The Importance of Innovation in Carrefour

Part A: Case study – Carrefour

Why Carrefour Places High Importance on Innovation

Carrefour considers its employees as its greatest asset in the innovation process. The entity’s future in the retail industry can only be secured if the company develops its retail expertise and customer-centric approach to levels that make it stand out from its competitors. The two aspects are fully controlled by employees. Carrefour has been working towards equipping employees with knowledge and information to enable them give more attention to the customer and work towards enhancing the company’s retail expertise. The retail industry involves giving customers a unique experience where they feel convenient when shopping. All employees, including the junior-most ones, should understand why and how the unique experience is important to the entity’s success and its sustainability.

Open University module B207 terms a vision as a contagious dream that helps stakeholders to jointly capture the need of time.[1]

Carrefour sees innovation as a way of capturing and propagating the entity’s dream. A continuous innovation process helps the company to remain future-focused. The big ideas created by employees are integrated into the company’s future. Carrefour has simplified the conception of its future by summing it up into the two aspects: retail expertise and customer-centric approach. One of the main reasons why Carrefour has emphasized on the innovation process is to ensure that it remains future-focused. The employees are helped to remain focused and reflect on the implications of their actions on the company’s competitive advantage.

According to Open University module B207 one of the main drivers of innovation in a company should be societal changes.[2]

Carrefour’s top management may not have an explicit experience with all the societal changes relevant to the innovation process. Carrefour has over 384000 employees who are spread across the region that the entity operates. These individuals are well acquainted with societal changes that may impact the tastes, preferences and perspectives of customers towards their experiences in the premises.  The employees are the single largest group of stakeholders who can be used to collect data on the advancement made by competitors. The information can either be second-hand, collected from customers when they visit the stores. The employees can also bring in their first-hand experiences in their interactions with competitors. Innovation gives employees an opportunity to participate in the company’s growth and thus feel a sense of commitment and responsibility. It has helped Carrefour develop organizational citizenship by implementing the employees own ideas towards enhancing retail expertise and a customer-centric approach. 

The company has created an efficient resource planning system to promote efficiency. Before the development, Carrefour endured inefficiencies due to uncontrolled supply chains. A company operating such systems is exposed to risks of undersupply or oversupply, putting its grip on the market share in jeopardy. The realization that new technology had the potential of overcoming the danger was followed by a quick action to take advantage of enterprise resource planning systems and channels for electronic data interchange. Such innovations have helped the company collect, compile and transmit important data such as product sales to the relevant parties for action. Suppliers, for instance, are given the data on sales to facilitate better stock level control.

A continued focus on innovation helps the company remain focused on key factors within the environment in which it operates. For instance, a company that is focused on innovation is always aware of the problems that require innovative solutions. Once the solutions are realized, the attention of the market is drawn to them and the entity springs above its competitors. Carrefour has remained focused on innovation as a way of being always on the lookout for factors that can help it create solutions to problems within the market. For instance, realize the potential offered through technological innovations. Most of these innovations are realized by other entities and it is upon Carrefour to realize the role that various innovations can play towards realization of its goals.

            Carrefour places a lot of emphasis on innovation in order to minimize expenses and alleviate risks that come with changes within an organization. In Open University module B207, it is noted that that the risks associated with innovation are incremental in nature.[3]

Therefore, a company must figure out the alternative ways of alleviating the risks before venturing into implementing the ideas that come up. Carrefour sees innovation as an opportunity to leverage on the social costs associated with its operations. For instance, the company has been slowly eradicating the use of HFC-based refrigeration and replacing it with more environment-friendly refrigeration. Such actions work towards depicting Carrefour as an entity that is sensitive to issues affecting humanity. 

Balancing between the ‘Global’ and the ‘Local’

            According to Reading Block 2 in the Open University module B207, countries have opened up their economies to allow entities from other countries to set up businesses and operate.[4] In return to this opening up, other countries allow entities from the former to set up businesses in their territories. Therefore, an organization will find competing on the global scale eve if it resolves to remain confined in its original countries. Decisions to allow international entities to operate lies with the government. In response to globalization, an entity must first strengthen its presence in the country of origin. Enhancing the company’s footprint gives it an advantage over international entities that enter the economy and try to take part of the market share away. The company should use its existing dominance in the retailing market in France to its competitive advantage in the country. The dominance can also be used when entering other markets, especially in nations that have strong relations with France. As much as global presence is important, Carrefour should not undertake the new venture at the expense of its dominance in the country of origin. Pursuance of the global expansion strategy is at risk of being affected by factors that are far much beyond the control and even the understanding of Carrefour. Therefore, dominance in France and other European countries can salvage the company’s progression case its efforts to achieve the global expansion footprint fails.

