Carrefour goes on the digital offensive and forges an alliance with Tencent

by bold-lichterman

Strategic alliance with Tencent in China

Chinese giant Tencent and Chinese supermarkets Yonghui will acquire a stake in Carrefour’s subsidiary in China. “This transaction will combine Carrefour’s know-how in the field of distribution with the technological excellence of Tencent and the operational expertise of Yonghui, in particular its mastery of fresh products”, says the French group. Carrefour specifies that it remains the largest shareholder of its subsidiary.

This investment is also accompanied by a “Memorandum of understanding for strategic cooperation in China” between Carrefour and Tencent, in order to pool the expertise of the French distributor with the tech know-how and innovation capacities of Tencent. This is for Carrefour “To improve its visibility on the internet, increase its online and in-store traffic and benefit from Tencent’s advanced technological and digital expertise to develop new smart retail initiatives”.

The scope of the envisaged cooperation includes several areas of partnership, in particular on data sharing, “Smart retail”, mobile payment solutions, improving the store experience and using data to boost in-store traffic.

Through this partnership, Tencent will expand the range of services offered on its platforms and develop, within the Carrefour ecosystem, the use of WeChat, its WeChat Pay payment solutions, its cloud and its other services.

Carrefour goes on the digital offensive and forges an alliance
Credit: pcruciatti / Shutterstock.com

Recall that last November, Auchan also entered into an agreement with the e-merchant Alibaba, another Chinese tech titan.

2.8 billion euros in digital and omnichannel by 2022

This announcement was made during the presentation of the Carrefour 2022 transformation plan. This eagerly awaited plan aims to get the distributor out of the doldrums and prepare it for the colossal challenges at work in the sector, under the impetus of its new CEO since July 2017, Alexandre Bompard.

In addition to the rationalization of the organization around a single head office, the drastic reduction in costs (2 billion euros from 2020) and a departure plan of 2,400 positions, much was expected from the announcements on the digital upgrade of Carrefour, which is lagging behind, in the context of a competition that has become global and fierce. So what should we remember about the digital aspect?

A target of 5 billion euros in food e-commerce turnover by 2022

2.8 billion euros will thus be invested in digital by 2022 (investments and operations), “Six times more than the investments currently made” according to the leader. Carrefour wishes in particular to increase its turnover to 5 billion euros in food e-commerce, which would bring its market share to 20% in France, against 10% currently. To do this, the group wishes to develop and make all delivery registers more reliable, thanks to its physical network: at home, express in one hour, drive, click and collect …

A unique Carrefour.fr site; disappearance of the Ooshop brand; 50% of digital marketing investments

Carrefour will also simplify its online presence. Today present via 8 sites and 14 applications, Carrefour wishes to recast its presence into a single site per country, under the Carrefour flag. The launch of this unique portal is announced for the end of 2018. Thus, the Ooshop brand will disappear, but some verticals remain, such as Greenweez or Rueducommerce. In addition, Alexandre Bompard announced a massive reorientation of marketing investments towards digital: from 8% today, they will rise to 50% in 2022. Carrefour currently spends around 500 million euros per year on these items.

Blockchain and food transition

Greenweez for organic is indeed perfectly in line with the great ambitions of Carrefour, which wishes to meet the new dietary requirements of consumers. The group wishes “To become the world leader in the food transition” in the face of increased customer demand for food quality and safety. An issue on which blockchain technology makes particular sense: the distributor is already using it for testing in the avian sector.

The markets welcomed these announcements: the Carrefour title gained more than 4% at the start of the afternoon, achieving the largest increase in the CAC40.