Carrefour is likely to announce that Georges Plassat will replace Lars Olofsson as Chief Executive. Plassat, a former Casino Chairman, most recently served as Chief Executive of French clothing group Vivarte and also spent two years at Carrefour Spain.
Plassat had reportedly turned down the offer of Carrefour CEO back in November, although the retailer denied that it was searching for replacement.
The departure of Lars Olofsson has been on the cards for awhile now. His attempt to revitalise the hypermarket format, although well-intended, was unrealistic and too costly. Various profit warnings, declining share in its domestic market and slumping like-for-likes, particularly in its core European hypermarket division, meant that it was only a matter of time before we saw a change at the top.
As we said last week after the retailer’s Q4 results were announced:
The Carrefour business model is inherently flawed given its over-dependence on a dated format and slow-growth markets. The company cannot carry on in its current state; a more drastic approach is needed to revitalise the business. Although Carrefour planet is a step in the right direction, it has proven too costly as a means of saving Carrefour. Up until now, the retailer has done very little to address the undeniable fact that non-food spending has shifted online. Rather than directing capital towards indulgent remodels, money would be more wisely spent ramping up multi-channel functions such as click & collect, instore kiosks and e-commerce. Without this, the hypermarket concept doesn’t have much of a future.
The appointment of Plassat should be viewed as a big win for Carrefour. Plassat is a well-seasoned retail executive with the non-food experience that Carrefour so vitally needs to turn around its hypermarket division. Equally, his experience at competitor Casino and even Carrefour itself, means that he is well versed in the French hypermarket scene.
We expected the next boss of Carrefour to be French, given the critical need to revamp its domestic operations. At private equity-backed Vivarte, Plassat had a strong track record of buying out French clothing brands such as Naf Naf and Kookai. While we certainly do not envisage French acquisitions in his new role at Carrefour, it is his experience in non-food that Carrefour will look to draw upon. Plassat may, for example, look to reduce the size of the average Carrefour hypermarket, moving many non-food items online, in order to improve sales densities. Pricing will need to become sharper and, although Carrefour has taken steps to improve price perception as recent as this week (with the announcement of a new price guarantee and reductions on 500 items), it still has a long way to go in comparison to its peers. We also imagine that the roll-out Carrefour Planet will be halted temporarily – and perhaps even permanently – while Plassat comes up with a Plan B for revitalising the hypermarket.
