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London/Paris: The Champion supermarket brand is set to disappear from the French retail landscape by the end of this decade after Carrefour finally confirmed it would rebrand the 1,000-strong chain, Carrefour Market.
The world's second-largest retailer said its seven-month trial in 13 stores gave it enough confidence to roll-out the new name across the entire chain.
Carrefour said that the test stores had enjoyed sales uplifts of 10-15 per cent. It expects an uplift of 5-10 per cent across the entire chain.
It will spend 200 million euros ($311 million) - taken from its existing capital budgets - to rebrand all its stores, with 100 sites being turned into Carrefour Markets by the end of 2008 with another 700 conversions coming through in 2009.
The rebranding could further boost Carrefour's performance. It has promised to deliver total sales growth of 6-8 per cent in the year to December. It expects the impact to be accretive on earnings per share in 2010 with the real impact coming through by 2011.
Jose Luis Duran, chief executive, is under pressure from his key shareholders to improve the company's share price. Bernard Arnault, chairman of LVMH, and Colony Capital, a US private equity group - they have a 10.7 per cent holding through their investment vehicle Blue Capital - are seeking to change the board structure in an effort to tighten their grip on decision-making at the grocery retailer.
Blue Capital is planning to get rid of the two-tier board structure in favour of a single board of directors.
Shareholders will vote on the change next month.
But doing away with the Champion brand could prove difficult given that 45 per cent of the stores are owned by franchisees. Carrefour says these partners will be attracted by the sales uplifts being driven by the Carrefour Market model - but they will have to strike deals with competitors if they do not like the terms.
The move is part of a wider strategy to unify dozens of sub-brands dotted around the world under the Carrefour name in an effort to simplify the business, cut costs and develop own-label sales.
It has already completed similar projects in Spain, Brazil, Poland and Turkey.
Carrefour said that it does not expect any job cuts because of the changes.
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