Carrefour in the Competitive Dubai Market - Assignment Example

 Carrefour in the Competitive Dubai Market Established in 1959, Carrefour was created by the Fournier and Defforey family. The company is considered the largest market chains in terms of its size, second largest in terms of revenue and third largest in profits. The French international market chain has established stores all over Europe, Asia, Africa and the Americas. The group is responsible for establishing a variety of different grocery stores: hypermarket, supermarket, hard discount and convenience stores. Owning around 15,000 stores or franchises all over the world, Carrefour is rightly considered one of the largest retail chains all over the globe. Promoting its name in the international sphere has been one of the biggest reasons behind the group’s success. With a strong presence in 33 of the world’s countries, the French group creates 56% turnover from outside France (Group). Thus, the group very rightly lives up to its name of crossroads. There are several reasons behind Carrefour’s success in the international market. The first of which is their recruitment of local people. By hiring local workers Carrefour ensures that its popularity and acceptance amongst the government and citizens remains intact. The reason behind the huge success of this organization is its commitment to serve the customers (Values). This essay will discuss the Carrefour that has been established in Dubai. It will show the reasons behind the success of this international market in the Middle East including the type of products that are sold. Considered to be one of the most unique and burgeoning markets in the United Arab Emirates, Carrefour has established its hyper markets amongst its other chains all over the Middle Eastern market. Providing the same diversity, quality and low rates, Carrefour has not let its market in Dubai suffer. The shoppers are open to the same experience that they will find available in the original store. By opening at locations all over the United Arab Emirates, Dubai, considered to be one of the shopping capitals of the world is a surefire root to success in the Middle East. The low costs and abundant quality and quantity of items, makes the shop in Carrefour Dubai a quick stop for any eager buyer. The accessories range from home appliances to fresh food, clothing, gardening supplies and any other item the customer wishes. Thus, the Carrefour established in Dubai does a successful job of maintaining its standards and quality as it has all over the world. Visited by a number of customers, it has maintained its promise of providing goods to a diverse and varied group of customers, ensuring that no individual leaves the store without finding what they have come looking for. The customers that visit the Carrefour in Dubai are generally foreigners. This is because of the vast foreign body that Dubai has adopted. A majority of these are Indians who visit for fresh food and groceries. The items available in Carrefour meet the customer’s food requirements and are thus amply chosen over any other good in the store. Shopping for their daily groceries, it is necessary to provide these customers with their requirements which make the necessity of food in the store essential. Because food is such an essential for sustenance, the demand curve is not affected by a changing in price. Some locals too choose to frequent this store but their demands are not always the same as their Indian counterparts. While many choose to shop for fresh food at their own local stores, Carrefour is used to buy other household items. This includes cleaning products of a great variety: brooms, detergents, bin liners or furniture polish which would otherwise be unavailable in such quantity at any other stores. Coupled with this is a demand for medication which is abundantly available at the Carrefour stores. Thus, the locals of Dubai choose Carrefour to buy household goods rather than food. However, if the prices of any of these increase then the shoppers prefer to take their purchasing power to local stores. This makes the demand curve for the locals needs very elastic, only a lower or equal cost as those in the outside markets can convince locals to shop in the Dubai Carrefour. Another group of customers that frequent this store are American or British mothers. These women choose to buy their children toys or any baby necessities for this store. The great diversity in both these groups: toys and baby care essentials makes Carrefour one of the most successful shops in Dubai for mothers. Thus, mothers also choose Carrefour to buy essentials for their wards. The toys available are suitable for different ages, genders and choices: board games, train sets, dolls or science kits. While the types of baby care products range from baby wipes, prams and baby blankets. The demand curve for this group cannot be determined. This is because the mothers are divided between those who take their shopping elsewhere when prices rise and those who continue to by loyal Carrefour customers despite the rising prices. The difference between the choices of the same group makes the demand curve of the mothers inelastic. The employees running the store are Filipinos who seem to buy little from the store themselves. Thus, Carrefour caters to the needs of a variety of different groups and ethnicities. To compete with the competition of local stores and other markets, Carrefour has to adopt a policy which encourages customers to visit the store. This is established through promotions and sales which entice customers to visit the store and choose it over other reigning super markets. These promotions are established according to the specific special time of Dubai. For instance, Carrefour is currently running a promotion because of the upcoming month of Ramadan. The Muslims consider Ramadan to be a holy month where they fast for thirty days as a sign of abstinence and piety to God. This begins with changes in the prices of food items which are essential during the month of Ramadan. These include dates and yoghurt which are part of a staple diet during the month for most Dubai locals. Also the prices of cooking oil and canned fruits and vegetables have been lowered tremendously to encourage locals to shop at the Carrefour. Thus, understanding the importance of Ramadan to the Muslims of Dubai, Carrefour has established