Carrefour In The Middle Of French Price War

Carrefour is a central player in a an increasingly vicious French retail war. The chain reduced pri…

Carrefour is a central player in a an increasingly vicious French retail war. The chain reduced prices to atone for trade lost to Auchan, Leclerc and Casino; as an indirect result, Auchan has announced that it will let 300 people go between now and 2016.

The current wave of price competition among French retailers dates back to 2011, when Carrefour, fighting to reverse years of underperformance in Europe – and notably in France – went on the offensive, abandoning confusing promotions in favour of lasting price cuts. It was followed by Casino in late 2012.

Auchan has now joined the fray, cutting prices in March by up to 5% and making clear its determination to continue.

"The price war is continuing. We will not be the first ones to end it," an bullish Phillipe Courbois, head of client relations for Auchan France told Reuters by phone.

Current 2014 earnings forecasts put Carrefour shares at a price premium of 20% to European peers, following its recent indication of recovery. Some analysts argue the market has yet to factor in growing signs of tougher competition to come.

"The price battle will be tough in the second half of 2014 owing to a still tense consumption climate. As Carrefour regains market share, Leclerc and Auchan have become more restless," said Yves Marin, senior manager at the Kurt Salmon consultancy.