France-based retail giant Carrefour began a radical five-year transformation in late 2017, bringing in digital consultancy Publicis Sapient to help drive an enterprisewide step change in the group’s ecommerce operations. The group has transformed its ecommerce engine and now has a more holistic approach to using IT to support the business and a revitalized work culture. Results so far are encouraging.
Carrefour is one of the largest and best-known retail brands on the planet. It has 375,000 employees across 12,300 stores in more than 30 countries, with a historic leading position in its home market of France. The company pioneered the hypermarket retail model, with its huge choice of food and nonfood offerings.
By 2017, the company was suffering commercially after having failed to spot three key shifts in the landscape:
Most of all, Carrefour was caught out in France by the ability of its traditional competitors to quickly grow online. They had the operational capabilities to deliver higher revenue and margin from online than Carrefour while still offering lower prices.
While all this was happening, consumers were changing where they were buying things. For example, hypermarkets were losing out to smaller formats and online, and nonfood sales were declining as people minimized the time they spent shopping.
Simultaneously, the company’s structure and operating model that had served it so well in the past had become antiquated and had turned from a strength into a weakness. The group became overcomplex and stovepiped by formats and by geography, with too high overheads and few synergies. Its agility suffered accordingly.
Critically for the future, Carrefour’s market share in online commerce was low, and the company was threatened not just by Amazon but by traditional competitors. What had gone wrong?
One result was a very poor web presence, and this in turn created a disjointed online customer experience that put Carrefour at a big disadvantage, not just to web-native competitors but also to more digital-savvy traditional rivals. In terms of technology, three separate technology stacks supported the business, which created a confusing multiplicity of customer-facing websites and apps. This drove a degraded customer experience (CX). The IT architecture was tactical and "theoretical," with limited impact on the day-to-day development decisions. A significant part of the application estate and the infrastructure was outsourced, meaning Carrefour lacked both agility and technology knowledge. There was no adoption of modern IT practices (cloud, DevOps, Agile delivery, etc.) at scale.
In this challenging context, in July 2017, the Carrefour board took decisive action by appointing a new CEO, Alexandre Bompard. He immediately began to work on creating a radical new strategy that he would unveil in January 2018 as "Carrefour 2022."
The second half of 2017 saw Bompard and his leadership team thinking through what was to become Carrefour 2022. This aimed to restore growth and profitability and – perhaps more importantly for the future – to make Carrefour more relevant to consumers’ daily lives. Carrefour 2022 was grounded on four strategic pillars:
The targets were audacious, with a three-year cost savings plan raised to €2.8 billion on an annual basis by end-2020 and ecommerce revenue of €4.2 billion targeted by 2022.
Internally, there was no lack of understanding of the problems that Carrefour faced. Externally, the group had consulted Publicis Sapient business strategy advisors, who had given it plenty of insightful advice. And yet, before Bompard arrived as CEO, the company had failed to take decisive action.
Part of the issue was the stovepiping that prevented a collaborative approach to identifying and then solving the company's problems. Equally important, senior leadership did not manage to create a comprehensive enterprisewide transformation plan that enjoyed the active, enthusiastic backing of managers across the organization to address "burning platform" issues.
Getting that alignment and that buy-in for transformational change was a major priority for Bompard in his first half year, and he got to work quickly in the second half of 2017.
For what was to become the third pillar of Carrefour 2022, omni-channel and ecommerce transformation, Bompard reached out to business transformation services provider Publicis Sapient, which is part of the global Publicis Groupe based in Paris. Carrefour leadership wanted an external partner to help create its next-generation omni-channel ecommerce system partly because it needed a catalyst to get the retailer thinking creatively. But, just as importantly, it needed help to energize and mobilize its people and get the vision implemented.
Over the course of several months, Publicis Sapient leadership presented Bompard and team with a challenging critique of the group's situation and worked with him to develop a strategic plan on how to drive a business transformation that would be both wide ranging and supported by Carrefour stakeholders at all levels.
By November, Bompard was confident enough in Publicis Sapient to sign a major strategic relationship with the consultancy to transform the group's omni-channel capabilities.
The first priority for Carrefour was to create wide agreement around a forward-looking vision of what needed to be done and, just as importantly, for this to include a detailed action plan – to avoid Carrefour falling into the trap of overanalyzing the problem and then failing to act.
