Banter Without Borders

Global Marketing Challenges: Carrefour's Turn

In his posting on the many cultural challenges of global marketing teams, as well as international organizations in general, Jack Brown discusses Wal-Mart's rocky path to worldwide success. He attributes this in large part to the careful attention it is now paying to local markets on a deep level after years of what he rightfully terms 'missteps.' Companies are increasingly finding that a superficial nod to local practices and preferences is not nearly enough. Rather, understanding the most fundamental cultural tenets, ethics and principles of one's customers is what will bring success for the long term, avoiding costly gaffes and  errors along the way. In its rush to bulldoze into emerging markets, Wal-Mart certainly learned this the hard -- and some would argue the American -- way.

Now, it seems that Carrefour, second in command in the retail market, is also having to pull back and consider culture as it re-examines its image and business model. This time, though, it is not the buying habits and idiosyncrasies of foreign cultures but rather its own French terrain under scrutiny. With 43% of Carrefour's market on domestic soil*, and nearly a million customers in Carrefour hypermarkets daily*, this seems imperative in light of the company's marked drop in earnings and gloomy forecast ahead. Its perception as a premium retailer is now being re-examined, along with the image and function of French hypermarkets themselves. Its new CEO (not French but Swedish, interesting in itself) is said to be focusing much more on discounted prices, in-store and outside promotions, private label products and loyalty cards, in very much the same way as Tesco, its longtime rival, has done with considerable success.

This re-examination of 'premiumization' is not limited to the hypermarket sector alone. L'Oréal and Diageo have both been in the news lately with reports of disappointing earnings and resulting strategies to, like Carrefour, manage the fallout from the current economic downturn through new price point considerations and possible re-branding. Similarly, on a national level, Japan has, in response to economic hard times, been experiencing a seismic shift in consumer habits, away from its legendary emphasis on quality with more focus now on price and value. This surely poses a major threat to brand loyalty, if not to global business overall. Wal-Mart has, to its credit and following countless blunders, continued to rise to the challenges of today's uncertain economy. Whether Carrefour and other global giants will be able to do the same remains a formidable question.

                                      

*Wall Street Journal, August 29 - 30, 2009: "Carrefour Posts Loss on Discounting" 

*http://www.ft.com/cms/s/0/6390eb24-9432-11de- 9c57-00144feabdc0.html