Carrefour sees China as testing ground for new retail methods

French retailer Carrefour , which opened its first high-tech store in Shanghai last month in partnership with tech giant Tencent, sees China as the ideal location to develop new methods for attracting shoppers.

More such stores were on the cards in China, including two in Shenzhen in the coming months, Thierry Garnier, Carrefour Executive Director for Asia, told Reuters.

Europe's largest retailer was "very positive" on the market in China, where with the help of Tencent it plans to use facial recognition technology to help make the check-out process quicker.

"We consider the Chinese market as a true laboratory that can inspire the rest of the group," Garnier said in a telephone interview.

The company launched the "Carrefour Le Marche" store in the centre of Shanghai on May 20, featuring functions such as cashierless checkouts supported by Tencent's popular social media app WeChat.

"We are going to open two more "Carrefour Le Marche" stores in the coming months in Shenzhen. We are convinced this is a growth format for the future in China," Garnier said.

The store, spread over two floors totalling 4,335 square meters -- only half the size of a regular Carrefour hypermarket -- is the fruit of a partnership sealed in January 2018 when Carrefour unveiled global plans to invest 2.8 billion euros (2.5 billion pounds) in digital commerce by 2022.

At the time, Carrefour also announced the potential acquisition of a stake in Carrefour China by Tencent, and Yonghui, a retailer specialized in fresh food and small formats.
This investment has yet to be finalised.

Seeking Chinese Revival

For Carrefour, the partnership with Tencent is the latest step in its attempts to stem a decline in sales in China amid competition from local rivals and a buoyant online market.

Tencent itself is in a race with Alibaba to boost their reach online and in brick-and-mortar stores in China.

Alibaba's Hema supermarket chain in China is already a test bed for the e-commerce firm's move into traditional retail, where mobile phones are used to order, pay and get information about items, the so-called "New Retail" strategy.

Carrefour has been trying to reposition itself in China, where it makes 5 percent of group sales, having previously been overly focused on large hypermarkets. Carrefour sales were still down 6.6 percent year-on-year in the first quarter 2018.

The new store features 25,000 products mostly in food, 20 percent imported products, as well as cosmetics and fashion products. It offers free home delivery service within three km for any purchases in the store over 188 yuan ($29), in-house cooking services and nine self checkouts.

"What is the role of the store in a world as digital as China, with such strong growth of e-commerce? Our answer is that it's firstly a place to spend (quality) time," Garnier said.

Chinese shoppers will be able to create a Carrefour account before they enter the store and link it to their WeChat profile and pay with just a face scan, or use WeChat to pay online.

With more than 1 billion users, WeChat is China's most popular messenger-to-payment app.

Carrefour, which opened its first store in China in 1995, operated 220 hypermarkets and 39 Easy convenience stores in the country, generating sales of 4.619 billion euros in 2017.