            In Reading Block 2 in the Open University module B207, the writer observes that the culture of individual living in large cities is becoming synonymous with the spread of technology. Comparison between large cities will reveal more similarities than one between the countries in which they belong. Therefore, a business that spreads its operations between cities should not have a hard time adapting and taking advantage of the new markets. Individuals from other areas within the countries will easily adapt to identify to life in the urban areas.

            The major cities that Carrefour targets should act as entry points to other countries. Once they are in these cities, they should seek information and data on smaller towns and rural areas. Though the cities may face similar challenges, it is important to appreciate that the culture of local people also plays a major role in determining the business environment. Therefore, the business environment in the large cities is influenced by both global trends and culture of the local people.[5] Major cities share policy lessons, especially in handling common problems between them. However, Carrefour should remain cognizant of the differences brought about by political parties and ideology. Factors such as language and culture can easily hinder the ability of Carrefour to appeal to customers in new environments.

In its global expansion strategy, Carrefour should be prepared to face issues such as differences in availability and cost of labor, transport systems and overcrowded markets. Despite these differences, the company should remain committed to innovation as a way of attracting and maintaining customers in new markets. France has shown its commitment as one of the innovation leaders on the globe. Carrefour should take advantage of this commitment by incorporating the new ideas in its operations. There are also other innovations that may be borrowed from other countries and incorporated into Carrefour’s operations in its home market. For instance, the use of mobile money for as a payment method has penetrated the developing countries more than in the developed world. Carrefour can obtain valid lessons on how the trend can be adopted by its customers in the developed countries.

Carrefour can adopt the idea of partitioned retail data systems to ensure that it separates between its local and global businesses. Despite the similarities in city culture, there are significant differences between cities in terms of tastes, preferences and even the amount of money that individuals are willing to spend on various categories of consumables. There is need to retain customers in each market by providing them with what they require. Zoning the data systems will help Carrefour identify trends in purchases for various categories of items. Information from the zoned data systems should be made accessible to manufacturers and suppliers. The information should inform decisions on how the retail outlets are stocked by suppliers and manufacturers and transfer of items between the retail stores.

How Carrefour Seeks to Nurture Long-Term Value Creation

            Today’s business world is characterized by availability of goods and services from all over the world.[6]

A business can either enter a developed market with existing demand or choose to create a niche for itself by helping potential customers realize new goods that can meet existing needs. Carrefour recognizes the fact that customers must see the value of their money at the end of their shopping experiences.

Many cities are expanding, thus putting pressure on land. City planners cannot allocate enough parking space for the growing number of cars. Congestion of human traffic has also led to depreciation of the quality of life in many cities. Due to lack of space, many people prefer shopping, living and carrying out other activities in city outskirts where there is relatively less pressure on land. Therefore, value can be created through provision of space in urban areas.[7]

Carrefour aims at providing large and spacious stores with wide aisles and free car parks. The customers will enjoy the convenience of not having to drive around towns to locate parking spots and walking for long distances to stores. The wide walking aisles may also prove to be a break from the rest of the customer’s activities in the cities where they have to walk through congested paths and drive through traffic jams. The serenity enjoyed when shopping at Carrefour outlets is key in attracting and maintaining a large customer base.

Carrefour aims at acquiring large stores, totaling to more than 10000 cubic meters to serve three million customers. The company’s blueprint does not merely focus on the number of customers or turnover. By targeting a specific total store size, the company shows that its commitment to giving its customers a certain experience, rather than just attract them to buy Carrefour’s wares and make profit. The company goes beyond the mere profit goal and seeks to make a permanent impression among its customers. Once the 10000 cubic meter footprint is achieved, the company can then concentrate on meeting other goals such as the number of customers who frequent its stores and annual turnover. The main goal is anchored on other goals that focus primarily on the customer as the center stakeholder in the retailing industry.

