Carrefour in Indonesia - Essay Example

Carrefour, with it’s headquarter in Levallois-Perret, Paris, France, is a chain of retail business, having more than 12,500 outlets, serving 100 million customers over 30 countries worldwide. Carrefour was created by Marcel Fournier and Denis Defforey on 3rd June 1959 when they opened the first Carrefour (means crossroads in French) retail outlet at the convergence of five roads in Annecy, near Paris. Over the past 40 years, Carrefour has grown into the largest retail group in Europe and China and second in the world in terms of revenue and sales figures after Wal-Mart.

It has built a reputation as a retailer that offers the most variety and freshness at reasonable low prices rather than bargain – basement value. It is currently operating in four main grocery store formats: hypermarkets, supermarkets, convenience and hard discount stores (Current News: Indonesia-Opening of the 35th Hypermarket, 2007). In 2000, Carrefour, Sears and Oracle created the first worldwide online marketplace called GlobalNetXchange for retailers connecting 50,000 suppliers, partners and distributors (Duran, 2005, pp.1-5). Carrefour was the first international retailer to establish its presence in Asia in 1989, when it entered in Taiwan through a joint venture with Uni President Enterprises Corporation.

Gradually, Carrefour extended its distribution network in thirteen Asian countries including Indonesia, Malaysia, China, Thailand, Hong-Kong, Korea, Singapore and Japan. and Japan. The retail giant, Carrefour, entered in Indonesian retail market in October, 1998 when it opened its first retail unit in Cempaka Putih, a sub-district of Central Jakarta (Duran, 2005, pp.1-5). Carrefour entrance in Indonesian retail market involved a number of factors. The following few section briefly discusses the factors which resulted Carrefour operation.

It also highlights the progress made by it since 1989. Important Factors Involved in Carrefour Operation in Indonesia Following are few important factors that had played major role in setting up of Carrefour operation in Indonesian retail market. 1. The liberalization of retail trading: Indonesia offers a good market potential for modern retailers. In March, 1998, the Indonesian government issued the SK Meninvest/No. 29/SK/1998 and Keppres No.99/1998 policy letters and effectively opened its wholesale and large-scale retail trade to foreign investment, lifting most of its restrictions.

Although some retail sectors were reserved for small-scale enterprises under another 1998 decree yet large and medium scale enterprises that wish to invest in these sectors, were given the option to enter the market through a partnership agreement with a small-scale enterprise, although this may not require a joint venture or partial share ownership arrangement. Since Carrefour already had its presence in Asian market hence it took the liberalization step as an advantage started to expand its retail network by setting first retail outlet in Cempaka Putih a subdistrict of Central Jakarta (Indonesia, 2005, pp. 73-76). 2.

Carrefour Strategy and Indonesian Potential Market: Carrefour follows very specific strategy before entering a new market. It assesses few parameters of target market before launching its operation. In doing so, it follows a few criteria including: - Small-scale retail rationalization and reorganization has not progressed. - Large-scale chain supermarkets are absent from the market. - Potential competitors that carry specialty items like household electrical appliances and clothing are absent from the market.

- Large amounts of retail space can be attained at low cost. - Laws and regulations governing large-scale retail operations are "developer friendly". Carrefour followed the same market entering strategy and made all assessment