Carrefour is to cut jobs, boost ecommerce investment and seek a partnership in China with Tencent in the face of competition from Amazon, sending its shares higher after the announcement on Tuesday, reports Reuters.
Alexandre Bompard, who took over as CEO in July, is trying to overhaul Carrefour’s French hypermarket business as well as expand online retail. Amazon’s purchase of Whole Foods in the United States last year has prompted speculation that the tech company could be targeting food retail in Europe next.
Bompard plans to invest 2.8 billion euros ($3.4 billion) in digital commerce by 2022, six times its current investment, as Carrefour plays catch-up in online food retail.
“Carrefour has reached a turning point in its history. We have a huge ambition and I am well aware of the magnitude of this challenge,” Bompard told a news conference.
Under pressure to increase profits, Bompard also announced cost savings of 2 billion euros by 2020, including a voluntary redundancy plan for 2,400 employees at its French head office and plans to sell or close 273 underperforming stores Carrefour bought from Spanish retailer Dia in 2014.
Carrefour shares rose around 6 percent, their biggest one-day gain since October 2015.
“Consumer trends are changing, and Carrefour is adapting accordingly,” said Benoit de Broissia, analyst at Paris-based investment firm Keren Finance, which owns Carrefour shares.
The group, the world’s second largest retailer with more than 380,000 employees, is targeting 5 billion euros in sales in food e-commerce by 2022 - an amount that would be six times greater than at present, which would represent a 20 percent market share in France.
Carrefour’s online sales accounted for just 1.7 percent of its total French food sales in 2016, while more digital-savvy rival Leclerc managed 8 percent, according to analysts at brokerage Bernstein.
Carrefour has struggled for years to reduce its reliance on hypermarkets, particularly in France, where it makes 47 percent of its sales.
Bompard, previously CEO of electronics retailer Fnac Darty (FNAC.PA), ruled out closing any of the 247 French hypermarkets, proposing instead to reduce selling space whenever it was relevant and to transfer five hypermarkets to lease management contracts.
In China, Carrefour remains loss-making amid fierce competition from local players and a buoyant online market.