planning, controlling, and organizing that involve the development of symbols, names and designs to distinguish a company’s products and services from those of competitors. Companies market their brands through advertising, internet marketing, personal experience and publicity. All members of a company should represent the brand in order to create a good brand image. Brand audit should also be carried out regularly to determine its performance.

Characteristics, Brand Life Cycle and Key Branding Strategies

Good brands carry various characteristics. For example, they are unique from other brands. Each company brand has symbols or signs that no other brands have; hence distinguishing products from those of other brands. A brand also represents different purposes of the products. For example, the brand name “Carrefour Kids” indicates that the brand is targeted on kids. Brands also represent certain values of a company.

Brand life cycle entails the various stages that a brand undergoes since it is introduced in the market, through the time when sales are increasing, until the sales eventually decline and go out of the market. A brand life cycle enables the business to increase its income and decrease costs, and improve the decisions made within the organisation (Bivainiene, 2010). The stages involved in the brand lifecycle include introduction stage, growth stage, maturity stage, and decline stage. In the introduction stage, customers know little about the brand and brand awareness starts to be created. Sales are low while costs are still high. In the growth stage, more consumers start to know about the brand and sales volumes stabilize as costs decrease (Bivainiene, 2010). In maturity stage, the product sales stabilize and begin to decline. In the final decline stage, the sales begin to decline constantly and the product may eventually be recalled in the market and a new brand is created.

There are various brand strategies that companies may use in developing and managing brands. One of the strategies is to use an umbrella brand in which the company name is used in all products. This strategy is used in Carrefour whereby brands are named as Carrefour Kids, Carrefour Mid-range, Carrefour Disney, etc. Another strategy is the portfolio of brands strategy in which product portfolios have individual brands. Brands competing against each other for market share also have different brand names. Brand strategy may also involve the use of equity, such that brands with string equity may gain competitive advantage through strong brand loyalty and customer attraction.

Branding Models

There are various models that explain branding. One of them is Keller’s brand equity model. According to this model, a strong brand is built by shaping how customers think and feel about the product. Strong brand equity means that customers will buy more because they develop positive feelings, opinions, thoughts and perceptions about the company’s products. The Keller’s brand equity triangle is used to measure a company’s brand equity (Jobber & Lancaster, 2003). According to this model, customers who change brands due to price differences have no brand loyalty while those who are satisfied with certain brands have brand loyalty.

This model can be applied to Carrefour. Carrefour identifies its brands in terms of four categories: hypermarkets, supermarkets, hard discount stores, and convenience stores. The company identifies its customers and positions itself using appropriate brands such as Carrefour Kids, Carrefour City, Carrefour Mini, Proxi, etc (Chinomona & Sibanda, 2012). There are just many brands that the company has to target specific group of customers. As a result, the company meets customer needs and develops a string brand equity which can lead to customer satisfaction and loyalty.

Branding Challenges

One of the challenges facing branding is the technological changes in the industry. as technology changes, companies are faced with the challenge of improving its brands to meet the changing competitive features and qualities of products in order to retain customers (Bivainiene, 2010). Secondly, brands are faced with the challenge of changing consumer needs. Customers usually have needs, preferences, interests and perceptions that keep changing. Developing flexible brands that can meet those changes is difficult. Economic resources are also limited. This causes problems in terms of branding because it becomes difficult to match limited resources to unlimited wants of customers using existing brands.

Part 3: Carrefour’s Sourcing and Buying Strategies

Appropriate Sourcing and Buying Strategy

Purchasing involves implementation of the decision of merchandising. This includes who buys, what should be bought, how much to buy, from whom, and when to buy. The purchased materials include processed food, fresh food, apparels and appliances (Chinomona & Sibanda, 2012). Products purchased by the company are always made within the local market by contracting local suppliers in order to provide materials that meet local needs and preferences of customers (Chinomona & Sibanda, 2012). This leads to creation of products of national identity in a global hypermarket. Local sourcing and purchasing offers a wide range of products that meet local demand and cut costs of production in order to provide goods at low prices for customers.

Decision Making Units (DMU) and Retail Product Management (RDM) are also important aspects of retail management and buying strategies. Effective management of sourcing is carried out by stores managers and department managers. However, the local managers make final decisions (Decision making unit) regarding the selection of merchandise, sales promotion plans, personnel management, and inventory control (Chinomona & Sibanda, 2012). The stores and department managers recognize the need of products and write product specification to satisfy the need. The suppliers relations team then identifies suitable supplier and makes specific order.

In terms of buying strategies, the company targets wide range of products that will meet the sales and profitability needs of the company. The company also selects good quality goods that reflect the needs of customers in order to increase release of stock and reduce space taken up by stock (Kumar & Reinartz, 2011). The wide range of products bought by the company also provides adequate choice of products for the customer and improves customer value.

In terms of local adaptation, Carrefour approaches different markets differently. It understands and responds to local needs of customers across the world. For example, Carrefour established small hypermarkets to respond to the limited space for hypermarkets in the country. It also entered Taiwan in terms of joint venture with Uni-President Enterprises which understands the local needs of customers in order to meet such local needs (Chinomona & Sibanda, 2012).

