Carrefour Plans To Invest EUR 2.8 Bln Over Five Years, Cut 2400 Jobs
French grocery retailer Carrefour Group (CRERF, CRRFY, 0NPH.L) said that it will invest 2.8 billion euros over five years, or six times more than current investments, to gain a new dimension in digital and omnichannel. It also launched efficiency plan aimed at generating 2 billion euros in full-year cost savings by 2020. It will offer a voluntary redundancy plan to 2,400 employees at head office in France. It targets 5 billion euros in sales in food e-commerce by 2022. Separately, Carrefour announced a potential investment by Tencent and Yonghui in Carrefour China as well as a strategic cooperation agreement with Tencent in China.
Carrefour Group presented its transformation plan, "Carrefour 2022", and is adapting its model and organization.
Carrefour said itis rationalizing its headquarters in all of its countries. In the Ile-de-France region, headquarters will be regrouped, which involves the closure of the corporate headquarters in Boulogne and the abandonment of the project to build a new 30,000 m² headquarter in the Essonne department. A strictly voluntary redundancy plan will be offered to 2,400 employees at head office in France, out of a total workforce of 10,500.
The company announced a cost reduction plan of 2 billion euros on a full-year basis by 2020. The cost reduction plan will focus on four main areas. They are The optimization of direct purchasing, The rationalization of indirect purchasing, The reduction of logistics costs, The reduction of structural costs.
The Group plans to divest 273 ex-DIA stores. A search for buyers will be launched store by store; In the absence of buyers, these stores will be closed. The company will systematically give preference to alternative job offers within the Group. The "Carrefour 2022" plan provides for annual investments of 2 billion euros as of 2018. These investments are rightsized to maintain the Group's assets; implement its transformation ambitions.
In terms of real estate strategy, Carrefour will dispose of 500 million euros of non-strategic assets over the next three years.
Meanwhile, the company noted that Supermarkets and convenience stores are growth formats for the Group. Carrefour will be on the offensive in this segment and will open at least 2,000 convenience stores in the next five years, with a growing presence in major European cities.
Carrefour will open 20 Atacadão stores per year in Brazil as of 2018, including 5 hypermarket conversions this year.
In Argentina, Carrefour announces it is investing in the Maxi banner, launching the conversion of 16 hypermarkets in 2018.
The adaptation of these formats in Europe will be continued, with an acceleration of the roll-out of Promocash in France and continued experimentation in other countries. Carrefour stated that it will invest 2.8 billion euros over five years, or six times more than current investments, to gain a new dimension in digital and omnichannel.
Carrefour said its ambition is to become a key player in food e-commerce, with 5 billion euros in sales for the Group and market share of at least 20% in food e-commerce market in France by 2022.
Carrefour noted that it will rely on its physical network to offer to its customers a reliable and extensive omnichannel service:
All the delivery solutions offered by Carrefour will see their reliability enhanced and be generalized. In France, home delivery will be extended to 26 cities by 2018, and 1-hour express delivery will be deployed in 15 cities in 2018.
Carrefour noted that it must improve the quality of service and extend its Drive offer. As of 2018, 170 new Drive will be opened in France and the overall quality of service will be improved, notably thanks to the deployment of automated logistics means (partly-automated warehouse).
Click & Collect will be expanded to more than half of the stores by 2019.
To successfully implement the transformation of its e-commerce offer, Carrefour announces it has entered into a partnership with Sapient, a leading technology player of the Publicis Group.
Carrefour noted that it is positioning itself as the leader in the democratization of organic products and aims to increase its sales in this segment to 5 billion euros in 2022 from 1.3 billion euros currently.
Carrefour noted that it is making a profound change by launching a new quality policy that notably involves the massification of controls and the rapid elimination of controversial substances. The Group will also reduce private label packaging by 5% by 2020.
Co-construction with customers is a strong development pillar of the company's private labels, as is strengthened traceability of the products that compose them. As of 2018, the Group is launching a powerful efficiency plan aimed at generating 2 billion euros in full-year cost savings by 2020. In addition, in order to improve its free cash flow generation, Carrefour will actively manage its working capital requirements, notably through an optimisation of inventory levels, as well as more efficient investments. Investments will be reinforced on the Group's strategic priorities and should represent 2 billion euros per year as of 2018.
In a separate press release, Carrefour said it has signed a term sheet with Tencent and Yonghui regarding a potential investment in Carrefour China. Upon completion of this investment, Carrefour will remain the largest shareholder of Carrefour China. Carrefour said it will improve its online visibility, increase the traffic of its offline and online retail activities and benefit from Tencent's advanced digital and technological expertise to develop new smart retail initiatives.
Tencent will further develop the retail services offered on its social platforms and promote the use of Weixin as well as Weixin Pay, cloud computing and other services within the Carrefour ecosystem. The contemplated scope of cooperation includes key partnership areas such as cooperation on data, smart retail, mobile payment, in-store experience and data analysis to boost Carrefour China's customer traffic. (dpa)
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