The Historical Development of Carrefour and its Competitive Advantage in Taiwan
- An Analysis on the Basis of Customer Value-
Pei CHAO
Assistant Professor, Department of Marketing and Distribution Management
National Koahsiung First University of Science and Technology
Hitoshi TSUCHIYA
Senior Instructor, Department of Marketing and Distribution Management
National Koahsiung First University of Science and Technology
Abstract
Carrefour has become a leading hypermarket retailer in Taiwan. In other Asian countries (e.g., Hong Kong, Japan and South Korea), however, Carrefour did not have the same successful experience. It is an interesting issue why Carrefour has had a prosperous business in the marketplace of Taiwan, but languishing in other Asian markets. Competitive advantage established by Carrefour, relative to both inter- and intra-institutional competitors, may account for its success in Taiwan. Following the contention of the extant marketing and strategy literature, this study asserts that the essence of establishing competitive advantage comes from delivering superior value offering to customers. Thus, the concept of customer value was applied to understand the accomplishment of Carrefour's development in Taiwan. According to the research findings in this study, Carrefour outperformed competitors on the basis of economical value; that is, to lessen customers' monetary and nonmonetary (e.g., time and effort) expenditures. Until recently, Carrefour opened a shopping-mall-type hypermarket that, unlike traditional hypermarket stores, offers customers more hedonic value (e.g., entertainment). Whether this special offering receives customers' acceptance and widespread popularity requires further observation.
Key words: Institutional Development, Hypermarket Retailing, Competitive Advantage, Customer Value, Carrefour
Introduction
Retailing, like many other industrial sectors, in Taiwan has experienced a rapid change for the last three decades. In the meantime, the evolution of retailing industry manifested two major characteristics: specialization and concentration. Specialization means that the retailing industry has been fragmented; that is, a variety of retailing formats such as convenience store and hypermarket, emerged in Taiwan during the time period. The emergence of the individual specific retailing formats was not only in response to the diversity of consumption patterns but also in reaction to changes in the socio-political environment. Concentration means that, given a retailing format (i.e., a set of involved participants whose operations are perceived as homogenous), participant companies have become larger in size and smaller in number. In 2005, the top two convenience-store retailers (i.e., 7-11 and Family Mart) shared about 70 percent of the total store number in this retailing sector. In the same year, the top two hypermarket retailers (i.e., Carrefour and RT Mart) held sales volume almost 60 percent of the total sale volume in the hypermarket sector.
Hypermarket has become one of dominant retailing formats (including department store and convenient store) in Taiwan. In 2005, hypermarket held almost 20 percent market share in the general merchandise sector, right behind department store (28%) and convenient store (25%). Among hypermarket retailers in Taiwan, Carrefour has been viewed as a leading hypermarket retailer in terms of owned store number and corporate annual revenue. According to the most recent record (on February, 2006) showed that Carrefour owned the store number growing to 37 (33 % of the total hypermarket stores). In 2005, Carrefour's corporate annual revenue was about NT$ 56 billion (40% of the total sales volume in the hypermarket sector) that was twice more than that of the second hypermarket retailer- RT Mart.
Carrefour has been a pioneering retailer undertaking international expansion since its first entrance to Belgium in 1969. Within the internationalization process for more than three decades, Carrefour has achieved mixed consequences in different countries. Carrefour is the leader within European countries such as Spain, Belgium, Greece and Italy, becomes the number one in Taiwan and holds a leading position in Brazil. On the contrary, Carrefour withdrew from the U.S. market in 1993, Hong Kong in 2000, Hungary in 2003, Japan in 2004, Poland in 2005 and Korea in 2006. Elsewhere, Carrefour is still striving for its survival in the marketplaces such as Taiwan, China and Thailand. It is interesting to inquire why Carrefour experienced success in some countries but failed in others. The explanation to Carrefour's success and failure may come from different theoretical perspectives. In this study, however, we tend to apply the concept of customer value to account for why Carrefour has been successful in establishing its competitive advantage, relative to inter- and intra-institutional competitors, since its entering to the Taiwan marketplace in 1989.
This study is organized as follows: first, we discuss theories of institutional evolution, which can be expanded to account for relevance and importance of customer value. After that, the concept of customer value is discussed in detailed. And then, we begin with separating the historical development of Carrefour into three phases, and identify what, on the basis of customer value, contributes to the competitive edge of Carrefour within the individual phases. Finally, we discuss the research conclusion and recommend potential topics for future research.
