Building the Carrefour brand

Building the Carrefour brand - Agenda

1. Focusing on the Carrefour brand The brand portfolio post merger was confusing and inconsistent The brand has a crucial role in the economic model and the relationship with the customer The brand guarantees for each product the values of the company 2. Evolving from a focus on products to a focus on the brand Adopting a brand management strategy Clarification of the portfolio and brand segmentation Overhaul of existing products and re-launch of innovation Positioning the brand at the centre of the commercial offer and the communication of the banner 3. First Results Sales and profitability Customer perception 4. Evolving from co-ordination of the brand to a brand strategy What is at stake for the future
62

In 2000, Carrefour inherited a confusing and inconsistent brand portfolio

FOOD BEAUTY GENERAL CONSUMER MERCHANDISE ELECTRONICS APPAREL

Specific ranges

Core market

Entry level
72

In 2005, own label already had a strong role in the commercial and economic model of retailers

Own label % of sales in 2005 Total market

)DH+ecneinevnoc +MS+MH(

Customer trends 2005

% households purchasing own label
7,9 9 2,8 9

Carrefour
27.9%

Annual budget ()

Annual frequency of purchase

35

28,6%

Specific brands Core market

081
5,78

82

SLF+CGP srevinU 7002 lenapdlroW SNT : ecruoS

01

Entry level

03

33

534
SLF+CGP srevinU

In 2005, customer perception of own label improved in general even as it declined for Carrefour
The customer increasingly recognised the attractions of own label
Less than 30% of customers believed that national brands had an advantage over own label (a 4 percentage points drop since 2000) While Carrefour was a pioneer in own label development (1976), its own label image had been deteriorating since 2000 due to lack of clarity of its portfolio
Customer perception of the relationship between quality/price of own label in 2005
5,82 5,23

Customer perception of entry level brands in 2005

92

5,6

MTI

ruoferraC

0,8

5,21

US

nahcuA

0,31

serfoS egamI engiesnerfR

crelceL

G onisaC ruoferraC

0,4

5,91

nahcuA

0,02

5,22

US

crelceL

The game has been to develop a true Carrefour brand

capitalising on the banners brand name, unlike most French retailers

Generic products at Carrefour

Products with the Carrefour name

A brand at the heart of the product

1976

1985

2005

03

Translating the values of the banner to products under the Carrefour brand
An every day commitment: making accessible all levels of quality for all our products, always guaranteeing the lowest prices Quality Respect Choice Freedom / Individualising the offer

Progress Confidence in the future

Quality for everyone

Price Leadership
Close and responsive to the consumer: ethical, practical and transparent
13

Building the Carrefour brand - Agenda

1. Focusing on the Carrefour brand The brand portfolio post merger was confusing and inconsistent The brand has a crucial role in the economic model and the relationship with the customer The brand guarantees for each product the values of the company 2. Evolving from a focus on products to a focus on the brand Adopting a brand management strategy Clarification of the portfolio and brand segmentation Overhaul of existing products and re-launch of innovation Positioning the brand at the centre of the commercial offer and the communication of the banner 3. First Results Sales and profitability Customer perception 4. Evolving from co-ordination of the brand to a brand strategy What is at stake for the future
23

Evolving from a brand project to brand management

2005: Creation of a brand development team with 8 brand managers (not category heads) covering
food non-food services

Objective: to bring a cross function vision to merchandising which allows us to develop products with our suppliers Presenting of objectives for product development: quality, packaging, pricing, promotions and communication
33

First step: Clarifying the portfolio around the Carrefour brand

SCINORTCELE ESIDNAHCREM REMUSNOC LARENEG

DRY

FRESH

SERVICES APPAREL

Premium Premium

< <
Baby Kids Cosmetics Men Light
stegrat cificeps htiw segnar gnidulcnI

Core Core market market

Exotic Home Christmas Topbike

Entry level Entry level

43

For fresh : Le meilleur des Prix Travel : Les irrsistibles

Second step: Refocusing N1 on core products

Positioning: Products which are indispensable, used daily, of a satisfactory quality, and the cheapest in market, for those who are always or sometimes looking to manage their budget Competition: Goal: cheapest prices while respecting quality Action Plan: Rationalise the offer to create three tiers (entry level/own label/national brands) without being present in every category 700 products de-listed or substituted by a Carrefour product (all sectors together), equivalent to one third of the range between 2005 and 2008

