Despite achieving growth of seven percent, a drop in Carrefour’s share price of 45 percent in 2008 led to investor impatience. Dissatisfaction, mainly from Blue Capital – consisting of Bernard Arnault, Chairman of LVMH, and Colony Capital – with a 14 percent stake in the company, and general unrest among shareholders, unseated CEO Jose-Luis Duran. His replacement in January 2009 was Lars Olofsson, a former Nestlé France CEO with an expertise in consumer markets, sales and marketing.
Born in Kristianstad, Sweden in 1951, Olofsson had previously spent 32 years and the whole of his business career with Swiss food giant Nestlé. Starting out with the company in 1976, after he had graduated in Business Administration from the University of Lund, it looked like he would stay indefinitely.
His first posting was as product manager for Findus frozen foods, before carrying out a variety of commercial and marketing roles in France between 1981 and 1992. Olofsson’s ascent, however, did not happen overnight, there was no meteoric rise for the blonde Swede and he was already 40 when appointed General Manager of France Glaces Findus.
With his background and experience it seemed an obvious move in 1995 for Olofsson to oversee Nestlé’s Nordic markets. But this was a short-lived appointment and he soon returned to France in 1997 to take up the post of Chief Executive of Nestlé’s French operations. In 2005 Nestlé elevated Olofsson to Executive Vice President in charge of strategic business units, marketing and sales.
With this kind of experience, and a belief that a portfolio of strong brands is the foundation for creating wealth, it is no surprise that Lars Olofsson would attract the interest of Carrefour. Subsequently, his regard for the Swiss company he served so well did not prevent him from accepting the invitation to take the reigns and become CEO at Carrefour.
The French retailer dates from 1959 when Marcel Fournier, Denis Defforey and Jacques Defforey founded the company. In 1963 the organisation stepped centre stage when it opened its first hypermarket at Sainte-Genevieve-des-Bois. Meijer in the US had opened a hypermarket at Grand Rapids, Oregon in 1962, but Carrefour were pioneers of the format in Europe.
Today, Carrefour has developed into one of the largest business empires in France. Third only, according to the August 2009 edition of Fortune magazine, to other French giants Total and BNP Paribas.
The company is headquartered in the north-west Paris commune of Levallois-Perret and has four main formats: hypermarkets, supermarkets, hard discount stores and convenience stores. Carrefour’s brands include GS, GB, Dia, Ed, Ok!, Promocash and Proxi, and the organisation has grown to become the biggest retailer in Europe. Second only to Wal-Mart globally. Something the new CEO is ambitious to change.
New challenges; new vision
“The most important objective that we still have,” he told the business world when outlining his planned transformation of the company in June 2009, “is still to become the preferred retailer and this is going to be the primary objective.”
Olofsson was also quick to stress that the immediate priority was managing the present while preparing for the future. Going on to say that for the transformation of the company to be successful, and to avoid too much disruption, he had decided on a restructuring process with a three year time-frame. Change happening now to set up a more profitable future seemed to be the recurring theme in Olofsson’s plans.
“Changing the way we are organising ourselves. Changing the way we are working in our operations and in that sense being able to create margins for future growth and margins for profit enhancements,” he told his audience.
The CEO, however, is acutely aware that the road ahead will not be easy. He knows the challenges he and the company face are not to be underestimated, especially if Carrefour is to overtake Wal-Mart and eclipse Tesco.
It is no secret, for example, that Carrefour’s French hypermarket performance is down and the company is struggling to record growth in the domestic market. In August 2009 the company announced half yearly sales of €17.7bn for its home market, down from €18.3bn on 2008. Overall, French sales fell by 0.6 percent, with hypermarket results showing a drop of 1.9 percent. With the hypermarket format accounting for 50 percent of domestic revenues, Olofsson is alive to the fact that this situation must be addressed.
It is true, of course, that modern consumer trends have not favoured the hypermarket format, especially with regard to non-food items. A feature of the contemporary French consumer landscape which has led shoppers to seek out specialist outlets and Carrefour hemorrhaging business. Olofsson will also have to address the problems facing the group’s deep discounters, with the Ed brand still trailing well behind Schwartz group rivals Lidl.
In addition it will not be lost on the CEO that the company has experienced downturn in key European markets, dropping 2.5 percent from 2008. True, it must have been encouraging for him to see Italy and Belgium return small increases in the second quarter, but Spain continued to struggle over the same period. Carrefour, however, are confident they have their man.
“Lars Olofsson has exceptional expertise in consumer markets” Amaury de Seze, Chairman of Carrefour’s board of directors, said of the group’s CEO. “His strong leadership and sales and marketing expertise make him an ideal leader for Carrefour to carry out the next stage of the group’s development.”
Praise indeed, but Olofsson has little time for plaudits with a business to develop and a carefully considered blueprint to implement. A vision Carrefour unveiled as a media campaign in September 2009 with the uplifting slogan ‘positive is back’. The group’s website provides a blurb explaining the ‘positive is back’ concept as an expression of the brand’s unshakably optimistic and committed state of mind. Whatever that actually means in practice remains to be seen.
Time, of course, will be the judge of Lars Olofsson. There can be little doubt, however, that Carrefour’s CEO – still in his honeymoon period – certainly has the qualities and credentials to transform Carrefour to the position of France’s favourite retailer and, perhaps, eventually the world’s.