Recommendations for Improvement

Sourcing of products from the local market to meet local needs is an important purchasing and buying strategies, but the company still needs to meet international needs for competitiveness by providing quality that cannot be rivaled in the local market. The company should use its global approach of quality management to ensure that the products purchased will meet the company’s required quality standards (Vedamani, 2004). One of the best qualities of a good buyer is the ability to judge the quality of a product correctly. Therefore, the company should use highly skilled merchandising and store managers to identify the right suppliers and quality products to ensure that the products bought are of good quality and can meet the needs of customers.

Part 4: Appropriateness of the sales methods used in Carrefour

Sales objective is to make a sale. Salespeople make sales by identifying needs, presenting, demonstrating, negotiating, handling objections and closing the sale. This requires a sales management which the sales managers coordinate the sales activities and make key decisions regarding the sales objectives, appropriate strategies and delegation of sales duties. Carrefour uses local managers and sales personnel and distributors to manage and make sales. The sales personnel team and the sales manager in the local markets develop a sales promotion strategy which promotes and sales stock based on local demand. In this case, the local sales personnel and marketers record customer information in various countries to determine shopping patterns of local consumers and sale to them the products that match their needs. This increases sales and profitability of the organisation within various markets.

Sales settings and sales environment also affect the sales management of Carrefour. The sales environment creates the image of the products which will determine whether they will sell or not (Jobber & Lancaster, 2003). In terms of internal factors, Carrefour is known to be one of the leading retail brands in the world and the leading in Europe. In terms of profit, it is the third largest in the world after Wall Mart and Tesco. Therefore, the retailer has enough resources and good brand image to implement its sales objectives successfully. In terms of external environment, competition impacts negatively on the sales management of the retail company. Furthermore, political stability in the host countries encourages effective sales and sales management. Economic crisis such as the Euro zone sovereign debt crisis experienced recently also impacts negatively on sales because it reduces the purchasing power of consumers.

The responsibilities of sales personnel/promotion team in Carrefour include identification of customer needs in the local market, presentation of the product and negotiation with the customer (Chinomona & Sibanda, 2012). The sales promotion team also demonstrates how the product works and responds to the objections of the customers. Generally, they convince customers to buy the products and close the sale. Because Carrefour is a large international company, its sales promotion team provides superior services by handling complaints effectively, collecting marketing information, and implementing marketing strategies to achieve marketing objectives.

Relationship marketing is also an important aspect of sales management in Carrefour. Relationship marketing involves developing a good relationship with customers in order to win their loyalty (Baran et al, 2008). In this case, the relationship between customers and the company is enhanced through segment positioning whereby the company provides good incentives to customers in different segments. For example, the company provides low prices for low-income segments and luxury products for high income segments. It also offers discounts to attract customers. Customer relationship is also enhanced through provision of quality and localized products that meet customer needs.

In terms of recruitment and selection as well as motivation and training, Carrefour relies on effective personnel management approaches and human resource development strategies. The human resource development and personnel management of Carrefour originates from the company’s headquarters. Managers from France go to different countries to recruit, select and train employees based on the local market conditions (Chinomona & Sibanda, 2012). This ensures that the company gets personnel who are adapted to the local market and can respond to global issues of sales management in order to remain competitive (Kotler, 2003). The company trains local employees as part of a career development plan. In its personnel management and training approaches, the company focuses on maintaining global retail management styles blended with local experiences and culture to achieve sales objectives.

Conclusion

In conclusion, it is clear that Carrefour uses a localized approach to meeting the needs of local markets while maintaining global standards to achieve global sales objectives. The retail design of Carrefour effectively meets the needs of customers by developing a good signage system that is simple and colour-coded so that customers can easily find shelves and speed up the movement of customers around stores. Merchandising approach also creates a good visual representation of products through displays and tables. Generally, space and products are matched to provide good shopping experience for customers. Carrefour also uses appropriate buying and purchasing approaches using local contractors and suppliers while maintaining good relations with local customers. Recruitment, selection and training of employees are also provided locally using globalized management standards to achieve sales objectives.

 

References List

Baran, R.J., Galka, R.J., & Strunk, D.P. (2008). Principles of customer relationship management. Mason, Ohio: Thomson/South-Western.

Bivainiene, B. (2010). Brand Life Cycle: Theoretical Discourses. Economics and Management, 15, 408-414.

Chinomona, R. & Sibanda, D. (2012). When Global Expansion Meets Local Realities in retailing: Carrefour’s Glocal Strategies in Taiwan. International Journal of Business and   Management, 8(1), 44-59.

Cox, R. and Brittain, P. (2004). Retailing an Introduction, 5th edition. Upper Saddle River, New Jersey: Prentice Hall.

Jain, N. (2008). Retail management: A realistic approach. New Delhi: Global India Publications.

Jobber, D. & Lancaster, G. (2003). Selling and sales management. London: Pearson Higher Education.

Kotler, P. (2003). Marketing Management, 11 Ed. Upper Saddle River, New Jersey: Prentice Hall.

Kumar, V., & Reinartz, W. (2011). Customer Relationship Management: Concept, Strategy, and Tools. Berlin: Springer Berlin.

Varley, R. (2008). Retail Product Management, 2nd Ed. London: Routledge.

Vedamani, G.G. (2004). Retail Management: Functional Principles & Practices. Mumbai: Jaico Pub House.

 

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