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Carrefour Egypt

Tamer El-Arid

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• Introduction.• Methodology.• Finding.• Conclusion.• Recommendation.

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Introduction

• Active shopping concept developers throughout the region, introduced the hypermarket model to the Middle East in 1995.

• In the expansion of Carrefour across the region currently there are 37 hypermarkets in the Middle East.

• Carrefour Egypt started fully functioning at the end of 2002.

• Carrefour reputation has been built, above all, on the quality and freshness of the products, customer service and competitive prices.

• Carrefour’s own retail brands are a significant medium for brand differentiation and customer loyalty.

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Methodology

• Problem definition:• Pressure of hypermarkets and increase

number of competitors and increase its share, scope for further growth of Carrefour in Egypt is large.

• Decision:• Expansion of Carrefour branches all over

Egypt to increase its share, profit and brand image.

• One approach to open “Mini-Carrefour” outside Cairo.

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Objectives

1. Studying demographic of Egypt.2. Consumer behavior and lifestyle.3. Consumer spending power.4. Retail Greenfield.5. Growth potential.6. Governmental support.7. Labor force and its role in business.8. Cost base and affect on profit.9. Support of feeder industries.10. Studying competitors and their strategy.

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Research design

Exploratory design: The search began internally with Carrefour. have asked to allow us to consult personnel

who may have access to records. Gain access to (possibly indirectly) internal

reports on the domestic marketplace; information on distribution; correspondence with customers at different regions; regional buying patterns; any complaints.

inspect published research for any indications of retail sales.

portfolio for advertising and promotional materials used by the competition.

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Descriptive research

Explore and understand the attitude of potential customer. Consumer behavior and lifestyle. Quantity like to buy. Carrefour brand for them to other competitor. Carried out questionnaire as cost effective way to connect with customers.

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Validation

Used a flexible and powerful data cleaning tool to check for any data errors or any logical inconsistencies.

Validation question. Sampling error.

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Findings

• Results were obtained by questionnaire. We interviewed 40 respondents from different regions outside the Capitals (Cairo & Alex). We put into mind the variation in the Age group and Gender.

• Purchasing per month • 37.5% of customer purchase once monthly. • 22.5% do purchasing 3-6 time/week.• 22.5%1-3 time per month.

No. of purchase

0

2

4

6

8

10

12

14

16

No

No

Once

Everyday

3-6 W

1-3 time M.

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• 80% of customer in sample purchase from supermarket .

• 65% of customers in sample spend less than 1 hour in purchasing .

• 50% of customers in sample spend in purchasing 1000-5000 L.E.

Gerocery type

0

5

10

15

20

25

30

35

NO

NO Super market

Special gerocery

Time spend

0

5

10

15

20

25

30

No

No

less 1hr

1-2 hr

More 2hr

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• 67.5% of the customers attracted by sales offers. offer attract you

0

5

10

15

20

25

30

No

No

Ab. Yes

Not so much

Not at all

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• 75% of customers in the sample buy all needs form the same market.• 25% of customers in the sample purchased their goods for Spinnyes, 22.5% form

Carrefour and 15% form Hyper and also Metro.

Supermarket prefer

0

2

4

6

8

10

12

No

No

spinnyes

Carrefour

Ragab sons

Abo khalifa

Hyper

Metro

Royal house

Amir

Amira market

Soedi

Mega

Mercato

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• 37.5% of customers in sample interest in availability of food and 20% interest in fresh food.

• 92% of customers in sample interest in improving of food quality.

Imp. of food quality

0

5

10

15

20

25

30

35

40

No

No Fair

V. imp.

Imp. pf purchase

0

2

4

6

8

10

12

14

16

No

No

Food fresh

Avilability

Price

Quality

Convenience

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• Increasingly competitive retail grocery industry, Carrefour sought to gain more control over its marketing processes and more effectively leverage its business intelligence—with the ultimate aim of strengthening customer loyalty.

Market share

54

110

17.6

25

17.5

Carrefour

Metro

Hyper

Spinneys

Alpha

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Conclusion

• Egyptian market is a great opportunity for investment in supermarket sector due to increase of population and prefer to purchase products from well trusted company.

SWOT analysis:

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SWOT Analysis

S•54 USD sales by five stores all over

Egypt.•2nd largest retailer all over the world.•Market leader.•Wide range of products.•Huge selling area.•Good service.

W•Take long time to open new store.•Not have branches all over Egypt in all governorates.•Not have more employee assist customer in buying.•No delivery.•Weak own brand sales.•Poor E-commerce performance.

O•Branches all over Egypt.•Improve sales performance.