Publicis Sapient proposed running an "Ignite" process. Ignite is a Publicis Sapient offering that takes a client through an intense mixture of brainstorming, strategizing, and detailed planning. The result is an executable road map that has buy-in across the client's leadership.
During the four weeks of the Carrefour Ignite, 40 Publicis Sapient people and 50 Carrefour senior executives cocreated the next-generation omni-channel transformation strategy for the retailer. Carrefour's people agreed to spend at least four days a week on Ignite, during the four weeks, and to be open and frank in their discussions – job titles and hierarchy were to be left at the door.
The Ignite was intensive and workshop based, with pods and scrum teams combined with plenary meetings at the start and end of each day. It took a "consumer lens" to reimagine Carrefour's ecommerce from the perspective of the customer's needs and CX. Because of the seniority of the executives and the urgency of the task, participants were empowered to come up with bold, enterprisewide solutions that crossed organizational boundaries.
"At the end of Ignite, we had collectively shaped something that people really wanted to execute on, and everyone was committed to be part of this change," says Olivier Gibert, principal architect for ecommerce at Carrefour. "The methodology was very structured, even if there was a lot of room for creativity and brainstorming. We ended up with clearly defined outputs."
The omni-channel transformation strategy was hence designed and therefore "owned" by the senior stakeholders from Carrefour, who would consequently be aligned around a single, agreed action plan. "Alignment is the keyword," says Xavier Mouly, delivery director, Publicis Sapient. "The solutions that we found could probably have been drafted by other consultancies. The difference is that coming out of Ignite you have an aligned team, which knows what to do, which is ready to start, and which has the authority to do it. Ignite is very much about deciding who does what. It helps to define the big picture, but it's very action focused."
The output of the Ignite process was a detailed omni-channel strategy and road map across four "streams":
The group set some ambitious targets for the transformation project:
Next, the consolidated web grocery touch point would be supplemented with a single Carrefour mobile shopping app.
Alignment of the business and IT teams was important because Carrefour's strategy would involve modernization of the group's technology stack top to bottom — including, for example, a new ecommerce engine, new middleware, migration of critical systems to the cloud, and the adoption of radical new ways of working such as DevOps.
"Previous technology initiatives had failed because they had not been driven by the business — for example, there was no clear direction to merge the three separate technology stacks, and business was not clear of the potential benefits," says Gibert. "So an important part of Ignite was to have the strategy agreed by 'both sides,' with business stakeholders committed to radical technology change."
The change also involved a major pivot to custom software built specifically for Carrefour by its in-house team or by partners such as Publicis Sapient. For some people, this might seem counterintuitive: Technology is something to be bought as a package and then configured or (only if absolutely necessary) customized, but definitely it is not a core business activity. But Carrefour disagrees, arguing that software is core to the business in some areas and is a competitive differentiator that the company needs to master.
"We acknowledge that we are not a technology player as such – we are not trying to be Netflix. But we do need to put technology at the core of what we do, gaining control on the components of our tech stack that are differentiating to our performance," says Miguel Gonzalez, global CTO of Carrefour. "We are going for a 'selective make' policy, which means that we do not intend to reinvent everything – we will keep some off-the-shelf solutions – but we will develop our own tech assets when it makes sense. A good example is the front end, we need to develop unique experiences for our customers."
The software for the user experience layer is a differentiating technology for Carrefour, Gonzalez argues. "We need to have this as our own core competence – when it comes to large geographies such as France, there are no off-the-shelf packages that really meet our needs. That's a big shift. Previously, we were using off-the-shelf software, but it had to be heavily customized – and overcustomizing an off-the-shelf package is the worst place to be in."
Creating a real-world "MVP" was the bold objective of the first few months of the transformation strategy. The MVP would include the unified shopping website and the accompanying mobile app, which would drive a transformed CX. A critical part of this work would be done in "Stream 1" ("I shop and I buy"). Within a few weeks, more than 250 people (two-thirds of them from Carrefour, a third from Publicis Sapient) were already working. Leadership of Stream 1 was shared between the two partners, with a delivery lead from Publicis Sapient and a chief product owner from Carrefour.
Kicking off the MVP was an intense experience, scaling up an additional 150 digital experts within one month. Publicis Sapient sourced expertise globally during this first phase, rapidly building a team from its retail practice. But despite these challenges, the new website was live in beta by August 2018, six months after the heavy-duty build work began, and it was opened to the public in October 2018. Moreover, the mobile app was significantly improved during the year. In line with the Agile principles, Carrefour proved its openness to embrace change and adapt the scope as needed, making the right choices based on customer value. For instance, the ambition of creating a single food and nonfood ecommerce app was temporarily scaled back.