53

Third step: Repositioning more than 15 000 products in 3 years

Positioning: Tasty, varied, practical, reliable products which meet customers daily needs and wants, capitalizing on Carrefours know-how and commitment, at the best price Action Plan: Repositioning more than 17 500 products, in terms of packaging, recipes or formulas, and in terms of price Nearly 2/3 of products have been repositioned since 2005
63

Fourth step: Broadening the core market with targeted ranges

Carrefour Baby
Food range, hygiene, perfumery, childcare products, toys, apparel developed under the advice of a committee of pediatricians and specialists, in order to guarantee the babys development from 0 to 36 months with security and comfort

Carrefour Kids
Food range, general merchandise, apparel, designed to develop good habits (fight against obesity with less fats, sugar and salt), as well as developing autonomy, satisfying the tastes of children between 4 and 10 years old through adapted packaging and the use of the mascot: Genius

Carrefour Light
Food range to allow customers to reduce their calorific intake without sacrificing taste

Carrefour Exotique
Food range of traditional products from around the world, eaten daily and adapted to French taste
73

Fifth step: Differentiating non-food

Carrefour Home
Positioning:
Products designed to completely furnish a house, with each style of product found in general merchandise, consumer electronics, and apparel, with a permanent range supplemented by seasonal ranges.

Action Plan:
3 Carrefour Home collections each year in growth categories such as Home and Decoration

Springtime / Summer Back to school / Young space Fall / Winter

A minimum of 2 styles per collection Capture through targeted actions the potential offered by loyal food customers
83

Fifth step: Differentiating non-food

Carrefour Christmas Positioning: A large range of seasonal products, designed to decorate the house and the Christmas table. Certain styles are coordinated with the Carrefour Home range Actions Plan: Choice of 6 styles, developed across Christmas tree decorations, disposable dishes, Christmas cards, etc 2 to 6 styles offered per store according to its size Display by style
93

Fifth step: Differentiating non-food

TeX
Positioning :
A more modern brand organised around 5 ranges, Baby, Girls and Boys, Women, Men, and Household, combining know-how of materials, colours and designer brands for seasonal products

Action Plan:
To position Tex more as a fashion brand combining womens ready to-wear with the Max Azria brand, in order to give women reason to come to the store independently of their food shopping

Womens ready to-wear by Max Azria

Casual chic style Limited editions Pricing 10% below GSS (Zara) and at the same price as H&M

3 segments:
Essentiels ( Best In Class ): perennial fashion, perfectly cut, renewed every 12-18 months The collections: clothes and accessories, casual style, urban or upscale, renewed every 3-6 months The silhouettes Fashion: very fashionable, 8 to 12 items renewed every 1-2 months

04

Sixth step: developing the range Carrefour Agir

Positioning: Products developed with the values of sustainable development in mind, endorsed by recognised third parties, at an accessible price, for those who value solidarity with causes that they hold dear Action Plan: To make the brand visible across the food range, cosmetics, apparel, with the development of organic products and in general merchandise and consumer electronics through the development of ecological products (Eco Plante), as well as through services
14

Seventh step: developing the Premium range

Positioning: Top of the range products, of which the recipes, the style, the composition, and the packaging are original and modern, with a price point which allows customers to buy them regularly Action Plan: To improve the existing offer and differentiate it from Reflets de France, and develop innovation in food and subsequently in non-food and services, for both the festive seasonal ranges as well as the permanent ones

24

Eighth step: Launching an ambitious plan of innovations over the next three years
Over the three years between 2005 and 2008, the objective is to launch around 4,000 new products under the Carrefour own label / Tex / and Reflets de France, (equivalent to tripling the average number of innovations between 2000-2004), in order to respond to the demands of different customer segments

Out of a total of around 17,500 SKUs in 2005, this signifies a 20% increase in the number of SKUs in growth categories which allows us to differentiate the offer. We expect to have 20,000 SKUs in 2008 Carrefour brand: more than 12 000 SKUs in 2008 Carrefour Agir, created in 2005: more than 300 SKUs Carrefour Selection, also created in 2005: more than 300 SKUs Tex: more than 7 000 SKUs Reflets de France: more than 300 SKUs
34

Ninth step: Placing the brand at the centre of the commercial offer

Promotions that increase brand value

Strong promotions highlighting own label Thematic seasonal ranges, explaining the ranges More in-store theatre

