Carrefour and Walmart: Positioned to succeed through convenience, diversity and customer service

Résumé du document

The Food and Marketing institute (FMI) estimates that the American population spends over $5.6 billion a year on groceries and that the average store carries over 40,000 products (http://www.fmi.org/facts_figs/?fuseaction=superfact). With each household visiting the grocery store twice a week, it is increasingly important that the stores differentiate themselves to attract more customers and increase their loyalty. By applying economies of scale, outstanding customer experiences and an efficient management of inventory, Wal-Mart and Carrefour have risen to the top of their markets by providing the right product, at the right time and at the right price. The modern consumer does not lack options. There is little difference from one brand store to the next and customer choice truly becomes a personal preference. This is reason enough for superstores around the world to create the perfect shopping environment where comfort and convenience meet the right set of circumstances that make a particular chain competitive in their market.

This paper will focus on the overviews and financials of two of these retailers. France's Carrefour and the American Wal-Mart. These two companies dominate the industry of the “hypermarket” in their respective geographies—Carrefour is the number 1 retailer in Europe and number 2 in the world while Wal-Mart is the largest supermarket by sales volume in the United States (Ellickson, 2011). They are not necessarily competitors in their main revenue generating markets rather have recently started to share the same demographics in some of their international locations. We will therefore show some of their similarities and differences that are key to their success. In addition, by extrapolating data from their respective 2010 year end reports, we will calculate standard financial ratios to illustrate their financial health and their likelihood for continued growth given the current economic situation around the world.

Extraits

[...] There is little difference from one brand store to the next and customer choice truly becomes a personal preference. This is reason enough for superstores around the world to create the perfect shopping environment where comfort and convenience meet the right set of circumstances that make a particular chain competitive in their market. This paper will focus on the overviews and financials of two of these retailers. France's Carrefour and the American Wal-Mart. These two companies dominate the industry of the “hypermarket” in their respective geographies—Carrefour is the number 1 retailer in Europe and number 2 in the world while Wal-Mart is the largest supermarket by sales volume in the United States (Ellickson, 2011). [...]

[...] This would in turn allow Wal-Mart to offer its customers the best possible pricing to assure customer loyalty. Debt Management Ratios (Exhibit According to the Leverage Ratio, Carrefour is highly leveraged. However, compared to the retail industry standard of both companies are within range. Building up on the above Leverage ratio, Carrefour also has a higher debt ratio, which illustrates the amount of their assets that are financed by debt. In this regards, Wal-Mart has an additional advantage, as it would be better prepared to deal with difficult financial periods given their reduced reliability on borrowed funds. [...]

[...] Carrefour, as a European company, employs the International Finance Reporting Standards (IFRS) principles. The IFRS is a not for profit organization tasked with creating an easily understandable set of financial standards that are accepted and enforced around he world (www.ifrs.org). On the other hand, Walmart operates under the US Generally Accepted Accounting Principles (GAAP). This discrepancy in reporting and operating guidelines is not excusive to these two companies but part of a larger issue being tackled by the industry. As the world flattens with globalization and companies operate across geographical boundaries, a globally accepted, adopted and enforced system needs to be put in place. [...]

[...] Additionally, the stores offer conveniently located fast food restaurants so they don't have to leave Wal-Mart in the middle of their shopping experience to dine. Even though the company has been heavily criticized for its management practices, it continues to be one of the most important employers in the United States especially in smaller communities where other industry jobs may not be available. The major area of criticism has come from its human resources practices as the labor unions claim that the wages and employee benefits are lower than average (Kabel, 2006). [...]

[...] Carrefour and Walmart: Positioned to succeed through convenience, diversity and customer service Paris, December 2011 Traveling from point to Point in the United States is characterized by the frequently appearing strip malls and retail centers designed to facilitate the shopping experience of customers mobilizing from one place to another. Nowadays, this experience is further enhanced by the ability to purchase everything in once store. The days where people had to go to the bakery for bread, the fish market for seafood, the butcher for meats and the florist for flowers are over. [...]