"Building a new front end is not a trivial task. Food shopping is different from nonfood shopping," says Cyril Marchal, director of Carrefour's Digital team in Paris. "The underlying technology model is not easy, but you need to make it as seamless as possible, hiding the complexity from the customer. This was definitely an area where Publicis Sapient were super helpful, bringing significant expertise from other omni-channel retail implementations."
But the front end is not everything. During 2018, Carrefour created important building blocks of its new supply chain and back-end operations, started work on the new loyalty scheme, and initiated the transformation of digital in-store technologies (e.g., store employee tablets). All this would accelerate in 2019. While the “One Carrefour” emphasis in 2018 was on creating a front-end experience for customers, in 2019, it was time to dial up the effort at the back end. 2019 saw a greater focus on the middleware and supply chain operations.
Looking back, Gibert says that in retrospect, Carrefour should have prioritized some of the critical supply chain and operational systems that support the customer-facing website and apps. “If I did it again, I would put a little less focus on the front end and more on the middle and the back. I’d focus on the two simultaneously and spend more time on logistics, as they drive critical customer experience KPIs as well, such as the complete order rate or the assortment availability,” he says.
Another focus of attention of 2019 was to build intelligence into the customer experience layer (e.g., creating substitution algorithms and smart lists). The year saw a strengthened focus on data and analytics – for instance, working on smart product substitution. 2019 also saw the first version of the new custom-built OMS (order management system).
Implementing new technology without changing the way people work isn’t a great idea. A major business transformation can also be looked as an opportunity to create new and better ways of working. In the case of Carrefour, it was particularly important to drive more collaborative and engaged ways of working across the organization.
“Trying to change the way people work is not easy because Carrefour is a very large company and can be very process driven, but that is ultimately what we are doing here,” says Carrefour’s Marchal. The company wanted to increase productivity and create personal responsibility among the workforce, in particular by introducing Agile and more collaborative work techniques and tools. “We are asking smart people to push themselves. We want to define a direction and then let the teams themselves decide how they get there, instead of telling them we want to go and asking for complicated analysis to determine if this or that is the best way to proceed.”
In parallel to this shift to more proactive workstyles has been a major effort to align the worlds of technology and business. “We have built a new way of working across business and IT. It used to be ‘business versus IT,’ but now you have a single product team combining IT and business people,” says Gibert. “While on paper there are still separate business and IT teams, in reality they work so closely together that you can’t tell the difference. This change was a very important achievement – maybe as important as the new technology stack itself.”
“In 2017, we needed to jump-start Carrefour’s delivery operations,” says Julian Skelly, Publicis Sapient’s retail lead, responsible for the transformation engagement at Carrefour. “Reorganizing everyone into agile teams gave us that electroshock and with it higher productivity than ever before.” The story didn’t end there, however. “In many ways, the last two years have been more about evolving Carrefour’s ways of working than delivering products,” says Skelly. “We have come from new ways of teaming to a fully scaled agile operation, with new roles, skills, and capabilities in the Carrefour team.”
Gibert says that this shift in mindset has driven important business benefits. Delivery is faster, and employees are more collaborative. Carrefour staff take more personal responsibility for delivering outcomes, and they have more control over how they produce them. Agreeing with Marchal, Gibert says, “With Agile, we empower people. Previously, the boss would tell you what to do, and how to do it. Now, people think for themselves more.”
Just as importantly, there's a more commercial mindset among people at Carrefour, including IT staff. "It's no longer about 'the business' being the internal customer and IT being the internal 'supplier' – we are all in the same boat now, and we have coproduction of SLAs," Gibert says. "IT staff is now more committed to the importance of keeping the business up and running and delivering more value to customers. IT is more business aware, while the business is now more involved in the technology strategy."
In 2020, Carrefour needs to build on the successes and the lessons of the first two years of its transformation, in particular to continue driving higher revenue growth. The transformation of the front-end buying experience has made a significant impact on customer satisfaction. However, Carrefour knows that, to drive sustainable revenue growth, it needs to replicate this success at the selection and payment stage of the customer journey in the equally important delivery and pickup phase.
