@Harvard Business School9-273-099
Rev. September75,7990W
Garrefour, S.A.
Inrnid-1972 the top m;rragementof Carrefour, S.A., faced important policy decisions thatcentered around the speed and direction of future corporate growth and how that growth ought to be
financed.Company Background
Carrefour began operations with a single 650 m’ supermarket in Annecy, France, in the summer
of retail food customers to the idea of one-stop,1 self-service
shopping with discount prices. The store proved to be popular; after considerable study, the firm’s
founders decided to test their retailing formula with additional products such as clothing, sporting
equipment, auto accessories, and consumer electronics. Thus, in 1963 Carrefour opened the first
“hypermarket”2 in France at a location just outside of Paris. The store covered 2,500 m’, sold both food
and nonfood products at discount prices, and provided parking for 450 cars.of1960. This store tested the responseThe Carrefour hypermarket was accepted enthusiastically by French consurners, and the
company began to grow rapidly. Between 1965 and 1971, Carrefour’s sales grew at an arurual rate
exceeding 50% (Exhibit L); nonfood items accounted for about 40″/” of total volume. The growth in
corporate assets kept pace with the growth in sales (Exhibit 2).
As the company’s revenue increased, so did the size of its stores. Starting
called “commercial centers” were opened with selling areas as large as 25,000 m’.in1970, new stores1 In France, as in most of Europe, retail distribution in 1960 was a highly fragmented activity. Small shopkeepers
accounted for almost all sales of both food and nonfood products, and product lines in individual stores were very
narrow. Food shopping was essentially a daily activity, and visits to four entirely separate shops were required in
order to purchase baked goods, dairy products, meat products, and vegetables.
2 A hypermarket was…