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Sales Forecasting - Carrefour
Sales Forecasting - Carrefour
Sales Forecasting - Carrefour
Operations Management
Submitted By: Anurag Bhargava (11DCP068) Gaurav Tripathi (11DCP074) Nirvan Rustagi (11DCP085) Yudhvir Singh (11DCP103)
Contents
Introduction...........................................................................................................2 Strategy................................................................................................................3 The Carrefour Group's Geographical Priorities......................................................3 Forecasting Methodology......................................................................................4 Sales Forecasting For Carrefour in France.............................................................5 Hyper Markets....................................................................................................5 Super Markets....................................................................................................6 Other Format Stores...........................................................................................7 Hard Discount Stores.........................................................................................8 Sales Forecasting For Carrefour in Rest of the World:...........................................9 Western Markets - Europe except France..........................................................9 Latin America...................................................................................................10 Asia..................................................................................................................11 Result..................................................................................................................12 Result
Introduction
The Carrefour group: a world leader in distribution Over the past 40 years, the Carrefour group has grown to become one of the worlds leading distribution groups. The worlds second-largest retailer and the largest in Europe, the group currently operates four main grocery store formats: hypermarkets, supermarkets, cash & carry and convenience stores. The Carrefour group currently has over 9,500 stores, either company-operated or franchises. An international retailer A pioneering entrant in countries such as Brazil (1975) and China (1995), the group currently operates in three major markets: Europe, Latin America and Asia. With a presence in 32 countries, over 57% of group turnover derives from outside France. The group sees strong potential for further international growth in the future, particularly in such large national markets as China, Brazil, Indonesia, Poland and Turkey. Promoting the growth of local economies Wherever it has a presence, Carrefour is actively committed to promoting local economic development. Since retail activities are all about contact with people, the group consistently emphasizes local recruitment plus management and staff training on the job wherever they work. Typically, the Carrefour group will be one of the leading private employers in any country where it operates. Naturally, this is the case for France, where the group was originally founded, but it is also true of such countries as Brazil, Argentina, Colombia, Italy and Greece. The group also seeks to support local suppliers, with some 90-95% of the products on its shelves sourced locally, depending on the country. STORES Hypermarkets, the retail business of today Carrefour market, the ideal supermarket Convenience: always attuned to customer needs Cash & carry: proximity and accessibility for catering professionals E-commerce
Strategy
The Carrefour group has one simple ambition: Making Carrefour the preferred retailer wherever it operates. The strategy of the Carrefour group is aimed at achieving organic, sustained, profitable growth in excess of the broad market growth rate, and has three levers: Client-oriented culture : Getting to know our customers better in order to serve them better Transformation : competitiveness increasing agility, execution quality and
Forecasting Methodology
Carrefour is expanding in the global markets at a very high pace. The company has successfully entered new markets where the concept of organized retail was new and independent retailers were operating. It has successfully expanded its operations base from France, Europe to Latin America and Asia. In countries like United Arab Emirates Carrefour has become iconic and has become a part of the shopping experience for the consumers. Forecasting not alone can predict the sales but also the current economic trends, consumer confidence and new offerings are pivotal in boosting the sales. However the sales forecasting gives us an idea of the growth of the company keeping all other factors unchanged. It helps the company to have an idea about the sales and to keep their inventory levels at par with the demand. The sales forecasting is done by taking the data of 10 years from 2001 to 2010. During this time period Carrefour has added several stores and new countries particularly in Latin America and Asia in its portfolio. For the study, we selected the historical sales figures of the last 10 years, i.e. 2001 to 2010, available on the Carrefour groups website. The link for the same is mentioned below: http://www.carrefour.com/cdc/finance/sales-and-results/our-sales/ The sales figures are available on quarterly basis, and distributed sector wise as follow: France (Hyper Markets, Super Markets, Hard Discount Stores & Other Format Stores) Growth Markets - Western Europe except France Latin America Asia
We have attempted to forecast the sales figures for each quarter of 2011 and compare it with the declared quarterly results of 2011. The forecasting method used is Seasonal Forecasting, and the error in forecast and actual sales has been calculated using Mean Absolute Percentage Deviation (MAPD). We have tried to explain this MAPD in terms of current market conditions and strategies of Carrefour.
Intercept (a): 20820.73 Slope (b): 170.14 Equation: 20820.73 + 170.14 X Total Annual Forecast for 2011 ( M) 22692.27 Quart Seasonal Forecas Actual Error er factor t Demand (MAPD) 1 0.2322 5268.77 5254 0.281% 2 0.2404 5454.53 5466 0.210% 3 0.2459 5580.94 5409 3.179% 4 0.2815 6388.02 The actual sales in the hypermarkets of France attributes to the large basket size of an average shopper. The sales have been very consistent and the markets have reached a saturation level
Super Markets
QuarterQuarterYear Quarter-1 2 Quarter-3 4 Total 2001 1749 1888 1847 1897 7381 2002 1840 1947 1937 1983 7707 2003 1911 2020 1984 2049 7964 2004 1941 2075 2099 2201 8316
2005 1964 2006 2073 2007 2158 2008 2304 2009 2120 2010 3015 Total 21075 Super Markets Forecast : Intercept (a): Slope (b): Equatio n: Total Annual Forecast ( M)
Quarte Seasonal Actual Error r factor Forecast Demand (MAPD) 1 0.2369 2649.74 3110 14.80% 2 0.2532 2833.05 3352 15.48% 3 0.2514 2812.43 3335 15.67% 4 0.2585 2891.64 The supermarkets have shown an increase in sales against the expected sales. This is due to the integration of the various Carrefour stores into one unit and also the closing of the discount stores in France has moved the shoppers towards Super Markets and other convenient stores.
