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Paris. The chief executive of Carrefour is staking the future of the giant French retailer on a simple strategy: strengthen at home, then dominate or withdraw abroad.

Lars Olofsson left Nestle to join the company at the start of 2009, when it was going through an upheaval. Market share had slipped at home, shareholders were uneasy and the group had lost focus on core clients, while pursing a haphazard international expansion.

“Carrefour had lost track of being client and consumer focused and lost a certain track of price competitiveness,” Olofsson said.

Just after taking the helm, he initiated what he called a “reset” in the core markets of France, Spain, Belgium and Italy.

That meant focusing on re-branding and refurbishing stores, automating checkout lanes at superstores, introducing recession- friendly value brands, overhauling the information technology systems and better leveraging its huge buying power to improve price competitiveness.

The process was expensive and dented 2009 results: net income plunged to 385 million euros ($470 million in today’s dollars), from 1.3 billion euros a year earlier, and consolidated net sales slipped by about a billion euros, to 86 billion euros. But market share in France crept up for the first time in three years.

“In 2010, we should see the fruits of that work coming through — in sales and profitability,” Olofsson said. “All this put us in a better position for the future.”

As the ship steadies, he plans to invest further in China, Brazil and India. But where prospects are less certain, the group may scale back.

“If you cannot become a leader, sooner or later you will have a competitive problem,” he said. “If ever I have an offer in markets where I don’t believe we can become a leader, I’m prepared to have a look at it.”

Carrefour did this before Olofsson took over, leaving Japan, Switzerland and Mexico. Under his leadership, it has also pulled out of Russia, and scaled back in southern Italy, Portugal and Belgium, where he has just signed a deal with unions to allow for job cuts and the sale of some stores.

Next up could be Thailand, where, “we were the pioneer, but we didn’t concentrate our efforts, and we lost leadership,” he said.

Created in 1959, Carrefour is synonymous with superstores, having opened the first such store in Sainte-Genevieve-des-bois, south of Paris, in 1963.

The company has expanded through acquisitions, mergers — notably with the French group Promodes in 1999 — and organic growth.

Now, it is the second-largest retailer globally by sales, behind Wal-Mart Stores, and the largest in Europe, with a range of formats from superstores to discount and local convenience stores.

It has 15,500 stores — company-owned or franchises — employing 475,000 people, and it operates in 34 countries. About 57 percent of sales come from outside France.

“There’s no distributor in the world with that kind of geographical footprint,” Olofsson said. But he still has plenty of work to do.

In a recent opinion poll by Posternak-Ipsos, which tracks the image perception of the largest French companies among consumers, Carrefour ranked 19th, behind its main rivals Intermarche, Auchan, Leclerc, Casino and Systeme U.

Carrefour opened in China in 1995 and has experienced almost seamless growth. Olofsson said he was open to acquisitions in China and unperturbed by fears about a property-driven downturn; the company leases most sites.

Like Wal-Mart, Carrefour has also been trying to weave its way through labyrinthine regulations for a toehold in India.

It is set to introduce a cash-and-carry store and a second around the turn of the year. It then aims to open its own stores in conjunction with an Indian partner.

How important could that market become? “Short term: not important at all. Medium term: very little. Long term: might be very important. It’s a huge market but modern retail is new to India,” Olofsson said.

He can also see the day when Brazil overtakes Spain as the company’s No. 2 market, behind France.

What of the largest overall market, the United States? Carrefour opened a handful of superstores there, notably in Philadelphia and New Jersey, around the early 1990s. But the plug was pulled quickly as American consumers spurned the Carrefour’s superstore model.

“I’m not excluding the US market one day,” Olofsson said. “However, today my absolute priority is France and the countries around us — we still have synergies to capture.”



The New York Times