Carrefour is estimated to belong to the biggest world’s retailers, having its origin from France, as its two founders are Marcel Fournier and Louis Defforey, who started this business in 1963 (Indu 17). In the article of IBS Center for Management Research the issue of Carrefour’s exit from the Russian market of retail is analyzed. It leads to the apparent need to answer certain questions relating to the fact that the main Carrefour’s competitors in Russia, Auchan SA and Metro AG (p. 20), keep opening new spots and deals with crisis issues well. Also, the analyst of this issue would be amazed because of such state of affairs, when Russia was becoming the second consumer economy in Europe after France (p. 20).
First question we have to answer is why Carrefour has exited from the Russian market, despite the previous optimistic and positive assessment of company’s future in Russia. Particularly, during the opening of the first market, the General Director of Carrefour in Russia claimed that the company will lead to positive economic outcomes for Moscow as well as for the development of the company per se (p.22). Then, three more stores were intended to be opened, particularly in Lipetsk, Krasnodar, and again in Moscow (p.23).
However, suddenly the board of directors has decided to close down the activity of the company in Russia, explaining it in the way that there were inadequate growth and acquisition opportunities as well as saying that such exit will not lead to significant costs the company is about to have (p.23). Among the main causes of exit, explained by the specialists, the following are mentioned: disability to reach the partnership agreement with Seventh Continent so as to expand its influence on the other territory of Russia; high level of bureaucracy and lack of loyalty from the domestic authorities; unclear legal framework (p.24). Additionally, the time, when Carrefour appeared in Russia plays crucial role. In particularly, they started their campaign, when other retailers, Metro and Auchan, have already successfully conducted their businesses as well have influenced much the main spot for retail, namely Moscow (p.24). Moreover, it is said that corruption and pressure from other local giants in the sphere of retail also had great impact on taking such decision (p.25).
Other matter we are to deal with is the statement of Jamie-Vazquez that stores in emerging markets are the only ones doing well and offering good growth prospects, and there is no use of selling them (p.25). We can agree with JPMorgan Chase & Company’s specialist to some extent, particularly in the aspect that the demand for such retail supply will always exist. However, this statement is not applicable to our case, since here lots of factors are to be considered. In particular, Carrefour, despite its reputation and status, has failed to appear on time on the Russian market, giving advantage for other retailers to win one of the most biggest consumer economies in the world, thus, it had to take additional and risky measures (which cannot guarantee the positive results) so as to perform better, than, e.g. Metro and Auchan.
The last, but not least statement in question is the implementation of Porter’s five factors on the Russian market reality. In context of Carrefour or any other potential market player it is necessary to highlight that there is low intensity of competitive rivalry, since there are resistance towards the fair play and lack of cooperation with new players from both government and legal entities. In our case we have seen that there is atmosphere of pressure, refusal to provide the new companies with essential conditions to work etc. Buyers are also not likely to substitute one product, which they used to purchase in certain spot, with the other ones, even if they are cheaper and are of better quality.
Works Cited
IBS Center for Management Research “Carrefour’s Misadventure in Russia.” Retrieved from:
https://prezi.com/2wo5qmvft8_6/carrefours-misadventure-in-russia
