CFAO outlines plans for 5 new Carrefour stores in Côte d’Ivoire

CFAO has announced plans to open five new Carrefour stores in Côte d’Ivoire. Four will be in Yopougon, one of the largest areas of Abidjan. The fifth will be within a new CFAO-owned PlaYce shopping mall to be built in Grand Bassam, a resort town southeast of Abidjan.

Carrefour’s four Yopougon stores will be built in the neighbourhoods of Niangon, Terminus 47, Gesco and Toits Rouges. There are not details on the size of stores, but Trendtype believes that at least three of the four the Yopougon stores are likely to be around 1,200m²-2,000m² and be Carrefour Market banner. The Grand Bassam store may be larger.

The new stores are being widely interpreted as a direct assault on the dominance of the market leader, Ivorian distributor and retailer Prosuma (which is also the longtime franchisee of French supermarket chain Casino in Côte d’Ivoire).

We disagree: Although Prosuma operates its Cash Ivoire format in Yopougon, analysis using Trendtype’s premium Retail Explorer mapping tool shows its premium stores are further east in Plateau, Marcory and Riviera.

In other words, CFAO is building the Carrefour brand in territory that doesn’t have international competitors such as Casino, Citydia and Super U. The only international supermarket brand currently present in Yopougon is.. Carrefour Market.

But, make no mistake, Prosuma will suffer. Its store estate is old and often uninspiring. Its own premium  formats, Hayat and Jour de Marché, haven’t grown at all in recent years. It operates too many banners and formats, confusingly so.

Prosuma lacks the appetite, capital or both to accelerate the Casino brand in Côte d’Ivoire, having had the premium end of the market to itself between 2006 and 2015, when Carrefour arrived in the country. It has so far failed to take the Casino Mandarine format beyond four stores after an initial push to launch, opening the door for CFAO and Carrefour.

To add to the pressure and the complexity, Carrefour’s Moroccan partner Retail Holding (Retail Holding owns 51% of Moroccan supermarket operator Label’Vie) has raised $62.5m to increase its stake in Côte d’Ivoire’s #2 grocery retail player CDCI. The investment will also be used to expand CDCI’s penetration in the country and take on Prosuma.

Prosuma is still the market leader in Côte d’Ivoire and realistically the pressure will likely come from CDCI, which is a much closer fit in scope and size for Prosuma. The growth of the Carrefour store network from 3 to eight outlets over the next 12-18 months won’t affect Prosuma’s #1 positioning. Especially as CFAO has proven itself pretty slow to open new Carrefour stores, partly because it  prefers to place Carrefour stores in its own new CFAO malls. What it will serve to do is place pressure on the premium end of the Prosuma offer.

Looking ahead, the Retail Holding/Carrefour connection also raises interesting possibilities about a future acquisition of CDCI (which doesn’t operate any premium stores), assuming a willing competition regulator. We should note that Prosuma is more than just supermarkets. It is a major brand distributor, with a particularly strong network in Abidjan. The growth of Carrefour threatens its distribution business, but less directly.

Prosuma has also shown a willingness to diversify – it has a growing network of specialist wine stores, it operates the Ivorian franchise for French electricals and books retailer FNAC and it operates the single Nespresso concession in Côte d’Ivoire. We speculate it may ultimately prefer to compete outside of the grocery sector.