After the boom and eventual bust of the past three decades of retail growth - Carrefour had to pay 220 million Euro ($294 million) to get out of Greece alone last year - Chief Executive Officer Georges Plassat chose a safer route for Africa by partnering with CFAO, a distributor and the continent’s biggest supplier of cars, trucks and pharmaceuticals. With the venture, he’s hoping to avoid the roadblocks competitors including Wal-Mart Stores Inc. have faced expanding beyond South Africa: a lack of distribution and available real estate.
’Early Advantage’
“Carrefour is taking early advantage of what will be an increasing move in Africa of people looking to do a weekly grocery shop of items kept fresh through modern advancements like refrigeration,” said Michael Dennis, an analyst at Cantor Fitzgerald. “Setting up good distribution channels in Africa can be extremely difficult and CFAO’s local connections with companies and relationships with government are an advantage.”
Wal-Mart’s South African unit, Massmart Holdings Ltd., said today it has met “several important players” in Kenya’s retail industry as it seeks expansion abroad.
CFAO, which will own 55 percent of the venture with Carrefour, aims to generate about 1 billion Euro in revenue a year in 10 years from the link-up and from revenue generated by shopping malls that it plans to build.
Building a successful network in Africa would help Plassat cement his turnaround of a company that trades at less than a third of its price at the end of the century, when grocers were promising heady growth and Carrefour was racing into countries ranging from Poland to Singapore. The shares have gained 70 percent since Plassat took over last year, buoyed by the exits of markets including Colombia and Greece and a promised revival in France, where it still gets close to half its sales.