0 Slope (b): -317.42 Equation: 9400.40 - 317.42 X Total Annual Forecast for 2011 ( M) 5908.80 Quart er 1 2 3 4 Seasonal factor 0.2322 0.2496 0.2669 0.2514 Foreca Actual Error st Demand (MAPD) 1371.7 9 920 49.11% 1474.7 7 1044 41.26% 1576.8 2 1127 39.91% 1485.4 2
In the other discount stores the sales were down. This is because a large number of one off store was closed and the logistics were merged with the supermarkets to consolidate the market holdings and to increase the sales in the ultracompetitive supermarket chain. This was as expected by the company.
( M) Quarte Seasonal Actual Error r factor Forecast Demand (MAPD) 1 0.2463 772.59 636 21.48% 2 0.2587 811.54 3 0.2398 752.14 4 0.2552 800.47 The rising costs to operate the hard discount stores and to maintain the profit margin was taking the toll on the companys profits. The sales were growing in the hard discount stores continuously from 2001 to 2010and these stores were converted into the DIA banner, a subsidy of the company. This is a part of the company strategy and fully integrated in the plans of the company to capture the market and maintain their market share as well.
Latin America
QuarterYear Quarter-1 2 Quarter-3 2001 2536 2604 2404 2002 1899 1653 1378 2003 1232 1353 1405 2004 1307 1379 1400 2005 1321 1472 1663 2006 1662 1720 1704 2007 1828 2320 2605 2008 2837 2956 3200 2009 2926 3209 3368 2010 3813 4288 4506 Total 21361 22954 23633 Latin America Forecast : Intercept (a): 4013.47 Slope (b): 986.02 Equatio n: 4013.47 + 986.02 X Total Annual Forecast for 2011 ( M) 14859.69 Quarte Seasonal Actual r factor Forecast Demand 1 0.2264 3363.69 4577 2 0.2432 3614.54 4168 3 0.2504 3721.46 4292 4 0.2800 4160.01
Quarter4 Total 2595 10139 1460 6390 1604 5594 1590 5676 1942 6398 2022 7108 3021 9774 3279 12272 3924 13427 4981 17588 26418 94366
The upward trend is followed from 2010 to 2011 and the sales have been consistently very high in the countries like Argentina and Brazil. In Argentina, the growth is close to 17%. This is attributed to the stable exchange rates and the economic growth in the region. This in turn boosted the consumer confidence and the sales in the electronic goods were particularly noticeable.
Asia
Year 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Quarter QuarterQuarter-1 -2 Quarter-3 4 Total 1261 1128 1275 1265 4929 1331 1175 1258 1255 5019 1258 1098 1332 1349 5037 1356 1302 1464 1406 5528 1568 1426 1642 1645 6281 1446 1220 1372 1383 5421 1665 1384 1542 1461 6052 1860 1441 1699 1720 6720 2133 1674 1787 1718 7312 2107 1833 2067 1898 7905 15985 13681 15438 15100 60204
Total Asia Forecast: Intercept (a) 4288.33 Slope (b) 314.92 Equation: 4288.33 + 314.92 X Forcasted Demand for 2011 7752.45
Quarter 1 2 3 4
Seasonal Forecas Actual Error factor t Demand (MAPD) 0.2655 2058.38 2438 15.57% 0.2272 1761.70 1768 0.36% 0.2564 1987.95 2037 2.41% 0.2508 1944.42
Carrefour is new player in Asia and with the Asian economy booming, and organized retail picking up pace, the sales have surpassed the benchmark in the first quarter due to the opening of new stores and then have stabilized in the second and third quarter. The last quarter is the most important quarter for the company to access the purchasing power of the consumers and also with the festival season, the sales are expected to surpass the forecast by a huge margin.
Result
With the complete analysis of the sales of Carrefour, by breaking the sales of the company into quarters and different markets, the forecast for the Quarter 4 can be made France The overall markets in France have become stagnant with the sales peaking in the festival season the company expects to do good business but the growth in sales is not expected significantly. Western Markets Due to the downturn in economic conditions which have marred the Western Europe the sales are down throughout the year in all quarters and the same trend is likely to follow Latin America The markets have grown consistently and the trend is expected to follow Asia The markets have grown consistently and the trend is expected to follow in the last quarter as well
As stated by the graph, the sales of Carrefour have been very consistent with the forecasted sales. This is because as the western markets of France are saturating, Carrefour has expanded its consumer base by moving out to the new emerging markets and entering the countries which lack organized retail. With India now opening itself to 51% FDI in the retail sector, it gives Carrefour opportunity to expand in one of the biggest consumer markets in the emerging countries.