Carrefour Must Take Caution In The Expansion Of Its Premium Retail Format

Carrefour Indonesia, the Indonesian subsidiary of French mass grocery retail (MGR) operator Carrefour, is planning to transform up to four of its Alfa Retailindo outlets into upscale supermarkets in 2012. Although we see merit in Carrefour's plans to sharpen its focus on the higher-end of the Indonesian MGR market given the country's rapidly expanding middle class, we stress that the French retailer must take caution in its expansion plans and should gradually expand its premium retail offering across the capital. Should Carrefour get overly ambitious in expanding its premium retail offering, the retailer might lose its appeal to local consumers, particularly among the lower-to-middle classes that do not yet have the purchasing power to trade up to organised retail stores.

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