Carrefour Opens First Russian Store

French retail giant Carrefour opened its first Russian store Thursday, hoping to become a leading player despite a late arrival on the domestic market. Carrefour has invested 8 million euros ($11.1 million) into the 14,300-square-meter, two-story hypermarket located in a shopping mall in western Moscow, said Carrefour Group executive director Thierry Garnier. Although the French company is Europe's top retailer, its entrance onto the Russian market comes after other foreign chains like Auchan and Metro Cash and Carry are already fully established. Auchan operates in eight Russian cities, with 20 locations in the greater Moscow area alone. Metro has 48 Russian locations. Carrefour will also have to compete with Russia's own X5 Retail Group and the Mosmart chain. By the end of the year, Carrefour plans to open two more stores in Krasnodar and Lipetsk, both in shopping centers. The company will eventually expand to other store formats but is starting with hypermarkets "because this format works well in Russia," said Carrefour Russia CEO Jacobo Caller, who previously headed the company's unit in Romania. Carrefour also operates supermarkets, discount stores and convenience stores. Spirits were high at the opening, where guests were entertained by mimes, accordion players and a dancing troupe that did a hip-hop number using shopping carts and cardboard boxes as props. The ribbon was cut to the sounds of "La Marseillaise" by nine people, including representatives from the Industry and Trade Ministry, the European Commission and the French Embassy in Moscow. The retailer was first rumored to come to Russia in the late 1990s and even opened an office in Moscow but pulled out of talks about a store opening during the 1998 financial crisis. Carrefour executives parried questions about the company's late entry into Russia. "We were waiting for the best moment to enter the market," Garnier said. "We are in Russia for the long term." But the late entry is unlikely to be a boon in Carrefour's case. "They are rather late in coming," said Maria Sulima, a retail analyst with Metropol. "At this point, it would be more effective to purchase a chain with already developed logistics and distribution networks." Three stores in six months is an adequate pace for a new player, though some chains like Magnit opened 11 hypermarkets last year, Sulima said. Carrefour's Garnier declined to comment on the retailer's possible acquisition of Sedmoi Kontinent, a Russian retailer that currently has 140 stores. "There are new rumors every day; I cannot comment on the rumors," he said. Vedomosti reported on Thursday that Carrefour stopped talks on purchasing the chain for 45 days. Carrefour evaluated the company at $1.2 billion to $1.3 billion and made an offer in February. The retailer also bid to acquire the Lenta chain last fall. Any existing Russian chain could be purchased right now "if the price is right," Sulima said.