Market failure

Market failure takes place when market does not «behave» as expected and sales do not meet expectations.

Overrated expectations took place in case of Russian retail market. In 2008, analysts for the investment bank UBS predicted Russian retail sales would grow 22% annually through 2010[8]. Investors piled on, and shares in grocery stores and retail chains soared. Instead, retail sales in August 2010 were down 9,8%[9] compared to a year earlier, according to the state statistics agency. We may assume that management of Carrefour decided to penetrate Russian market following positive analysts’ forecasts. "We were waiting for the best moment to enter the market,"[10] — said Thierry Garnier,Carrefour Group executive director.Indeed these calculations appeared to be too optimistic.

Competitive failure

Competitive failure means that operational performance does not match that of competitors or regulation impacts upon competitive capabilities. For instants, such factors as:

- Inefficient marketing strategy (including those due to lack of adjustment to cultural differences)

- Unstable competitive advantages

- Legislation issues

From this perspective company faced legislative barriers on its way. Complicated legislative framework, widespread bureaucracy and red tape were significant obstacles of success. Carrefour was scared of uncertainty in retail regulations. It was very pessimistic about Trade Act that was about to be passed and threatened with restrictions for regional chains development.

Also we need to mention severe competition from local retailers that Carrefour had to face. In addition to this its worldwide competitors – Aushan and Metro Cash&Carry – outstripped Carrefour: in 2009 there were 34 Auchan hypermarkets and 27 Atak supermarkets (Auchan group) in Russia.Auchan operates in eight Russian cities, with 20 locations in the greater Moscow area alone. Metro has 48 Russian locations.

Дата добавления: 2015-08-18