In an effort to expand its operations to other parts of the world, Carrefour has been conducting research on trends in local tastes. In Reading Block 2 in the Open University module B207, it is noted that globalization has been influencing culture in major cities. Therefore, the tastes and preferences may be similar across the cities. However, Carrefour has been cognizant of the fact that the tastes keep changing. Some of the key influences towards such changes include the spread of the use of technology.[8]

Technology has made communication easier, influencing rapid changes in preferences. Carrefour has been keen on keeping track of the changes and changing its goods and services to meet the new expectations in the market. Flexibility in product and service offering has been enhanced to not only meet tastes at the local level but also global trends.

Food is one of the most basic needs required by every person on a regular basis. Carrefour has diversified the types of food on its shelves to meet the needs of the markets where its stores are located. Food accounts for almost half of the company’s total sales. Despite the company’s efforts to provide its customers with a variety of products, it has not neglected the need to focus on meeting the dietary needs and expectations of its customers.

The company has been forfeiting large profit margins in order to achieve high-volume purchases. This forfeiture creates values for customers as they enjoy daily discounted prices. Discounts, especially for the most basic consumables, help in overcoming competition. Customers mainly compare the prices of the most common commodities across stores before making decisions on where to shop. In Reading Block 3, it is noted that efforts to maintain quality and value for customers often result in the escalation of costs. [9]

Carrefour has managed quality by looking at value from the perspective of the customer. It is defining quality in terms of the needs of the customer.

Part D: Skills Reflection

            At the beginning of block 3, I was feeling that the activity was not relevant to business or management. My perception changed when I felt that the activity was helping think to overcome issues that were being simulated. As a business owner in the service sector, I have noticed that technology influences the perception of customers towards my entity. Customers would like to be attended to by a business with the most advanced machines at the least costs. Therefore, I will use the persuasion skills gained from the activity to have all my employees support changes in technology by linking the new technology to our goals. I appreciate the role of critical thinking skills in business management. In the future I will apply these skills in integrating short, medium and long-term personal and company goals. One of the challenges I have had in the workplace is adopting new technology as the employees always fear the effects of the changes, the biggest fear being loss of jobs. By incorporating new technology with existing goals, both at the company and individual level. I will use the critical thinking skills gained to have my employees accept and support the changes.

Bibliography

Castells, Manuel. Challenges of Globalisation: South African Debates with Manuel Castells. Vol. 4. Pearson South Africa, 2001.

Dunning, John H. The Globalization of Business (Routledge Revivals): The Challenge of the 1990s. Routledge, 2014.

The Open University, Business School. B207 Shaping business opportunities: Readings Block 1: Big ideas in organizations. Norwich: The Open University, 2017.

The Open University, Business School. B207 Shaping business opportunities: Readings Block 2: Competing in a global context. Norwich: The Open University, 2017.

The Open University, Business School. B207 Shaping business opportunities: Readings Block 3: Building long-term success. Norwich: The Open University, 2017.

Weisbrod, Glen, Don Vary, and George Treyz. “Measuring economic costs of urban traffic congestion to business.” Transportation Research Record: Journal of the Transportation Research Board 1839 (2003): 98-106.

[1] The Open University, Business School. B207 Shaping business opportunities: Readings Block 1: Big ideas in organizations. Norwich: The Open University, 2017, 13.

[2] The Open University, Business School. B207 Shaping business opportunities: Readings Block 1: Big ideas in organizations. Norwich: The Open University, 2017, 20.

[3] The Open University, Business School. B207 Shaping business opportunities: Readings Block 1: Big ideas in organizations. Norwich: The Open University, 2017, 49.

[4] The Open University, Business School. B207 Shaping business opportunities: Readings Block 2: Competing in a global context. Norwich: The Open University, 2017, 9.

[5] Castells, Manuel. Challenges of Globalisation: South African Debates with Manuel Castells. Vol. 4. Pearson South Africa, 2001, p. 7.

[6] Dunning, John H. The Globalization of Business (Routledge Revivals): The Challenge of the 1990s. Routledge, 2014, p. 7.

[7] Weisbrod, Glen, Don Vary, and George Treyz. ”Measuring economic costs of urban traffic congestion to business.” Transportation Research Record: Journal of the Transportation Research Board 1839 (2003), p. 102.

[8] , The Open University, Business School. B207 Shaping business opportunities: Readings Block 3: Building long-term success. Norwich: The Open University, 2017, p. 7.

[9] The Open University, Business School. B207 Shaping business opportunities: Readings Block 3: Building long-term success. Norwich: The Open University, 2017, p. 65.