T•Political and commercial issue in Egypt after revolution.•Competitor power (Metro-Hyper-Spinnyes).•Power of buying after revolution

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PESTEL Analysis • Political: After revolution Egypt in political issue due to not presence of president or stable

government and there is any clear position about commercial and industrial view of Egypt.

• Economical: After revolution, Egypt pass through instability situation, increase in inflation rate,

decrease of economic growth.• Social: Shopping in modern and clean supermarkets with a variety of different products is

becoming a lifestyle and leisure activity among Egyptians.• Technological: Improvements in technology will allow Carrefour to perform better analysis of

data related to existing and future customer bases.

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• Environmental: Egypt’s substantial population makes it the largest market in the Arab world, with

the population increasing from 78mn in 2009 to an estimate of 84mn by 2014, and GDP per capita predicted to rise by 72% reaching USD 4,201 by 2014.

• Legal: Egypt after revolution will support investment and businessmen to increase their

business and expansion in all sectors.

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Competitor analysis

Metro Supermarkets:• USD 110 million in sales across 40 stores with an average sales area of 863 square

meters.• Domestic chain owned by Mansour Group.• Mainly mini-markets in middle-income residential areas.• The company has introduced discount format at three stores under the name

Kheir Zaman.

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• Spinneys:• USD 25 million in sales at one store of 9,000

square meters.• Gulf retailer is present in Cairo’s CityStars

modern shopping facility.• Plans further expansion in the country.• Alfa:• USD 17.6 million in sales across five stores

with an average sales area of 2,500 m2 .• Established Egyptian chain of department

stores with an aging profile.• HyperOne:• USD 17.6 million in sales at two stores with an

average sales area of 10,000 m2• Owned by Egyptian retailer El-Hawary.• More discount oriented than Carrefour,

targeting average and lower income.

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Segmentation • Geographic segmentation:• Egypt is divided into 27 governorates, Carrefour establish in two governorates

only (Cairo-Alex.).• Demographic segmentation:• Population growth rate: 1.96% (2011 est.)• Birth rate: 25.43 births/1,000 population (2010 est.)• 0-14 years: 33% (male 13,308,407/female 12,711,900)• 15-64 years: 62.7% (male 25,138,546/female 24,342,230)• 65 years and over: 4.3% (male 1,546,774/female 1,818,778) (2010 est.)

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• Psychographic segmentation:– The average of Egyptian income 5400 USD /year.– 2% of Egyptian earns 20000000 /year, ultra luxuries enjoy money.– 8% of Egyptian earns 2000000/ year, – 30% of Egyptian earns 80-150000/ year, well educated striving for

growth and capitalism mentality.– 20% of Egyptian earns 15-40000/ year ambitious but only covering

basics and social needs. Earn for good future for their children.– 40% of Egyptian earns 1-15000 /year focus on life necessities.

• Behavioral segmentation:• Egyptian behavior in last years changed toward buying from

hypermarkets.

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Recommendation

• Targeting• Based on the previous segmentation, Mini-Carrefour target market will be mostly

all segments with focusing mainly on age 15-64. It will also target the Class A and B customers .. and class C to smaller extent.

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Positioning

• “Positive is back” an expression of the brand’s unshakeably optimistic and committed state of mind. Its new stance is in line with the current concerns of Egyptian citizens, who are seeking simple, accessible solutions to improve their day-to-day lives..

• High quality discount products, easier shopping, accessible organic goods, new technologies, eco-friendly products ... these are all examples of positive undertakings Mini-Carrefour intends to reinforce as the Group evolves.

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4 p’s

• Place:• Based on our target, Mini-Carrefour will open in places where there’s high volume

of customers. It should be almost near to most population in the city for convenience.

• Product:• Mini-Carrefour has to adapt its merchandise to the culture. For example, certain

food nuances had to be appreciated, such as the sale of halal food that lacked pork. Second, Mini-Carrefour has to adapt to Islamic cultural holidays like Ramadan and Eid, which would build its peak sales. During these holidays, Mini-Carrefour has to account for increased demand and plan its supply accordingly to not disappoint shoppers. Third, operating hours in Egypt had to accommodate Egypt’s workweek from Saturday to Thursday, and the weekend which is mainly Friday.

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• Promotion• Mini-Carrefour main promotional effort will be discounting certain items. Also, we

will handle local promotions, and coordinate some of these regionally with its stores throughout the Middle East. Promotions will be placed in print media and in-store, to attract mall-walking traffic. Because Egypt is a society emphasizing the importance of social relationship, Mini-Carrefour could reasonably expect that consumers might discuss some of the deals.

• Price• Mini-Carrefour’s price position will be as a discounter, and will use pricing as part

of its promotional effort.

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