Monday, December 1 2014

The Carrefour Office in Armenia denies the media reports that the French retailer demands a 15% discount from the Armenian suppliers. When replying to ArmInfo's questions, Laurent Nazet, Carrefour Representative for Armenia, said that there is no condition concerning provision of privileges. He added that 95% of the products at Carrefour supermarkets will be supplied by Armenian manufacturers and suppliers.        

In relation to the upcoming opening of the world-known Carrefour trade chain in Armenia, the Armenian media outlets disseminated reports that the French retailer demands discounts. Otherwise, it will not agree to sign the relevant contract and develop cooperation. The given information has triggered concerns in the Armenian market by raising the question how the Armenian suppliers will benefit from it and what effect it may have on the whole Armenian market in the future.         

Meanwhile, it is known that the Carrefour offices in the international market were blamed for demanding privileges from the local suppliers at unprofitable terms for the market. As early as 2011, the French retailer had problems with entering the Hong Kong market due to the contract terms with the local suppliers. Later, 22 Hong Kong-based companies refused further cooperation with Carrefour. A similar situation arose in the People's Republic of China as well. For instance, in 2001 in Chongqing many companies refused to supply Carrefour with products because the French retailer spared its funds at the expense of Chinese suppliers' profit. A provision in the Carrefour's contract of delivery of products to the Carrefour retail chains in the PRC implied the demand of most privileged prices for products. The Chinese suppliers were displeased with that provision and this weakened Carrefour's competitiveness in the Chinese market and contributed to promotion of other trade chains, such as Wal-Mart, in the PRC. 

ArmInfo experts believe that such a policy of Carrefour may aim to oust the competitors from the market, as Carrefour enjoys the brand advantage in new markets and can strongly influence the fundamental principles of trade such as fair competition due to privileged terms. In the meantime, Yerevan City and SAS trade chains in Armenia may also demand special privileges from the suppliers. 

According to the media outlets, Carrefour is going to occupy a considerable part of Yerevan's food retail.  This will have a negative effect on the Armenian suppliers' capability to resist the unfavorable terms of cooperation. Under such conditions, Armenian suppliers will have to raise prices, which will destabilize the situation in the retail food market.