lower prices for all essential goods like rice. Along with this, gifts and prizes are also attached to purchases which ensure that the winner is rewarded for their shopping (Carrefour UAE). As mentioned earlier, the range of goods available in the store are suitable for all kinds of needs. The customer can choose from a wide array of items like furniture or traveling goods. Also, Carrefour Dubai is economically friendly and provides cloth shopping bags at a low cost in an attempt to keep the environment safe (Act Green). Most of the items sold in the store come with a fixed retail price. Produced by a variety of different brands, the store has little or no say in the prices that the producer set for the good. However, the Carrefour in Dubai still gives successful discounts on the goods it sells. This is because the demand curve of the good does not shift with the supple curve. While the supple curve of almost all goods remains constant, the demand curve for them changes from season to season. Thus, while some fruits and vegetables are unavailable during a particular season, their demand does not increase phenomenally. However, some items like dates become particularly sought after in months like Ramadan which makes it highly lucrative for Carrefour to place it on sale. So what Carrefour Dubai does is keep the supply curve constant but shift prices according to the demand curve. . Factors of production are seen as the essential sources required for producing a specific amount of goods and services (Sullivan and Sheffrin). Helping in the facilitation of the good, they are not part of the good that is being sold it. Thus, in this case, Carrefour Dubai’s factors of production will be the rent, lighting, air-conditioning and other aspects that accompany the goods that are sold in the store. While these goods are not part of what the market sells, they are necessitated by the importance customers place on them. A good lighting system allows the consumer to view the wares better just as a working air-conditioned building protects the customer from the pollution or heat of the city. Carrefour caters to a group of people who buy an abundance of goods from them. Thus, the costs of furniture and electronic appliances can be higher in the Carrefour store which is selling them. This allows the store to maintain a pricing range that allows discounts but it still able to cover the fixed costs of the store. The marginal costs of a Carrefour store will affect the total output that is produced if the store is kept open for another hour. Dubai is considered to be a shopping capital and this means that the city has a number of stores that are open all the time. The customers who shop at Carrefour come at specific times of the day, the Indians choosing to visit after their day at work and mothers visiting during school hours or after school. Most of these customers are loyal followers of Carrefour shops and would come at no other time. Also, the great varieties of other objects kept in Carrefour are responsible for attracting customer during a specific period of time. For instance, furniture or clothing is brought by most individuals on their way back from work as are other essential items. Thus, by keeping the market open for another hour would just add to the marginal costs of the store. With its wide variety of goods, core commodities are abundantly available in the Carrefour. This is coupled with the fact that they are the most sold goods in the store. The manager of the store does regularly place discounts on items at specific times. As mentioned earlier, the holy month of Ramadan enforced many promotions to be placed on the Carrefour Dubai to encourage customers to buy goods like rice or cooking oil. While these commodities are not demand inelastic, a lower cost for buying these items in bulk is sure to encourage customers to buy more of the inelastic commodity than they would have otherwise bought. It would be harmful to close the store under short or long term because with the competition in the local market, it would not be hard for customers to shift their loyalties which could cause the company great loss. One of the economic problems that are abundant in the store is the group of workers they hired. Despite their philosophy, Carrefour Dubai has employed Filipinos who are ardent workers but will not appeal to the locals of the region. With such competition available because of the presence of other markets, Carrefour should employ local individuals who can interact and attract local consumers. This will increase sales and encourage people to come to Carrefour for a hospitable and interactive environment. With the developing world of today it is essential for markets to move with the time. Ideas like online shopping have become so famous that they are now chosen by many customers as a mode of shopping for goods. Carrefour has been unable to maintain a successful shopping site for its customers. It does not list the brands and prices of the goods available in the store for a new customer. Thus, if a customer wishes to purchase a good they have to make the trip to the store itself to view and purchase it. In many cases this can be frustrating especially if the store does not have the required item. Carrefour should work on maintaining a good website for its customers to access and shop. The last problem faced by the store is its inability to provide bigger discounts to the customers. In a city with so much competition it is but natural for markets to reduce costs to attract customers. Carrefour should establish an image in Dubai that lives up to its name of providing low prices and great quality to the people. Only by doing this will they be able to succeed in the competitive Dubai market. Thus, Carrefour is doing great as a brand ambassador for its store in Dubai, yet a few minor changes can make it amply successful in Dubai. Works cited Carrefour UAE, Act Green, August 15 2009 < http://www.carrefouruae.com/Service.aspx?id=12&language=en&country=uae> Carrefour UAE, Main, Latest Promotions, August 15, 2009 < http://72.32.124.138/Carrefour/retailtool/Resources/Flipbooks/UAE_Ramadan/flipbook.html> Group, Carrefour Group, August 15, 2009 Sullivan, Arthur; Steven M. Sheffrin . Economics: Principles in action. Upper Saddle River, New Jersey 07458: Pearson Prentice Hall (2003). pp. 4 Values, Carrefour Group, August 15 2009 Read More