Hearing of Alexandre Bompard, CEO of the Carrefour group

I swear. I swear.

Everything is fine. Nothing particular to declare.

I will speak alone first, and then we will both answer your questions.

Thank you, Madam President, Madam Rapporteur, ladies and gentlemen senators. Since you allow me, I will make an opening statement, and then Mr. Laurent Valallé and I will answer your questions. Since I have been leading Carrefour, I have had the honor of being regularly, almost annually, heard by various parliamentary committees. To be honest—and I will try to be throughout this exercise—I am both happy and somewhat concerned by these hearings. Happy for the exchange with you due to the respect I owe to the national representation, and concerned because I systematically see a temptation to cast suspicion on the practices, strategies, and margins of retail. I sometimes feel that through these successive works, very specific to France—you have before you someone present in about forty countries, and I have never been summoned before any parliamentary committee there. There is too much demonization of retail. I regret that we never focus on the future of French retail, its strengths, its role, its difficulties. Retail is a sector with emblematic French companies. It deserves consideration from public authorities and national representation. Having said that, I will proceed in two parts: first, some elements about the sector and Carrefour; second, remarks on the core of your reflections. In a sector undergoing profound changes, Carrefour, the last French retailer with international ambitions, wants to position itself at the level of its global competitors. The sector faces increased competitive intensity from market polarization, new entrants like hard discount and Chinese platforms, and consumer behavior after hyperinflation leading to hypersensitivity to price. Strong purchasing power tensions put pressure on margins and volumes. Political and macroeconomic uncertainties raise savings rates. The reality is that historic French retail groups are suffering. Carrefour operates 15,000 stores in 40+ countries with 500,000 employees. This year I launched a new strategic plan to 2030 around three areas: customers (price investments, fresh plan, product innovations, CSR commitments), stores and e-commerce (investments in territories), and technology, especially AI. One objective is to improve Carrefour's margin. Our accounts are public and transparent. My net profit is less than 1% of revenue, ten times less than industrialists. We need to increase margin because internationally, competitors like Ahold, Tesco, Walmart have double our margin, and no one questions their profitability. This is unique to France. Regarding the core issue of price formation and value chain remuneration, the equation is always the same: retail must manage consumer prices, remunerate producers, and guarantee quality. We try to reconcile these daily. During deflation, EGAlim 1 focused on producer remuneration; Carrefour applied it. During COVID and Ukraine, we secured supply. Later, inflation required focus on customers; we set up anti-inflation baskets and reopened negotiations. Now that inflation has eased, some suggest retailers have undue margins. This is not serious or responsible. Retailers' commitment to purchasing power and fair upstream remuneration is not in doubt. I want to end with a strong conviction: for 30-40 years, commerce has been subject to legislative intervention. The temptation to intervene on prices and free play of private actors remains too strong in France. No other country outside political regimes no one wants to copy has this permanent interventionist temptation. Commerce can only thrive in freedom: freedom to choose products, to negotiate, to set prices. The final arbiter is the customer. My message: leave freedom to private actors, give the sector air, stop regulating at the request of interests. At Carrefour, we believe only contractualization, not overregulation, can end the mistrust. Thank you.

Thank you, Madam Rapporteur. I said it on BFM, and it is even more important: my Director of Merchandise France came to tell you here. We respect French law. Absolutely.

Madam, I am delighted you asked this question. This law—or rather this part of the law that sanctions the distributor who has not concluded negotiations by March 1st—is one of the stupidest legislative provisions I know. I sometimes discuss with global CEOs of groups I negotiate with, and they always say off the record: how is it possible that in France, when negotiations between me and Coca-Cola, Pepsi, Unilever, Procter & Gamble don't end by March 1st, the distributor is sanctioned? Intellectually, the idea of sanctioning the French distributor who failed to reach an agreement with a multinational is hard to define. That said, you are right: we have sometimes not concluded all contracts by March 1st. We have thousands of contracts. In that case, we face a penalty from the DGCCRF. We contest the principle because normally Spanish law applies, but that is secondary. It happens, and it will happen again. We have thousands of negotiations, and some global distributors have an interest in dragging us to March 1st because they know we will be condemned if no agreement is reached.

First, you are right, as it is public: my operating margin in France is 2.5%, published a week ago. My net result, after deducting financial and tax items, is below 0.7%. So that is what remains at the end of my French activities. It breaks down classically: gross product margin minus store operating costs, mainly personnel costs, energy, etc. So I arrive at a 2.5% operating margin.

The salary charge is between 10 and 16% depending on the store's operation.

Franchise at Carrefour serves two objectives. First, offensive franchise: accelerating the opening of our proximity store network. We have 5,000 proximity stores. Second, defensive franchise for large stores: the goal is to save these stores. We had a part of our hypermarket park that was structurally loss-making. To avoid closing them—I have never closed a hypermarket in France—we transferred them to entrepreneurs via management leases or franchises. They invest and develop the stores. We have six years of experience; we convert about 15 hypermarkets per year. The results: revenues have increased, profitability restored, customer satisfaction up. This allowed us to avoid closures. Now Carrefour is a hybrid model of integrated and franchised stores.

Madam Rapporteur, my answer is as simple as your question: no. It is first a mechanism that saved stores. I am sure you are sensitive to that. We have not closed any hypermarket. Second, there are legal guarantees: each transferred employee retains their contractual terms. We also negotiated a social clause with all union organizations, a majority agreement, that maintains additional benefits beyond legal ones. So it is not a degradation. We measure employee satisfaction annually in franchised stores, and we see that when the store does better, employee satisfaction increases. There is initial concern, but over time, both customer and employee satisfaction have improved.

Yes, but that is not what we have seen at all.

Thank you. This is an important objective of our plan. We aim to reach 25% of the French market. How? First, natural development of our brand through price competitiveness—that is essential in this business. But also through proximity store expansion (1,000 new stores), a strong fresh products offer where we are leaders, leadership in organic products, acceleration of e-commerce, and transformation of our store park. Additionally, tactical operations like attracting franchisees from competitors or selective acquisitions. All this should help us reach 25%.

Yes, absolutely central. First through our fresh products focus. Carrefour represents one-third of long-term contracts in France. Our sourcing: 100% French for milk, eggs, poultry; 96% for beef; 86% for fruits and vegetables. We work with 30,000 producers in privileged long-term relationships. We also have quality supply chains that ensure stable remuneration for producers and exceptional quality for consumers.

Madam, since I am under oath, I sometimes use Walmart as an example, but never for dividend distribution. What I said is that Walmart is a model for its digital transformation, e-commerce, store digitalization, and AI. Those elements are inspiring for us. We have invested heavily in digital and e-commerce, and now AI is a central bet of our strategic plan. That is why I cited Walmart.

Yes, that is a very good question. My mission, my responsibility, is to make it compatible and create a virtuous circle: growth, market share gains, strengthening in core countries, working with all stakeholders including agriculture, and generating slightly higher profitability. We announced targets: 3.2% operating margin in 2028 and 3.5% in 2030 globally. That will allow us to reward shareholders and continue development.

I do not believe so. I cannot say it never happens with some global industrialist, but I do not believe it. Carrefour has a code of conduct; these are not our practices. I see no interest in such practices, and they are foreign to my personal ethics. They are very far from us. But I cannot say they cannot exist. However, the main question, when you talk about negotiations, will lead us to purchasing centers.

You talk about negotiation with groups. I have 45 suppliers in my purchasing center, 92% of which are non-French groups, more powerful than me. When I negotiate with Pepsi, Procter & Gamble, Unilever, I do not feel like a giant against weak groups.

Yes, but among those 45, 42 have no agricultural raw materials. Only three do: Lactalis, Danone, and McCain (which has French factories but is not very French). So 42 are very large companies without agricultural raw materials. The main subject is agricultural, and in my purchasing center, 45 negotiations are with global multinationals.

I criticize it, and I hope you do too. In a scheme where what matters is transparency, Options 1 and 2 give the value of the agricultural raw material. Option 3 only gives the certified evolution by a statutory auditor. More transparency means more confidence. Option 1 gives more transparency. That is why some actors avoid it and use Option 3. I can work with Option 3, but in a logic of sanctifying agricultural raw materials, the more precise you are, the better you can sanctify it.

The more precise, the more I know what the agricultural raw material is, the easier it is to sanctify it. More precise means it's not just an evolution.

No, sir, you have to be honest. Why? There are three options? Because there are different categories. There are products with one agricultural raw material. So we are not going to hide it, it will be clear. And then there are products with many agricultural raw materials. That is why there are several options. We did not create several options just to complicate things or to provide an escape. On the contrary, we wanted option three. I remind you that this is not a creativity of the parliamentarian. All of this comes from the States General of Food, with the complexity of agricultural products where sometimes there are many agricultural raw materials and we are not going to put people around tables for hours to dissect them. So I have 5% of this and 1% of that to make administrative tracks that you condemn. So option three aims to respond to the information needs you must have in terms of price framing without entering into administrative complexity for products that would have too many agricultural components in the same processed product. So it is perfectible certainly, but we must not make a bad trial of option three. Nevertheless, I think, excuse me, I allow myself, but I think that was told to you by Hervé Duin who shared his surprise from time to time, regarding exactly the same agricultural raw material with evolutions because we only know the evolutions that are on important materials in products or that are essentially on materials with extraordinarily different evolutions. And I think he simply told you that this could raise astonishments and questions among distributors that are not illegitimate.

In purchasing and service centers. So, Concordis is the governance body of the purchasing alliance concluded between Carrefour, U as you know, yes, cooperative U and RTG which is a German distributor. Concordis does not negotiate but entrusts the negotiation to two commissionaires. Eka for the negotiation of purchase conditions for national brand products and CWT for the negotiation of international service provisions. That is how it is articulated.

It is a governance body of the alliance. So it is a company based in Brussels. It is a governance body that makes structuring decisions, sets orientations. There is a board of directors, a steering committee that brings together merchandise directors from the three entities cooperative U, Carrefour, and RTG. And so it sets the orientations and objectives of the negotiation which it then entrusts to EKA for purchases, to CWT for service provisions.

So it mandates these two institutions.

Yes, and Concordis in Brussels. Yes. When you have a French, a German, quite often it can be neither in France nor in Germany, the centers are sometimes in the Netherlands. We put it in Belgium because we consider it the capital of Europe and it is a governance body, it is just the location where meetings are held.

No, no, in fact Eka and CWT pre-existed Concordis since they were structures at Carrefour and in a way RTGU. The solution did not consist of RTGU entering into the companies Eura and CWT, but to create this structure Concordis which, as Alexandre Bompard said, sets the objectives. So there are no financial flows between these companies. Regarding Carrefour, there are financial flows between Eureka and the Carrefour group, and financial flows between CWT and the Carrefour group.

Yes. So no French SME or intermediate-sized company buys services from CWT. No, it is international service provisions. It has existed for 30 years as you know. It is perhaps a specificity compared to other groups. We have a global dimension that is very displayed, very affirmed, and so it is an international service provision. From memory, Laurent, we have 65 suppliers that go through Concordis. So it is 65 large groups with international ambition.

No, there are a number of actors, even among the large actors, who are not interested in international services. The vast majority are interested because we offer them services that we consider very valuable to them. There are large global suppliers who tell us, 'Me, this service this year does not interest me or no longer interests me structurally,' and in that case they buy from Eureka but do not negotiate via CWT. So we have a list of global suppliers who decide not to use the service provisions. It is not the majority at all, but obviously it exists and it is not a problem when it is the case.

We will come back to you because I think we cannot give it to you. You do not have it off the top of your head. It is not how we calculate it. So we will give you the elements.