Alexandre Bompard, CEO of Carrefour: "Manufacturers are asking for crazy price increases"

Le Figaro. – Carrefour posts record results and an increase in its margin. Aren't you afraid that this will give food for thought to those (industrialists, farmers, politicians, etc.) who accuse distributors of being inflation profiteers?

Alexander BOMPARD. – Double-digit inflation is putting our customers to the test, and powerfully weakening our sector, as illustrated by the difficulties of many global players. In this context, our results are very solid. We now have a systemic and very resilient growth model, whatever the environment. For several years, we have been gaining market share in all our major countries. This is the result of the transformation of Carrefour over the past five years, of our great financial discipline and of the major projects carried out around digital, franchising and the food transition for all. We have strengthened our position in France while protecting consumers. We are the leaders in terms of market share gains in volume and we have won over 470.000 customers by multiplying initiatives to protect their purchasing power. Customers have understood since the start of the crisis that we are on their side. Moreover, when you release 1,3% of net income on turnover, you are far from realizing superprofits.

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Despite inflation, consumption in supermarkets held up relatively well throughout 2022. Has this still been the case since the beginning of 2023?

Food product inflation has a strong impact on household consumption, accelerating the move downmarket. 80% of our customers tell us that they want to buy cheaper products. The French favor distributor brands and avoid the fresh departments, which are falling by double digits. The fall in volume sales is powerful, at 2,2%. But the measures taken by distributors allow consumption to hold.

Will consumers be able to withstand the new inflationary shock that is looming after price negotiations between distributors and manufacturers?

Food inflation, currently 13%, will continue and remain in double digits in the coming months. Manufacturers are asking for crazy price increases of 20% while the prices of raw materials, transport and energy are now significantly down. The world price of wheat was 430 dollars per ton six months ago, it is 280 dollars today. A container used to cost $11000, now it's $2000. Energy prices are also on a downward trend. The increases suffered last year by manufacturers have already been taken into account. Some of their new demands are justified, others not at all. A review clause is required for contracts that will be signed at the end of the annual tariff negotiations. We hope that the government will be as quick as last year, when costs were soaring, to ask for a reopening of negotiations, now that they are plunging, to restore purchasing power to the French.

Between the Descrozaille bill and the anti-inflation basket, the public authorities are getting more and more involved in the level of prices on the shelves. Do you understand this interventionism?

This proposal is of no interest to consumers. This is the tenth law governing trade negotiations voted in 20 years. We are legislating more and more, and things are not really getting better and better. The Descrozaille law has no other consequence than the protection of the interests of large multinationals. It does not protect farmers, since the Egalim 2 law already protects agricultural materials in tariff negotiations. Carrefour was the first to alert on the level of inflation and the first to take measures to support customers: baskets of 30 products at less than 30 euros, 100 products at a fixed price for 100 days... It is our customers who helped us in round tables to build these solutions. We don't need another anti-inflation basket that has a small risk of being technocratic. But with all my comrades in the sector, we are always open to discussion with the government to continue to defend the purchasing power of the French.

Christiane Lambert, the president of the FNSEA, criticizes your anti-inflation devices. Is it possible to support both the purchasing power of the French and the agricultural world?

We see the contradictory injunctions addressed to large retailers. Mrs. Lambert's comments are unfair and unfounded: since Egalim 2, the price of agricultural raw materials has been protected. But above all there is a form of contempt for the French. These anti-inflation devices, we have built them with our customers, they are the ones who help us choose the products they need in priority.

To remain competitive despite inflation, some distributors are cutting their margins, like Leclerc, which has gained market share. Can Carrefour, listed on the stock exchange, afford it?

Year after year, we deploy productivity and savings plans that enable us to defend customers' purchasing power while improving our operating profit and our cash flow generation. For five years, we have been saving a billion euros each year, to reinvest them in commercial policy. We expect 4 billion in additional savings by 2026. We have transformed our model by introducing digital technology into the choice of our assortments, the commercial policy and the management of our stores. Digital also allows us to accelerate structural cost savings. We are thus going to simplify the organization of our different head offices, without reducing the number of staff in the stores.

Are your Maxi hyper discount concept and the establishment of Atacadao, your Brazilian cash and carry format, a sign that French consumption is polarizing between customers who are finding it increasingly difficult to make ends meet? , and others less affected by inflation?

I don't believe in the idea of ​​polarization. Almost all French people are suffering from inflation, and some are in immense difficulty. To meet their needs, we are deploying our Maxi method developed in Latin America: a tight offer, 40% own-brand products, large volumes. We are accelerating the deployment of our discount formats, Supeco in France, Atacadao in Brazil. They are a response to inflation.

Is the Carrefour brand credible for discount? Facing Leclerc, Aldi and Lidl, who together have a third of the market?

I have the conviction and the demonstration: we are gaining market share and customers. However, we are not giving up our fight for food quality. We can do both thanks to our own brand, of which we constantly raise our level of requirement by removing controversial substances, sugar, salt...

You are in the midst of mandatory annual salary negotiations. What is the social climate at Carrefour?

The social dialogue works well. We have granted regular increases since the start of inflation: the remuneration of a cashier, for example, increased by 8,3% between August 2021 and December 2022. For this year, we have good hopes of obtaining a majority agreement on our proposals. Added to this is a strong increase in participation: thanks to our good results, it has increased by 85% in 4 years, and exceeds 1000 euros for the first time in ten years.

Casino and Teract have formalized their discussions to combine their distribution activities in France. Would this merger be a game-changer?

I did not understand the object of these discussions; this is normal, because they do not concern us. Given the constant improvement in our results, Carrefour no longer needs a major consolidation operation to continue its transformation. We haven't been working on such projects for a long time. On the other hand, if tactical acquisition opportunities create value, such as that of Big in Brazil, we are watching them closely. Intermediate-sized operations can make sense in all of our major countries, including France.

Despite Carrefour's progress, the price remains at 16 euros. Should we be worried about it?

Until the end of 2020, the markets, marked by the poor performance of the action for 15 years, were skeptical about the transformation underway. Since 2021, we are in a new period: Carrefour outperforms the CAC by 7%, and outperforms its European peers by 25%. Our job is also to accelerate the improvement of this stock market performance. All the elements are there for this to happen.