1.

Case presentation

Carrefour was founded in 1960 by two entrepreneurs – Marcel Fournier, a textile

retailer, and Louis Defforey, a wine and food wholesaler from Annecy in Eastern
France. Carrefour tries to offered products at the lowest prices as compared to its
competitors by negotiating with wholesalers and suppliers. The concept of a
hypermarket found instant acceptance among the younger people, suburban
dwellers, and price conscious consumers.

Its first international venture was in Belgium, in 1969. . In its first venture outside
Europe, Carrefour opened a hypermarket in Brazil in 1975. In 1988, Carrefour entered
the US market then middle east in the ninety’s with joint venture.

As of 2008, Carrefour was the second largest retailer in the world and the largest
retailer in Europe. Carrefour‟s revenues were at € 108.629 billion for the year ending
December 2008.

Becoming one of the top three players in terms of market share. leading market
position within the medium term, establish our brand quickly, and secure a return on
investment. announced its intention of entering the Russian market in June 2007; At
this point, it would be more effective to purchase a chain with already developed
logistics and distribution networks.”; Seventh Continent was a luxury store. However,
the offer was rejected by the shareholders of Seventh Continent; not impressed with
the location of Fillion Shopping Mall; Russia was under a recession; 2009, Carrefour
announced that it had decided to close down its Russian operations; pressure from
share holder; Carrefour also looked around for a franchising partner to operate the
stores and to develop the brand in the country. operation troubles.

2. According to Thierry Garnier, “we are confident that retail business in Russia
has considerable long-term potential, and the market is strategically important
for the development of our company”. In the light of the above statement, what
factors led Carrefour to suddenly exit the Russian retail market?

Challenging market conditions:

- The country = high levels of bureaucracy, complex regulations
- Failure of the acquisition of Seventh Continent = don’t have the power of the local
retailer. Know that to enter this country and to better understand all the bureaucratic
processes it’s better to use a company already set up in the country.
- First location = not impressive, not well-located and easily accessible, target not the
best one to start.
Strong competition:
- Timing = too late unlike competitors like french competitors such as Auchan
- Market already saturated with well-established players such as X5 Retail Group and
Magnit

Economic difficulties and instability:

In recent years, the Russian economy has been subject to a range of economic sanctions
and instability, including fluctuations in the value of the ruble and political tensions with the
West. These factors may have made it more difficult for Carrefour to operate profitably in the
Russian market.
- The country = corruption (ranked 137/180 in the corruption index), recession.

Strategic priorities:
- Pressure of stakeholders= aks Carrefour to exit in order to be focus on other markets
such as in Europe (no more emerging market)
- The Russian market seems to no longer be a strategic priority and that it would be
more profitable to focus on other regions or business segments.

3. According to Jaime Vazquez, “Stores in emerging markets are the only ones
doing well and offering good growth prospects,” so selling them makes no
sense other than making short-term financial gain” Do you agree with this
statement?

There is some truth to Vazquez's statement that stores in emerging markets are offering
good growth prospects, as emerging markets tend to have higher population growth rates
and increasing consumer demand. Retail companies that are able to successfully enter and
operate in these markets can potentially benefit from significant long-term growth
opportunities.

However, it's important to note that selling off stores in emerging markets may not always be
purely for short-term financial gain. Companies may choose to sell off stores in order to
focus on other areas of their business, or to reduce their overall risk exposure in a particular
market. Additionally, selling off underperforming stores or assets can be a strategic move to
improve overall profitability and efficiency.

Ultimately, whether selling stores in emerging markets makes sense depends on a variety of
factors, including the company's strategic priorities, financial goals, and competitive
landscape. While emerging markets do offer attractive growth prospects, companies must
carefully weigh the potential benefits and risks before making any strategic decisions.
Thus, any company should familiarize itself with the desired market and not take any risks
lightly. As we can see with Carrefour in Russia, there is no such thing as zero risk, even with
market analysts, experience in the field and a strong international reputation.

4. Critically analyze the Russian retail market in the light of Porter’s five forces
model. Do you think the market is lucrative enough to attract more foreign
players?

The Russian retail market has high barriers to entry,

particularly for foreign players. Regulations and bureaucratic
Threat of new entrants
processes can be difficult to navigate, and the market is
already dominated by a few large players such as X5 Retail
Group and Magnit. However, there is still room for domestic
players to enter the market, particularly in niche segments
such as online grocery delivery.

Suppliers to the Russian retail market, particularly in the

food and beverage industry, are relatively fragmented and
Bargaining power of
have limited bargaining power. However, larger suppliers
suppliers
may have more leverage, particularly if they are able to offer
unique or high-quality products.

Bargaining power of Russian consumers have significant bargaining power due

buyers to the large number of retail options available. Additionally,
price sensitivity is high due to economic instability and
fluctuations in the value of the ruble.

Substitutes to traditional brick-and-mortar retail in Russia

are limited, particularly in smaller towns and rural areas.
Threat of substitutes
However, the rise of e-commerce and online retail has
begun to change this dynamic, particularly in urban areas.
 Competition among existing players in the Russian retail
market is intense, particularly among the major players such
Rivalry among existing
as X5 Retail Group, Magnit, and Auchan. However, the
competitors
market is relatively fragmented, with no single player
holding a dominant market share. The rise of e-commerce
and online retail has also introduced new competition,
particularly in urban areas.