Carrefour's new CEO Georges Plassat told the company's annual shareholders' meeting it would take three years to turn around the retailer amid the challenging economic climate, according to press reports.

Cost reduction and decentralisation central to strategy

Plassat, who took over as CEO from Lars Olofsson on 23 May, said the world’s second-largest retailer faces tough times ahead given the current economic situation, and that it would take three years to turnaround the company. He attributed Carrefour’s ongoing troubles to the pace of its development.

As part of Plassat's strategy, Carrefour will focus on reducing debt, consider exiting certain markets and reducing overhead costs and marketing spend. In addition, he will offer Carrefour’s store managers in France greater autonomy, saying the group was overly centralised.

Inventory reduction and operational efficiencies targeted

Since 2009 Carrefour has been pursuing a three year transformational strategy it calls "en avant" or "getting ahead", with the objective of driving cost reductions and operational efficiencies.

In 2011 the retailer achieved a total cost reduction of €449m, slightly below the target of €480m for the year. Logistics and shrinkage savings of €55m were realised during the year, with the remaining €394m coming through operational efficiencies. Total cost savings since "en avant" was launched remain ahead of plan with €1.5bn achieved against a target of €1.3bn.

Carrefour has recently prioritised on driving down out of stocks in its French stores, which in the second half of 2011 had a big impact on the retailer's overall performance. A dedicated task force was established, focusing on reducing the number of glitches occurring in-store, improving inventory management in intermediate warehouses and better coordination between merchandise and store management.

Carrefour has focused on reducing stockholding levels across its international operations, with notable successes in Poland, Italy and Belgium. The retailer aims to cut inventory by seven days by the end of 2012.

Plassat has yet to indicate how he intends to build on "en avant", but is expected to lay out more detailed plans when Carrefour releases its first half results for 2012 at the end of August.

For a more detailed overview of Carrefour's global supply chain operations please click here.

Argentinian acquisition and Greek sale confirmed

In its first move outside Carrefour's domestic market since Plassat took over in April, the retailer confirmed it has purchased 129 EKI stores in Argentina, subject to approval by anti-trust authorities. The deal includes 100 convenience outlets and 19 small supermarkets, located for the most part in Buenos Aires. Although this is not a major acquisition, it demonstrates commitment to the market and signals the future and long term importance of Latin America for the group.

Carrefour has also confirmed it will sell its 50% stake in its Greek joint venture with Marinopoulos, who will also become the retailer's exclusive franchise partner in the Balkans (Greece, Cyprus, Bulgaria, Albania, other Balkan countries). Full financial details of the transaction have not been released, although management states it will record a charge of €220m. The Marinopoulos family has reaffirmed its commitment to the markets its serves.

The Greek 'exit' is another logical step given the highly challenging trading conditions in the region, although Carrefour does remain exposed through its now exclusively franchised operation.