"We're obsessed about customer satisfaction, because at the end of the day, it's what drives repeat business," says Carrefour's Marchal. "So, in 2020, we want to get the satisfaction with delivery and pickup to the levels we have at the front end. We need Publicis Sapient to push the logistics side of things to improve the way we are seen by the customer after the order is actually delivered. That means the customer gets the right product delivered on time, not broken, fresh, and looking good every time. You could say that, by comparison, transforming the front end is easy."
Carrefour has to drive significant improvement in this space during 2020 and 2021, or it risks losing some of the gains it has made with the front-end transformation. It's a tough task that shows how a major transformation program is a never-ending series of challenges.
To keep a focus on growth, Publicis Sapient worked with Carrefour to identify a series of "growth accelerators," projects to drive up revenue growth, capitalizing on the work done in 2018-2019. These included enhancements in its loyalty programs, better delivery and pickup services, and continued improvement in the online and mobile customer experience. Much of this boils down to a few critical improvements to back-end technologies and business processes that drive better CX, for example, better slot availability at peak hours, more personalized and more appropriate product substitutions, and better quality of service.
All this means Carrefour has to take a holistic view of the entire "customer journey" and to drive often-radical business and IT change at each stage of that journey – and to do so not just at the front end but across the whole of the stack.
What has all this achieved? Obviously a major enterprisewide business transformation is a multiyear work in progress.
On the organizational and cultural side, as we saw previously, the company is transforming itself and its leaders describe a transformed working environment in parts of the organization and a far better alignment between IT and business teams.
In technology terms, large parts of the new ecommerce system are up and running. Much of this was done in a short time span – an incredibly short time span compared with what the old-style Carrefour would probably have achieved. "We delivered at speed and at quality. We changed the technology, and we changed the way of working at Carrefour, building enterprise agility. We showed the outside world that Carrefour could do something as ambitious as this," says Olivier Goethals, a Publicis Sapient executive who led the technology side of Carrefour transformation.
In terms of business results, it's worth noting that Carrefour's net promoter score (NPS), a key metric of customer satisfaction and advocacy, has risen since 2017 as the group rebuilt its ecommerce front end and revamped the underlying operational systems. For example, in 2019, the NPS for Carrefour's Drive service increased from 3 to 49, and for Home Delivery from 14 to 56, reflecting significant improvements in customer satisfaction.
Of course, the real proof will show up in the financial result of Carrefour over the next few years. So far, the signs are good. Some glimpses of the effects of the ecommerce transformation can be seen in the published financial results.
In February 2020, the group announced its full-year 2019 results. Sales were up 3.1% on a like-for-like basis, and the group was confident enough to raise its Carrefour 2022 targets, notably with the three-year cost savings plan to €2.8 billion (versus €2.6 billion in 2019 and €2 billion in the original plan). Food ecommerce sales grew more than 30% (against an industry average of 6%) to nearly €1.3 billion in 2019, and the group confirmed its target of ecommerce food sales of €4.2 billion in 2022.
While the work done jointly by Carrefour and Publicis Sapient is not directly attributed in the overall group's financial results — there are many other factors at work — it's significant that ecommerce is expanding rapidly and that the overall momentum of the group has been positive following the launch of the Carrefour 2022 plan.
Looking back at the experience of Carrefour's ongoing transformation, Gonzalez identifies six key success factors that have helped Carrefour:
This IDC Perspective discusses business transformation at Carrefour.
By early 2017, France-based retail giant Carrefour needed a major change. The company had failed to evolve its offerings and its operating model in the wake of major shifts in customer behavior and in the competitive landscape. A new CEO, Alexandre Bompard, arrived in midyear and began creating the retailer's "Carrefour 2022" transformation strategy. Carrefour brought in digital consultancy Publicis Sapient with a charter to help drive a major enterprisewide transformation of the group's ecommerce operations. Two years later, the group has a transformed ecommerce engine, a more joined-up approach to using IT to support the business, and a revitalized work culture. The results so far are encouraging, and the group is sticking to its Carrefour 2022 strategy targets. This IDC Perspective includes some of Carrefour's key learnings from this major transformation.
"Enterprisewide business transformation is a major challenge, and one that's usually best done with a strong consulting and implementation partner," said Douglas Hayward, research director for Digital Strategy Consulting and Digital Agency Services at IDC. "Transformation usually forces organizations to change their strategy, their technology, and their processes, and maybe even their business model. But they often also need to change their work culture and their approach to the end customer. That's a journey that is usually best taken with a trusted strategic partner."
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