The Fall Of Carrefour: What Really Happened?

In 2012, French hypermarket chain Carrefour has exited our shores. It pulled out due to not “being competitive enough”. You see, they believed that they could not achieve a leadership position in the medium and long term perspective in the country. Why is this so? Perhaps, they were not able to study our customer culture very well.

It is surprising to see the local downfall of a hypermarket chain who runs as the second largest mega-retailer right after Walmart in terms of revenue. Before I highlight the two factors that led to its exit, I will give you a brief background on Carrefour.

Its 1989 entrance in Taiwan began its operations in Asia. Its launching in Asia was prompted by the laws, which restricted the growth of hypermarkets and supermarkets in France. It opened its first Singapore branch in 2003. Its decision to penetrate the Asian market was further supported by its success in international ventures in Latin America.

Singaporeans were initially attracted with the combination of food and non-food items such as electronics and furniture. Yes! Your child can get lost while running around in a supermarket that housed a variety of products in one roof!

Once the enthusiasm faded, Carrefour faced tough competition from the other local players. Giant and Cold Storage were everyone’s preferred grocery while Courts and Best Denki were preferred in electronics. These stores gave Carrefour a run for its money!

Image Credits: pixabay.com

ITS LOCATION

Its two outlets smacked in the city center were located in Plaza Singapura and Suntec City Mall. Imagine traveling in the middle of town just to replenish your groceries. It is quite a hassle, right? This is why it is convenient for consumers to buy groceries in stores spread across residential areas.

I am referring to Cold Storage and FairPrice. I would not want to travel far and wide just to get an item that I can buy nearby! This sentiment echoes in the hearts of many.

ITS PRICES

Aside from its location, a factor that dictated its downfall is its pricing. It is undeniable that Carrefour offers products at a higher price. To be fair, their products are reasonably premium.

Nonetheless, these products are not unique. You can purchase cheaper hotdogs in the nearby mart at your HDB complex. Do you really need to spend S$20 more for a pack of hotdog? This is why most people will prefer for cheaper substitutes to everyday products.

Image Credits: pixabay.com

“The bottom line is Singapore is not the biggest market (in Asia) and it’s very competitive. It’s not the cheapest place to do business in as well.”
-Song Seng Wun, Regional Economist, CIMB , 2012

Sources: 1 & 2

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