Carrefour Calls Time On Indonesia
Under new CEO George Plassat, France-based retailer Carrefour has looked to sell international businesses where it is not a market leader. This focus on its core domestic business as well as higher-growth markets where it has a strong presence has been further demonstrated by its decision to sell a controlling 60% stake in its Indonesian business to domestic company CT Corp for US$673mn - valuing the unit at about US$1.12bn.
Carrefour has been making tangible progress in France, where it is focusing heavily on price. G iven that most of the retailer ' s business is centred around hypermarkets, a core focus on price is critical , in our view. This is especially true as Carrefour is fighting against the tide somewhat given the ongoing evolution of French food retailing away from big-box hypermarkets. Plassat has also been aggressively selling businesses in countries where the firm is not a market leader and would have to invest heavily to establish a strong presence.
In different circumstances , we believe that Carrefour would have been very reluctant to leave Indonesia. Organised food retailing in the country still accounts for less than half of overall sales, with wet markets and kiosks still very prominent. To 2017, we see mass grocery retail sales growing at a comp ound annual rate of 13.9% in US dollar terms, indicating that CT Corp has a real opportunity here.
|Indonesia Growing Quickly; France Mature|
|Selected Countries - Total Mass Grocery Retail Sales (US$bn)|