June 5, 2012 / 1:46 PM / 5 years ago

Carrefour set to overhaul hypermarket product lines

PARIS (Reuters) - Carrefour (CARR.PA) aims to cut back selling space devoted to some non-food items at its French hypermarkets and give local store managers greater control over the products they sell as part of the plan to revive sales at the struggling business, a trade union official said on Tuesday.

<p>The logo of Carrefour Planet supermarket is seen in Bordeaux, southwestern France, January 19, 2012. REUTERS/Regis Duvignau</p>

Noel Prioux, the head of Carrefour France, told unions on Monday that the company will scale down selling space for phones and jewellery and boost its offering of household goods now that cash-strapped shoppers are cutting spending on non-essential items, said Dejan Terglav at the Force Ouvriere union.

Prioux will also give managers more independence in running their stores including decisions about what to sell and who to employ, Terglav said.

“He stressed the need to revitalise the commercial tool. He did not speak of cutting on spending but instead of investing, notably in household equipment, a sector he believes in,” Terglav told Reuters.

Carrefour’s new group chief executive, Georges Plassat, is expected to reveal more about his turnaround plan for the world’s largest retailer after Wal-Mart (WMT.N) at Carrefour’s annual shareholder meeting on June 18, although analysts say he is unlikely to be ready at least until first-half results in August to disclose his detailed strategy.

Plassat, a veteran French retailer with a reputation for reviving retail brands and ruthlessly cutting costs, joined Carrefour on April 2 as chief operating officer with a view to becoming CEO in June, but the handover was brought forward when Lars Olofsson retired at a board meeting last month.

Carrefour’s plan to cut selling space on phones and jewellery at 60 out of 100 French hypermarkets would probably not result in job cuts as sales people would be redeployed across the stores, Terglav said.

But fears over job losses remained, he said, as Plassat previously made it clear he would strive to slash costs at headquarters. In April Terglav had said Carrefour could cut at least 3,000 jobs in France.

There could also be cuts in logistics, Terglav said.

A spokeswoman at Carrefour France confirmed the group met with unions on Monday to “discuss various projects involving French hypermarkets” but declined to provide further details. Plassat’s challenge is to reverse years of underperformance at Carrefour’s European markets, notably in its main French market, at a time of government austerity measures and higher prices that are squeezing disposable incomes for households.

Editing by Greg Mahlich

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