France’s Carrefour launches new discount brand

PARIS — French retailer Carrefour SA said Wednesday it is launching a new low-cost range of products to attract cost-conscious consumers hurt by the recession and to win market share on its home turf.

Gilles Petit, head of the French division, said in a press conference that the ‘Carrefour Discount’ range is designed to compete with deep-discount stores and that “Carrefour wants to improve its image on price.”

The company is the world’s second-largest retailer after Wal-Mart Stores Inc.

Consumers are switching to cheaper goods and avoiding non-essential purchases as France’s economy shrinks at its fastest pace in more than 30 years.

Carrefour is responding to “all the people today who are keeping a close eye on their budget, want essential products, and want to eat well cheaply,” Petit said.

New CEO Lars Olofsson has said his priority is to improve performance in France, which accounts for about 40 percent of Carrefour’s sales. It operates over 5,500 stores in France, including hypermarkets, supermarkets, discount stores and convenience shops.

French Prime Minister Francois Fillon said Wednesday it is “probable” that France’s economy will shrink by 2.5 percent this year as the country suffers its worst recession in decades.

Petit said Carrefour will launch the discount range in 1,200 Carrefour supermarkets and hypermarkets in France at the end of May with an initial 200 products.

The range will eventually cover 400 products, 80 percent of which will be foodstuffs such as breakfast cereals, coffee, yogurts, cheese and fruit juice. Household products such as shampoo, tissues and cleaning fluids will also be sold under the brand.

It will also be launched in Belgium, and may be sold in other European stores later if customer sentiment demands, he said.

The range won’t be on offer in its 914 French hard-discount stores Ed, which will continue to be run separately, he said.

Petit’s boss Olofsson was appointed last year to improve performance at Carrefour. In 2008, net profit slid 45 percent to €1.27 billion ($1.64 billion) from €2.30 billion a year earlier.

Shares closed up 1.1 percent at €28.81 in Paris.