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Alexandre Bompard (president of Carrefour): “We want to limit price increases as much as possible” | Business

Since Alexandre Bompard (Saint-Étienne, France, 49 years old) became executive chairman of the French group Carrefour in 2017, he has launched an aggressive cost reduction plan, improved cash generation and launched a strategy to boost electronic commerce, but has not managed to make the price reflect this improvement. In Spain, despite the fierce competition between supermarkets, it has managed to remain second in market share (9.4%), behind Mercadona (25%), according to the consulting firm Kantar.

The executive explains, during an interview last Tuesday in Madrid, the plans of the company that in the sixties was a pioneer in opening large hypermarkets in France and that now also bets on proximity stores (added all the formats it has 13,000 establishments in the world, especially in France, Spain and Brazil), home delivery and internet sales. Precisely this week, its first warehouse dedicated exclusively to orders was inaugurated in Getafe on-line of food, with 10,000 square meters of surface and that offers a maximum capacity of up to 4,000 shipments per day.

Regarding possible mergers with other companies to grow (last year contacts with the French Auchan), Bompard considers that Carrefour, whose main shareholders are the Moulins family and the Brazilian billionaire Abilio Diniz, has enough strength to grow independently.

Ask. Do you foresee major supply problems due to the war in Ukraine?

Answer. This is a dramatic event that also happens in Europe. Through our foundation we are deploying aid for refugees in Poland and Romania, where we are present, mainly collecting food. Regarding the consequences in terms of supply, it is still too early to estimate the precise impact of the conflict, as well as the sanctions that it has triggered. Of course there will be consequences, given the export nature of these two countries in certain products such as wheat and sunflowers, but I think it is too early to quantify the impact that the conflict will have on Europe’s food supply.

P. The price of energy and costs are going up a lot. Are they passing it on in their prices?

He knows in depth all the sides of the coin.

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R. It is true that since the second half of last year we have been in an inflationary context in European countries that has not been seen for years. There is an increase in the costs of energy, transport and a series of raw materials. This translates into increases in food prices, which in Spain is around 5% and which I expect to be in France, for example, between 3% and 5%. But our responsibility is to preserve the purchasing power of our customers, so that they suffer as little as possible from price increases. In the first place, we have a very good dynamic in negotiating with suppliers to avoid increases. We also have experience in markets with inflationary tendencies, due to our presence in Latin America, and there are many practices that allow us to limit price increases. In addition, we have a white label for customers who resent more than one price increase and it allows us to adapt the offer. And we develop discount formats such as Supeco in Spain. The main concern of the teams in Spain is to limit the impact of inflation on sales prices as much as possible.

P. Do you think that the inflationary situation is going to last a long time?

R. It is difficult to foresee. A few months ago, most forecasts pointed to the second part of this year being better. But I didn’t believe it too much because there are long-lasting factors that will surely contribute to higher inflation than in recent years. The conflict in Ukraine is an additional element, but as I was saying it is still difficult to know to what extent it will affect inflation. What we can say is that there will be a more accentuated inflationary context than in previous years. It will be more durable than was anticipated at the end of last year.

P. Complaints are usually heard from suppliers about the great power of pressure of the large food chains to negotiate prices. What do you think?

R. Our priority is to defend what our clients ask of us: their purchasing power. In parallel, we must accompany the agricultural world. And in all the countries we differentiate the small producers, whom we try to accompany with increases equivalent to the rise in raw materials, from the big negotiations with the multinational groups, with whom we believe we have the right to negotiate the best for our customers. When we negotiate with Coca-Cola or Red Bull we are thinking of the final consumer, when we negotiate with a small company, a small producer, we try to reconcile the preservation of the customer’s purchasing power with the income of the agricultural world.

P. The sector in Spain presumes to be very competitive. Do you have a worse time in Spain or in France?

R. This is a very competitive sector in practically all countries. In Spain too, of course, with well-known national companies, discount stores, many well-respected players. I am proud of the Spanish team, led by Alexandre de Palmas, who works in a universe with a lot of competition, to win more and more clients. We like competition.

P. How have consumption habits changed during the pandemic?

R. There were a number of pre-existing trends that have accelerated during the pandemic, such as e-commerce and home delivery. There is also a very strong attention to the quality of the products, to their origin, if it is organic. A greater appetite for local, neighborhood stores. And that is good for our group, which has been betting on these trends for four years. In Spain last year we opened 260 stores and we already have more than a thousand Carrefour Exprés stores. In electronic commerce, our ambition to achieve 10,000 million euros in turnover at the group level in 2026. The platform that we have just inaugurated in Getafe (Madrid), the first dedicated entirely to electronic commerce, is an example of this commitment, with the goal of serving 4,000 orders per day. Then we will deploy this type of platform in other important cities in Spain. Regarding the segment of healthy, organic and gluten-free products, our market share in Spain is much higher than the general one.

Alexandre Bompard during the interview in a hotel in the center of Madrid.
Alexandre Bompard during the interview in a hotel in the center of Madrid.INMA FLORES (THE COUNTRY)

P. Is the format of the large hypermarkets in decline?

R. I do not believe it. The wealth of our group lies in the diversity of formats, which respond to the needs of different types of customers and different types of purchase, whether they are daily, weekly or monthly. The Spanish hypermarket retains an extraordinarily strong appeal. The diversity of the offer, the low prices and the wide possibility of choice continue to be a strong advantage of the hypermarket model, and even more so in the current uncertain times. But at the same time the smaller, proximity formats are growing. And, at the same time, all this combined with the rise of electronic commerce. This diversity of offer is reflected in our financial results, along with the ability to accelerate growth and investments.

P. What does your digital strategy consist of?

R. The digital business is not just another distribution channel, but it has to be present in all our activities. We have 13,000 stores, which must also be distribution, collection and direct sales points. Everything as a set. Having 800 million visits on our digital platforms is an asset. Our ambition is to be the European leader in this online business. In Spain, for example, we already have hybrid platforms, with the capacity to place orders in stores. And the new platform for online food orders in Getafe, and there will be more.

P. Amazon, for example, sacrificed profitability at first to get off the ground in food sales. Would Carrefour do the same?

R. My responsibility is to combine future growth with profitability. When you are developing or transforming a traditional business like this, you must combine growth, profitability and cash generation. You cannot choose between these possible targets. My responsibility is to find the right combination.

P. Since you became CEO, cash flow generation has improved, and so has shareholder remuneration, but the market has not fully recognized this improvement and the price has been worse than that of other comparables.

R. It has taken a while for investors to understand and trust that we had the ability to transform the model, but I think they are now convinced that we are achieving our objectives. They see that we generate cash every year, more than a billion, and that we are going to a digital model. That is why more and more investors show confidence in our strategy and I hope that it will continue to do so.

P. He sees the future of Carrefour as a company, an independent group or believes that it will again be the target of a takeover bid. Does a merger with Auchan make sense?

R. I think we have the instruments to develop autonomously. When a group is capable of investing 3,000 million to build a digital platform, generate cash and meet its objectives, I think it has the basis to continue autonomously. We are strong in many European countries, so we are contacted by market players interested in partnering with us. When it makes sense, we carry out operations, in Brazil, in Spain. We are now in a position to be essential in most of our markets, with autonomous and independent development.

P. Are new acquisitions in the style of Supersol being considered?

R. We have ambition in Spain, with eight and a half million members who endorse our model. If we can continue to gain market share through selective acquisitions, we will.

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