Carrefours exit from japan

Case study from ” Carrefour’s Exit from Japan” from a marketing point of view Strategic Problem Carrefour’s strategic problem was that they did not fully take into account a few important realities like the Japanese consumer behavior, the changing fashion trends in Japan, not having a Japanese partner, and the loss of trust in the company and its brands.
Tactical Problem
Before entering the Japanese market, Carrefour had already set up networks in other Asian countries like Taiwan, Malaysia, China, and Thailand which the company believed shared similar buying behaviors of purchasing products more hastily and at varied points of time.
Issues related to tactical problems
One of Carrefour’s criteria for entering a new market is that small-scale rationalization and reorganization were not in effect and that large-scale chain supermarkets were absent from the market. However, at the time of entry, Japan already had large-scale special discount stores for clothing, electrical appliances or furniture. With strong competitors in the market, it would have been difficult for Carrefour to establish a strong entry presence.
When Carrefour entered the Japanese market, the real estate prices were high. Carrefour’s global store strategy of obtaining a large amount of floor space at low price to provide wider space, free parking and one-stop shopping options for its customers did not meet its objective.
Another Carrefour marketing criteria was to offer fresh products at very low prices and with high-value additions and an array of choices. After entering the market, the company followed its basic strategy of purchasing directly from the producers to keep buying costs low. However, the concept of ” Everyday Low Prices” was not feasible in Japan as the customers were accustomed to frequent shopping and buying goods in smaller quantities to because of space restraints at home. Also, the Japanese were also very quality and fashion conscious and low pricing products did not convey that message.
When Carrefour entered the Japanese market, they were wholly-owned. In the absence of local contacts and know-how, Carrefour was unable to expand their operations via partner stores and also in purchasing new stores. This situation also did not help the company in dealing with the distribution system in Japan where wholesalers were strong and buying influence on its suppliers would have helped the company’s pricing strategy.
When Carrefour invested in the General Merchandise Store (GMS) concept, they were not fully equipped to manage the quality management aspect of the business and that impacted on the trustworthiness of its brand and the GMS format.
One alternative to entering the Japanese market with its multi-format concept is to purchase existing establishments and learn the local culture and buying habits before working on expansion. Another alternative is to disregard their pre-assumptions that Japan purchasing behavior is similar to other Asian countries and to enter this market with a brand new marketing concept that fits the local conditions.
I recommend Carrefour follow the successful multiple-store format that worked in other Asian countries like Taiwan and Thailand where partnerships with local establishments ensured their understanding of the local markets and distribution systems were in place.