Olofsson fights Carrefour's status quo

Olofsson fights Carrefour's status quo

The Wall Street Journal Europe

16 September 2010

By Christina Passariello

PARIS -- When Lars Olofsson took over as chief executive of struggling French retail giant Carrefour SA last year, he wanted to break the status quo that had landed the company in a slump. To remake the retailer, he has poached ideas from across the industry. He startedby scrapping his management team and importing new talent. Over the past year, he has assembled a

seven-person executive board by poaching managers from his competitors. His two key executives in Europe -James McCann

for France and Vicente Trius for other continental European countries such as Spain and Italy -- hail from Britain's Tesco

PLC and U.S.-based Wal-Mart Stores Inc. respectively. Mr. Olofsson says he was able to benefit from Wal-Mart's supply chain

excellence and Tesco's branding expertise. "Carrefour never had a top manager coming from elsewhere," Mr. Olofsson said in an interview. His own background makes him an outsider in the company. Previous chief executives at the French retailer spent their entire careers climbing Carrefour's ranks. The Swedish executive, on the other hand, joined after spending 32 years at Swiss food giant Nestle SA. In redesigning the stagnant supercenter format, Mr. Olofsson culled the best examples from competing retailers. He says he was inspired by LVMH Moet Hennessy Louis Vuitton's cosmetics chain

Sephora -- and its influence is visible in the sleek new makeup counters at Carrefour'spilot supercenter outside Lyon. Ikea's

model was also studied, and Carrefour incorporated some of its attractions, such as a day-care center. "It's not because [a

store has] low-cost and competitive pricing that it has to look like a garage," says Mr. Olofsson.

He visited clothing stores such as Hennes & Mauritz AB, Inditex SA's Zara and Fast Retailing Co.'s Uniqlo, which have eaten

into Carrefour's apparel sales. "If they're not shopping for clothes at Carrefour, I know where they're going," he says. Mr. Olofsson also broke the status quo in other ways. Last year, when designing his strategy for the group, he came up with

three options, one of which involved selling the company's high-growth international operations in markets such as China and Brazil. Though he opted against it because it would deprive Carrefour of its long-term growth, Mr. Olofsson says it was important for him to explore all possibilities. (Mr. Olofsson has pulled Carrefour out of markets where it had a weak position, such as Russia. The company is now in the process of selling its Southeast Asia business.) He also brought in consulting

firm McKinsey & Co. to help with cost savings plans. Still, changing a company at large as Carrefour will take time. Most of the

475,000 employees have been with the company since before the recent management changes. But Mr. Olofsson

has hired a new human-resources executive -- from mining giant Rio Tinto Ltd. -- to help them adapt. "We are the seventh largest employer in the world and we didn't have a dedicated human resources [chief] on the executive board," says Mr.

Olofsson.