Customers walk past a sign which reads "Carrefour guarantee, lowest price" displayed inside the Carrefour hypermarket in Brive-La-Gaillarde, central France. Picture taken July 8. — Reuters PARIS — Fifty years ago, on June 15, 1963, two French families opened Europe's first hypermarket in Sainte-Genevieve-des-Bois near Paris. Stocking 5,000 products over 2,500 square meters, it was three times the size of most grocery stores. Today, owned by retail giant Carrefour, it has tripled in size and offers 19,000 different products. The store's growth mirrors Carrefour's global expansion, but the format — an out-of-town warehouse offering cheese, lawn mowers and almost everything in between — is shrinking as online vendors, convenience shops and discounters bulk up. Some fear the decline could be terminal. Not Carrefour, which pioneered the stores across the globe, making it the world's second largest retailer after Wal-Mart , but its attempts to revive the hypermarket in France have ended the tenure of a string of chief executives. Not long ago, ballooning debts, falling profits and strategy U-turns such as a failed merger in Brazil led to concerns the company might be broken up. Now, with the French economy slowly crawling out of recession, it is trying again. "I was happy when Georges Plassat took the helm at Carrefour, because he has no doubts the hypermarket has a future, so now at least two of us think that way," said Vincent Mignot, managing director for France of rival Auchan. Plassat, who became CEO in May 2012, is streamlining an empire that sprawled from China to Brazil. He has sold assets in Colombia, Malaysia and Indonesia to reduce debt, and pledged to invest up to 2.3 billion euros to renovate or expand stores, mostly in France, which accounts for nearly half of group sales. Plassat wants to offer shoppers low prices and simpler products, renovate aging stores and give managers more autonomy after decades of central planning. Even one of its biggest investors, property tycoon Thomas Barrack, concedes that reviving the firm was "like moving an aircraft carrier". Earlier this year, Carrefour for the first time lost its market lead in France, as Leclerc, a cooperative of independent store owners, took 19.9 percent in the four weeks to May 19, pipping Carrefour's 19.6 percent. It was back on top in the period to July 14, but it has little wiggle room on margins to give shoppers the low prices they want when unemployment is at a 14-year high. In 2012, it made just 2.6 percent profit on sales, compared with 3.7 percent for smaller rival Casino and 4.7 percent for Britain's Tesco in its home market in 2012/13. The head of a big food supplier in western France, who asked to remain anonymous, said recent negotiations with Carrefour were "extremely tough and combative". The company was asking for price cuts of 2-5 percent despite higher raw material costs. "We got a flat to 1 percent increase, and that is far from what we need to cover operating costs," he said. Plassat has cut debt and plans to use part of the cash raised from selling international operations to fund renovations and price cuts in France. – Reuters
