FRENCH RETAILER CARREFOUR: LosES IN JAPAN BurwINs IN CHNA
For Western firms in general and more recently.global retailers been challenging and business history abounds struggles Noted examples of global he panese market has always with stories of thei came retailers that ba ve faced d ulties in japan ude Wal M affiliate, S planned to source yu and Germany's Metro G Products directly roup whereas UK and France's Sephora exited Jap was unable to nadequate purchase orders, it ets. Thus, secure Putchase contracts directly from produc was forced to approach who wo years a g it, which made the elailing indu try, sit up d tak notice. The latest y of the h o please Japa was Francc's Ca 2ht-kni argest fetasle work be ween local suppliers and and the second homegrown Japanese Eest in the world giant wa super mark herefore could not offer a wide range of mart) with worldwide sales of over 821 b operates n euros (2007 ries As of 2007. around 11.000 stores in 30 different coun ountry 458 percent of its sales come form its home l years after 37.5 from ope o its Ja Punese ents Finally, mo ated by a drop in worldwide revenues and unpro stores in Japan and us in y into the ket, Carret ur made the pean countries, other decision to sell off all its stores in Ja Contenders for n Asian 10 percent from Latin America, and 67 per paa. Carrefour sold its economies acquisition included many but ul lely gest retailer Aeon Co. Ltd. Now Carrefou very begi nning. Western retailers star Japan is run by Aeon Marche Co. eyeing the Japanese market in the 1990s when the Japanese on other hand, Carrefour's e in Mai China xperience the top five has been very different and it is now one of retailers in the country, Carrefour entered China in 1995 with a ng and by the year 2000, it had stores in 1s ernment finally revoked its Large-Scale Stores Law th prevented foreign entry by retailers nd when rcal estate prices in Japan started ta he dawn of the 21st stor several global retailers set up shop in Japan. These firms include Boots, Sephora, wat Ma and finally U.K.'s major cities in Mainland China. Since then, Carrefour has developed rapidly in this country. By August 2 n 2003. Carrefour its entry into Japan in the year l has opened 116 stores on the 2000 and initially opened four sto nland with a total area of in cities such as Tokyo. nearly 1 million square meters and is almost osaka, Saitama and Ityogo, followed by four more in Kansai. people. The company's ales in China amounted to 30 billion stores by the end of the it 2003. Bu a votaior around 15 venue. In China, Carrefour's formula of low prices, huge in for 5 o unable year to have only was localization scemed to have worked had started denying rumors it was going to quit Japan out much only to exit the Japanese market a few months later. Industry so so that it has now gone down in global manage as Carrefour's Chinese success story. Moreover experts claim that the low price focus of ms like Carrefou has store operation in ahina and also and Wal-Mart do not meet the expectations of established the Carrefour China Institute for employee Japanese consumers who prefer better quality over lower training price. Also, the establishment of specialized retailers and The company's success in China in spite of periodical run changes in the consumption erns has exacerbated the ins with protective Chinese regulatory come as situation for foreign retailers both a surprise and an important lesson global China, Carrefour, which engages in all ypes of retailing with a like Japan, has not been an easy market for foreign firms to focus on food retailing at competitive, in conduct business in, given its varying cultures within the same hree main formats in foreign markets, namely "hypermar country, the stark differences between lifestyles in urban cities upermarkets" and "hard discounters" with hyper- as compared to that in provinces and set up. With markets being the largest in terms of floor area and stock and China's entry into the world Trade organization hard discountcrs being the smallest of the three formats. When spurred by Carrefour's accomplishments in Chin the com- Carrefour's first few stores opened up Japan, there we pany's ambitious plans forthe market include opening a storea large spaces filled with piles of products that did not allow month and investing more than $750 mi ion in its stores in to easily find an item they needed. Furthermore, aina. So, the company still has something to smile about! according to some, Japanese consumers saw Carrefour as a Fre och retailer and expected to sce more ench-style clothing DISCUSSION QUESTIONS and products Tapping into this perception of their stores, i. Do you think it was the right decision for Carrefour t Carrefour revamped its stores in Japan and brought leave Japan? Could instead have a dopted other strategies French made products but even then, it failed to carve a niche that perhaps would have led to a different outcome tor itself in the mature Japanese market on the supply si 2. Carrefour, being the second largest retailer in the world. what are mplications of its pull out from Japan other global retailers such as is struggling to survive? 3 y did Carrefour exit Japan but succeed in China?