Shopping Ceenter-Carrefour's Road To Transformation

After the "sale" in 2019, the cooperation between Carrefour and Suning was once expected. With Suning's empowerment, Carrefour China has been given a customized approach to digitalisation.

In addition, Carrefour China has been able to use big data to optimise the category structure of its merchandise, eliminating outdated products and introducing netflix products to improve inventory turnover. In this way, Carrefour seemed to be able to shake off the burden of being a "big box" store.

In 2020, Carrefour China reported a net loss of 795 million yuan on revenue of 25.574 billion yuan, and a net loss of 486 million yuan in the first half of 2021. Not only that, Carrefour suddenly accelerated the pace of shop closures in 2021. Last year, Carrefour closed more than 20 shops in one go, including seven hypermarkets, eight convenience stores and three select shops. The wave of shop closures has continued to this day.

In fact, the big proprietor, Suning Tesco, is itself a victim of the e-commerce economy. Once upon a time, Suning and Gome were also a reigning presence, but with the rapid rise of e-commerce companies such as Jingdong, Tmall and Taobao, Suning has been losing its edge as a traditional e-commerce company. Suning has also thought about transforming itself, but it has not had the internet gene, which has led to its failure. With its main business withering, Suning instead looked to diversification to reverse its defeat, and ended up in a quagmire of debt.

It was these two disillusioned players in the e-commerce economy who finally came together in the hope that they might be able to join forces, but it was clear that without real innovation and breakthroughs, it would be difficult to survive in this era of competition.

Luckily for Carrefour, it did wait for a "saviour" after all, and it was the opening of the first Costco shop in China in August 2019 that changed the international retail giant's unconvincing situation in the country. The shop was so crowded that day that Mao Tai and big brand bags were madly grabbed, and Costco also had to announce the suspension of business in the afternoon because of too many customers.

More importantly, Costco has become a symbol of the middle-class family, and this has attracted the attention of middle-class families in China.

In October 2021, Carrefour opened its first member shop in Shanghai. By December, Carrefour's second membership shop had also opened. Carrefour claimed that it would open 100 member shops in three years, with the goal of having "a Carrefour member shop within 15 minutes of consumers' drive".

However, on the first day of its opening on 22 October, Carrefour was hit by a competitor, leaving it in disgrace.

In its apology letter, Carrefour explained that "competitors continued to pressure some brands to take down the brand's products in competing pairs if the brand supplied to Carrefour member shops; even on the opening day, some brands were so overwhelmed by the pressure of competing pairs that they had to sweep the site to buy out all their products." Shortly afterwards, Carrefour joined forces with Boxcar to accuse Sam of monopoly and expressed its firm opposition to unfair competition in the commercial sector.

This incident makes people wonder whether Carrefour is really prepared to face the strong competitive pressure from Sam's and industry leader Costco, and whether it can do something new and different with its products and build its own "moat". Personalised or personalised products, which will have the greatest possible chance of sticking with consumers, will not only have a bearing on Carrefour's future development, but also on the fate of the entire membership-based retail industry.

It can be said that the emergence of Costco and its warehouse membership system opened up a new market space and saved the traditional retail giant from the waning days. Immediately afterwards, dying capitals flocked to the market to capture the middle class, but the extent to which China's middle class can support a piece of the sky remains to be tested, and it is difficult to predict who will have the last laugh.

The battle for the middle class has only just begun and Carrefour is being reborn in another form.