business news in context, analysis with attitude

Regarding the possibility that Wal-Mart might make a bid to acquire France's Carrefour, MNB user Dan Raftery wrote:

Having been inside several European hypermarket operations, including Carrefour, I observe Wal-Mart supercenters are very similar to them in merchandising and operations. Where do you suppose the folks in Bentonville learned how to run a big box? Not just in Europe, for sure, but I bet a few lucky souls got similar assignments to mine, way back before the turn of the century - travel, observe, interview and write.

MNB user Bob Vereen chimed in:

I have interviewed and written about Wal-Mart's German division, and have listened to German friends pooh-poohing Wal-Mart's efforts to change the business. Only in the UK, which is to some degree like us, has Wal-Mart been successful.

I think you are right that in France there would be deep resentment if Wal-Mart were to acquire Carrefour. Though Wal-Mart has made progress in turning around its German acquisition, it seems it has not yet become profitable. Carrefour would be a much more difficult project.

Another MNB user wrote:

The possibility of "Wal-Four" or "Car-Mart" unveils a possible route to one trillion in sales for WM. Carrefour operates in 40 countries including leadership positions in coveted WM expansion countries such as France, China, Italy, Spain, & Brazil. Very little overlap as 97% of Wal-Mart's sales are in North America/UK. Less than 1% of Carrefour's sales ( 27 Mexico stores) are in North America/UK. This also syncs well with Wal Mart's preferred strategy of building from an existing store base versus green field entry. Imagine the WM expansion machine working simultaneously in 30-40 new countries. WM would probably surpass the Catholic Church as the world's largest landowner !

On the other hand, we cannot underestimate the magnitude of integration challenges between Wal-Mart & the French. The biggest issue is France itself, which represents approximately 50 % of Carrefour's sales. Any anti-WM backlash in France could distract the entire process.

The 2003 feeding frenzy over Safeway UK provided industry buzz for almost one year. "Wal-Four" is even a bigger story. Protests, EU intervention, French government as a "White Knight" could all be part of this exciting drama.

At the very least, it'll give us something to do for the next year or two…

MNB user Tim O'Connor had a thought:

Alternative engagement would be Target finally going for the big time by merging with Carrefour. The French would find that more acceptable as many have called Target "TarJay" for a long time now.

We had a story yesterday about consumer confidence on the wane, which got one MNB user who works for a major wholesaler to write:

I know my confidence in the economy dropped yesterday when the company I work for announced 30 people in Information Technology were being laid off. Then I found out that a friend of mine at another company was laid off yesterday along with 20 of her co-workers. So don't try and tell me the economy is recovering Mr. President Bush!! I don't believe you!

Another MNB user offered:

No matter what statistics they quote, my feeling is that it's even worse. Half the couples we know have at least 1 person out of work, prospects are's scary.

I just returned from the American Craft Council (ACC) wholesale show in Baltimore. The ACC is a group that promotes modern Arts and Crafts in the U.S. This is not a quilt and stained glass ornament show, but very high quality art and jewelry.

The show has about 500 wholesale exhibitors who sell to specialty gift shops. Typically, during the wholesale part of the show, the booths are crowded with buyers who are excited to purchase and artists who are so busy that they can not ship product until late summer, some can't produce enough to keep up with demand and are sold out for the year the first day.

This year, you could bowl down the aisles. No significant traffic, and any orders that we wanted to place could deliver by late April. The work these artists sell are premium, luxury items. Small shops are tightening up to prepare for weathering a long, slow recovery, and the artists are very concerned.

The items sold here are those that people treat themselves to when they feel strong and successful. The lack of demand here shows me that people really are nervous about the economy.
KC's View: