Do you share the fiscal exasperation that Patrick Pouyanné of Total, the CEO of Safran, and Florent Menegaux of Michelin have denounced? Do you feel that way, saying 'enough is enough'?
Yes. I said it quite early – this surtax is truly the tax too many. The idea that after the entire budget process the only thing found to reach 5% is the old idea of taxing large companies a bit more because no one will defend their tax bill. I find it deplorable, and it shows a lack of understanding of the economy and the interpenetration of large and small companies. Large companies create the most jobs, export, do the most research, and have the luxury to choose where to locate. That's not my case – my stores and restaurants are in France – but many CAC 40 companies ask themselves every day where to invest. This question can also apply to us. I was both annoyed and it's a real economic policy back-and-forth. In the first part of Macron's terms, we returned to the European average – that was a performance. Then at the end, they said 'we don't care about the average, let's be 10 points higher.' And they think large companies will manage. But they won't. They can invest elsewhere, and this measure will also weigh on employment and innovation. It's a very bad measure.
Are you worried for France when you see a survey published yesterday by the American Chamber showing that American companies are very skeptical about France now? That's new. Are you worried for your country, Alexandre Bompard?
You know, when at the end of the budget process you say 'I abandon the reform everyone considered good – extending working time. Can we not work more?' The answer is no. So we stopped the pension reform that was passed painfully, and then we increase taxes on large companies. That sends a signal to both domestic and foreign companies wanting to invest in France. These are extraordinarily worrying signals. However, there is a vitality – French companies, entrepreneurs, managers, teams – a lot of dynamism, innovation, creativity in this country. But these measures go against the return of French business to the forefront.
Yes, but there is still this divorce with business, and another divorce. A recent Cevipof survey – I imagine you read it because it's full of lessons – about the divorce between politicians and the French. And the French are turning to certain business leaders, notably your competitor but well-known, Michel-Edouard Leclerc, who came out on top in the polls. Did that make you smile? Annoy you? Or do you say 'it doesn't make sense'?
No, I told myself two things. First, it's recognition of the role he has played for a long time. He knows the country well, defends purchasing power, has a unique voice. And also it's a sign, as you said, that the perception of business leaders by the French has changed. They expect their business leaders to share their ideas. That wasn't the case twenty years ago, as you know since you played that role. So the vision of business leaders and expectations towards them have changed. That's positive. It shows that citizens' relationship with business and its role has intensified.
Have you met Marine Le Pen or ...? Are you going to meet them, or don't you want to meet them?
No, I haven't met them. I think the natural meeting place for candidates is collective organizations, like employer unions.
Yes, but you preside over the Fédération du commerce et de la distribution. So you could receive them as such. Have they asked to be received or not?
No. Once again, when it happens, it will be during campaigns. I think we have a vocation to receive candidates, whether at the FCD or other circles or at MEDEF. First to express our convictions, to state our red lines, to say what we need to develop businesses. But that's the framework for me.
Okay, at least it's clear.
So let's get into the thick of it. First, there's the commercial negotiation. We've been talking about it here for several days. Yesterday you said 'well, actually it's going rather well.' I want to say, I've received the representative of the brands who say 'it's not possible.' We have the president of ANIA who was on RMC saying 'we're completely in the blue, it's not possible.' It's not going well, this negotiation.
You know, I've been here for a few years. This is a great chestnut of French economic life. More and more, when we are 15 days before March 1st, we see the representatives of ANIA come and make excessive statements every year, and each year I could show you exactly what was said on February 15th. What is the reality? I'll tell you mine because I'm a big negotiator. Today we have concluded 95% of contracts with SMEs, and we are ahead with large companies. We're at more than two-thirds. All right.
OK. What are you missing, or who rather?
We are missing the large multinationals. Not who, but we have 15 days left to discuss with them to reach the same situation as other years, where we will have signed 98% of contracts. 99%, and I even hope 100, but I think 100 will be difficult, as every year.
Well the goal is to be at 100.
Yes, no no I mean at what inflation level? Sure, at what inflation? Now, just so everyone understands, I listened to you yesterday, it was very interesting, but what's the point of these negotiations every time? They say that the big retail is tough and so on. If we don't negotiate – let's say I leave my hands in my pockets and take the manufacturers' prices, Unilever, Procter & Gamble, etc. – what happens? We have 10% inflation in the basket. But there, you're exaggerating.
Yes, I'm not exaggerating. If we didn't negotiate, we would have inflation of around 10%. So we negotiate with the large multinationals to give purchasing power back to the French. That's what these negotiations are for. So we will end up with a small inflation feeling of around 1%. I think we'll be around 1% food inflation this year.
Okay. Which products will go up, which will go down? Because naturally, those whose raw material costs continue to rise go up.
Peanut butter because peanuts keep rising, sardines because of shortages, beef because of difficulties in the sector. Conversely, many products are declining because raw material costs have fallen a lot: pasta, flour, sugar – these products are going down. One must understand that raw material costs are mostly declining. Energy is down, transportation is down. So many large industrialists we tell – as nicely as possible – that they should be at zero or even negative. In total, it will be around 1%.
Are you going to the Agricultural Show or not?
Yes, I'll go next week. What to say? Aren't you afraid of being booed? Because it's difficult for producers, farmers – this race to low prices also falls back on them. The relationship with the agricultural world has improved a lot in recent years. When I arrived, I felt that tension. It's not perfect, but it has improved a lot. First because we gave strong signals that our supply is very predominantly, if not exclusively, French – eggs are French, milk is French, poultry is French, 97% of beef is French. That is the most important for them. Second, when they convert farmland – from conventional to organic – they need visibility on prices and volumes. We sign a third of the multi-year contracts at Carrefour. They also need help when there is overproduction. We have been present when there was a crisis of overproduction recently with leeks. And after [the price?], how they can get by. And also the reality – I'm often struck that it's not mentioned more – is that I no longer negotiate the agricultural raw material. That's an achievement of the EGA, and if I were the public authorities, I would say so. Since I no longer negotiate the agricultural raw material, my relationship with the farming world has greatly calmed down. They know I don't negotiate it; it's a given. The only thing I ask is that it be transparent – that I really know the raw material cost in the relationship between the farmer and the processor, so that I don't negotiate it.
This race for low prices – is it really what the French want? We see clearly, as I said in the introduction, that purchasing power is the top priority with security. Is this race for low prices driven by Michel-Edouard Leclerc who wants to remain the leader? And the arrival of Action, which is also reshuffling the cards, right?
No, but there is competition in the French market and I'm taking part. Of course. We've lowered 6,000 products by 10% in the last two years. I announced yesterday 200 products at cost price under our own brand starting next week. We are very active in this competition. The reality is that it's not competition for competition's sake. It's because the French want purchasing power. A growing number of our fellow citizens are suffering, struggling to make ends meet. Our role is to give them purchasing power. We also add fights for food quality – that's why we are leaders in organic, leaders in fruits and vegetables. We are both the leader and the cheapest. But the reality is that the French need that purchasing power, and our mission is to give it to them.
The success of Carrefour and your plan – we'll get to it, Alexandre Bompard. It depends on finding your place among these competitors. Maybe not number one, but number two on low prices. Is that really your objective?
There is no scenario where you are competitive in this business without being very competitive on prices. None. So price competitiveness is a given. If you don't have it, you leave the market. But you need many other things.
What almost happened to you, I mean to Carrefour?
Yes, of course. And that's why, because I needed to reassure investors, I told them each year we will improve our price competitiveness. That's a commitment – the first time a Carrefour CEO has made such a promise. Each year there is a price indicator, and I will improve it to show that I will never drift from the need to improve price competitiveness. But obviously, that's not enough. We also need strong fights around food quality – I mentioned organic, fruits and vegetables, and our own brand, which is a strong differentiator. It went from 25% to 40% of our sales. Our own brand carries all the battles of quality. And then there is the growth of formats, of proximity. All these fights make up what Carrefour is today and its singularity.
Yes, let's come back to an important point because we've seen a kind of game of musical chairs in retail – 'I buy your stores, etc.' Carrefour itself has evolved its model. It was an integrated model – you owned all your stores. Now you are increasingly moving to franchising or management leasing.
Yes, we now have a very hybrid model, with half of our turnover in integrated and half in franchise.
Let me come back to the strongest announcement you made yesterday in your strategic plan – that you want to reach a 25% market share, which is an increase of three and a half points from 21.7%. That's a lot. How are you going to do it? Because on the stock market, which has been somewhat your path of the cross, Alexandre Bompard, we saw yesterday a kind of warning shot because investors were very skeptical about the possibility of achieving this goal. Today it rebounded a bit. How can you convince them?
A parenthesis: we published our results the day before, so yesterday's stock price was mainly due to the results. Today we gained three and a half points. But when you ask investors, they're still skeptical. That's not the point; what matters is what will happen tomorrow. What we tell investors – and I'm meeting with them now – is two things: we will achieve it in two ways. First, because we have become competitive on prices and will continue to be structurally. When you are competitive on prices in this business, you gain market share. That's the model. Second, we have growth engines that are now all switched on: our own brand, proximity, e-commerce (where we have become a leader), organic. These engines were off when I arrived and are now all on. Freshness is a particular focus. And then, as you said, we can add tactical acquisitions – we have done that recently by rallying franchisees from other actors, especially in proximity, and we consider selective consolidation. We have the financial means because our balance sheet is solid. But I have refrained from doing the big deals that excited everyone because they weren't right for Carrefour. Tactical operations, yes.
No question on Intermarché's strategy because we see that Thierry Cotillard is very aggressive.
We grew quite similarly to Intermarché. We grew with Cora and small acquisitions from Casino. They grew with Auchan. We each grew by about two and a half points. We can continue to do tactical operations – on various assets that come up for sale.
