Posted Oct 3, 2022, 7:30 AM
Carrefour changes gear in Brazil. The leaders of the distributor met Wednesday in the stands of a large hall in Sao Paulo, as well as online on the Internet, 4,000 employees of the new group that constitutes their subsidiary since the takeover of Big, the network of former Walmarts in the country. The high mass, second of its kind since the acquisition last June, bludgeoned the new house slogan: “Better together, bigger with you. »
On stage, wearing a T-shirt, Stéphane Maquaire, the new executive director of Carrefour Brazil, took on the accents of a televangelist to praise the merger, “the writing of a new book” for the 150,000 employees who make Carrefour Brazil the leading private employer in the country. “We don’t want to reproduce Carrefour-Promodès”, mocked the day before in his office the man who completed the recovery of Carrefour Argentina, which went from an endemic deficit of more than 100 million euros per year to an equivalent profit.
The renewed executive committee
There is no question of dragging out the integration of the Bigs like the merger of the Normandy local specialist wholesaler and the hypermarket pioneer. The two entities have long retained their headquarters and, a quarter of a century later, their employees still remember which side they come from.
Carrefour’s Sam’s Clubs in Brazil sell brands at reduced prices, such as Levi’s.DR
Stéphane Macaire speaks softly but acts quickly. The one who was the boss of Monoprix arrived on the 1er September 2021 and has already renewed the executive committee of the Brazilian subsidiary at 80%, including women such as former managers of Big – starting with Daniel Mora who manages all the supermarkets and hypermarkets of the brand, after straightening the former Walmarts on behalf of the Advent fund which had taken them over.
With Big, Carrefour adds brands to its brand portfolio: Bompreço supermarkets, Maxxi cash-and-carry stores which can compete with Atacadao, Sam’s Club, these Costco-type club stores recovered from the wedding basket.
The French retailer is adding 374 points of sale (58 cash and carry, 43 Club, 80 hypermarkets, 97 supers and 96 discounts) to its 548 units, and has launched a vast movement of conversions from one brand to another which is optimizing its park at best from a Brazilian market that is emerging in good condition from the Covid with growth of almost 3% – and inflation that 12 interest rate hikes have fallen from 12% to 6%.
The Atacadao formula boosts turnover
Most Maxxi become Atacadao, like 33 Big hypermarkets, 7 other Big ones transforming into Sam’s Club and the balance into Carrefour hypermarkets. A great upheaval justified by ratios that the markets will appreciate if they are verified.
According to Carrefour, a hyper Big that becomes cash and carry Atacadao multiplies its turnover by 2.7 and increases its margin by 2 points. That’s 5 points and 1.7 for a Big that becomes Sam’s Club, 1.7 times more sales for a Big that becomes hyper Carrefour, with a bonus profitability point. A Maxxi that takes the Atacadao name increases its sales by 50%.
The transformation plan of 2 billion reais (around 400 million euros) should generate 390 million euros of additional Ebitda per year from 2025. Carrefour Brazil thus becomes the group’s second driving force, representing 18% of turnover. business and, above all, a contribution to profitability roughly equal to that of France.
“Brazil is more than ever at the heart of the group”, summed up the CEO, Alexandre Bompard, during the finalization of the acquisition. “The future of the group is largely written in Brazil and Latin America,” he added Wednesday on the stage for the employees of the subsidiary.
Market of contrasts
With Big, Carrefour has acquired a presence in the 26 states of a federal continent country as large as the European Union, even though it has half the population and its wealth is still only a tenth of that of Europe.
Carrefour has 25% of a market in Brazil, a third of which is still the prerogative of small independents. In the Southeast – the region of Sao Paulo and Rio (which concentrates half of the national GDP) -, the share of the French is only 17%. The figures point to the growth potential.
A growth that is also nourished by new formulas, such as small autonomous stores, without staff and without cash register, of a hundred square meters, being tested in “condominiums”, these condominiums of several hundred fenced and protected apartments.
The hypermarket is not dead
The takeover first accelerates the development of the star brand Atacadao – which represents three quarters of Carrefour Brazil’s sales and 80% of its results. The number of its cash and carries – which provide large volumes to both individuals and professionals, against a discount of 15% to 20% – increases from 250 to 340.
When asked whether dependence on this format is not a danger, Stéphane Maquaire replies: “Hypermarkets and superstores publish as many receipts as Atacadao. In Brazil, the hypermarket still appeals to the middle class, such as the Sam’s Club which sport cash and carry codes with pallets stacked to the ceiling, but act as a toy box for wealthy Brazilians with their Levi’s jeans in bargain prices, their giant flat screens, their matured prime ribs, their huge wine shelves and their top-of-the-range own brands.