In-store campaigns
More than 10 000 days of campaigns in 2006 to explain 3 ranges (Carrefour, Carrefour Agir, Carrefour Selection)
44

Tenth step: Communicating the brand

Promotional offers by Carrefour on the radio, in the press, and on billboards:

In 2006, in press + on billboards, a campaign developing three key messages of the Carrefour brand:
A campaign on the quality and accessibility of the Carrefour brand The commitment of the Carrefour Agir brand Refining Carrefour Selection

In 2007, on TV: 2 key messages: the brand and loyalty In Press + billboards:
54

Launch campaign of Tex by Max Azria

Building the Carrefour brand - Agenda

1. Focusing on the Carrefour brand The brand portfolio post merger was confusing and inconsistent The brand has a crucial role in the economic model and the relationship with the customer The brand guarantees for each product the values of the company 2. Evolving from a focus on products to a focus on the brand Adopting a brand management strategy Clarification of the portfolio and brand segmentation Overhaul of existing products and re-launch of innovation Positioning the brand at the centre of the commercial offer and the communication of the banner 3. First Results Sales and profitability Customer perception 4. Evolving from co-ordination of the brand to a brand strategy What is at stake for the future
64

Objectives sales and margin mix

With an increase of close to 6% per annum, own label sales are growing three times faster than the rest of the offer

Leveraging scale through sales growth: potential to differentiate the offer in non-food and services Leverage on profitability: development of the margin mix Opportunity to strengthen relationships with small to medium sized suppliers on the basis of a very positive long term outlook
74

l6002 tnemessalC dnarbretnI

Objective: to achieve at least 5 bn of sales in 2008:

First results customer perception

Customer perception of own label quality 2007
5,53

Carrefour is a leader according to customers with regards to the perception of quality of the Carrefour own label, an item measured since 2006 Carrefour has made progress on the two other indicators: Carrefour own label has move up two ranks with regards to quality/price, and is now just behind Leclerc The N1 brand has moved up one rank and is positioned as number three behind Leclerc and Auchan.
Customer perception of entry level products in 2007
52

Customer perception of the relationship between quality/price of own label in 2007

5,42 0,03

84

hcramretnI

5,8

0,21

US

r u o f err a C

5,21

na hc u A

5,41

serfoS egamI engiesnerfR

cr e l c e L

o n i sa C

5,01

ccrellceL r e ce L

52

nahc u A

5,02

5, 62

U USS

5,32

US

na uA nahchcuA

5,62

r u of e r ra C

r erraC ruofuoferraC
c re lc e L

First results: a strong draw for new customers

Clients

Non clients
94

y t i lauq leba l nwO

e c i rp leba l nwO / y t i lauQ e te lpmo c se c i v reS e c iohC

e c i rp y r tnE tsu rT
0,05 0,04 0,03 0,02 0 , 01 0 , 01 0 ,020 ,030,0

The greatest gaps in perception between clients and non-clients are in : Quality of the Carrefour brand Services 2 image aspects to be worked on in 2008 through TV, by presenting the Carrefour brand in fresh products with EQC and in non-food and services

d ra c y t la y oL h t laeH ssenhse rF / y t i lauQ tnem lo vn i y t inummoC

Building the Carrefour brand - Agenda

1. Focusing on the Carrefour brand The brand portfolio post merger was confusing and inconsistent The brand has a crucial role in the economic model and the relationship with the customer The brand guarantees for each product the values of the company 2. Evolving from a focus on products to a focus on the brand Adopting a brand management strategy Clarification of the portfolio and brand segmentation Overhaul of existing products and re-launch of innovation Positioning the brand at the centre of the commercial offer and the communication of the banner 3. First Results Sales and profitability Customer perception 4. Evolving from co-ordination of the brand to a brand strategy What is at stake for the future
05

Positioning the brand at the heart of our customer relationship and commercial model
After the initiatives launched in 2005, Carrefour own label is ready to play the role of a true brand, recognised for its quality, its commitments, and its accessibility to the customer, (not simply a copy or an alternative price point) Only a brand has the capacity, to be developed with power and legitimacy across all food and non-food categories and services Product innovation, as well as the development of store concepts, has been driven by our customer knowledge: The Carrefour customer loyalty programme is the most well regarded in France (Source OCC 2007) for its simplicity and benefits It collects sales data on 10 million French households It enables us to best respond to the expectations of customers with regards products, services, in-store display etc The brand and customer knowledge: our 2 trump cards to grow future profits

15