French supermarket group Carrefour (CARR.PA) on Tuesday pledged to spend 3 billion euros ($3.47 billion) between 2022 and 2026 to step up digital commerce expansion and boost profits, in line with boss Alexandre Bompard’s future strategy plan.
As Europe’s largest food retailer looks to stay ahead of Amazon on grocery deliveries and to speed up an ongoing turnaround, the main drivers of an online push will be e-commerce – boosted by express delivery and innovative services – the ramp-up of data and retail media, and the digitalisation of financial services.
“Digital will be the centrepiece of our next strategy plan to 2026. It is a tremendous opportunity for Carrefour,” Chairman and CEO Bompard told investors at the group’s Digital Day.
By 1442 GMT, Carrefour shares gained 2.2% at 15.70 euros. The shares are however 30% below their level when Bompard took over in July 2017. He secured a further three-year term in May.
Carrefour has spent 2 billion euros since 2018 on technology and digital expansion under the first leg of its turnaround plan, tripling its food e-commerce activity in the process.
As a result of the new digital push, Carrefour is raising its total annual investment target to around 1.7 billion euros, the higher end of a 1.5-1.7 billion range given in early 2021.
“As a successful first transformation plan comes to its end, we now want to transform Carrefour, a traditional retailer with e-commerce capabilities, into a digital retail company, which places digital and data at the heart of all its operations and its value creation model,” Bompard said.
Commenting on competition from Amazon, Bompard said: “Today it is very difficult for them to enter the food market, notably fresh food. We must look for the model they cannot replicate,”
Carrefour said the extra investment would help it to triple its e-commerce Gross Merchandise Value – the total value of merchandise sold – by 2026 to 10 billion euros.
It expected digital to contribute an extra 600 million euros to recurring operating income in 2026 versus 2021. “This will be a minimum,” finance chief Matthieu Malige added.
With Carrefour in the later stages of a five-year turnaround plan launched in January 2018, he faces the challenge of conducting the second leg without the extra financial resources that would have been on hand if two planned tie-ups this year had not failed – one with Canada’s Couche-Tard and one with France’s Auchan.
Past digital initiatives have ranged from a strategic partnership with Google (GOOGL.O) to rapid grocery delivery services deals with Uber Technologies. (UBER.N)
Carrefour on Tuesday said it was setting up a dedicated venture capital fund to enable it to take minority stakes in companies involved in innovations and emerging technologies.