Carrefour, the world's second-biggest retailer, is trying to move into Africa after a string of expensive failures in other countries, Bloomberg reported on Monday (Aug. 12).
The French chain plans to open stores in eight African countries by 2015. It has partnered with CFAO, a distributor and the continent's biggest supplier of cars, trucks and pharmaceuticals, to get around roadblocks that other big multinational chains including Walmart (NYSE:WMT) have hit in much of Africa: lack of distribution and available real estate.
Carrefour's deal with CFAO, which will get 55 percent ownership to Carrefour's 45 percent, should put stores in Ivory Coast by 2015, with Nigeria, Ghana, Cameroon, Congo, the Democratic Republic of the Congo, Gabon and Senegal also on the list. Most of the countries are on the west coast of sub-Saharan Africa. The companies hope the joint venture will generate about $1.3 billion per year in revenue from stores and shopping malls they plan to build.
Africa's top 18 cities are expected to have combined spending power of $1.3 trillion by 2030, according to McKinsey & Co. estimates. The region is currently very underserved by conventional retailers, and is mostly served by small sellers in marketplaces, even in the largest cities.
Carrefour would like to have a winning entry for a change. The retailer has spent much of the past two years getting out of markets it failed to dominate, both in Europe—Carrefour had to pay about $300 million just to leave Greece last year—and in China, where Carrefour is considering selling its Chinese operations or merging them with another chain.
- See this Bloomberg story
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