French supermarket chain Carrefour has reached a deal with Argentine workers for voluntary buyouts as part of a crisis prevention plan which aims at ending three years of crisis for the brand.
Angel Martinez, spokesman of the FAECYS (Argentine Workers Federation for Commerce and Services) declared that workers would agree to the voluntary buyouts: “If we had not done these negotiations, Carrefour would have left Argentina,” he said. He added that the company had agreed to pay 50 percent more than the normal cost of letting workers go in Argentina. Local newspaper Ambito Financiero cites an anonymous source to explain that 1,000 workers allegedly accepted the deal, while Carrefour declined any comments. A meeting is scheduled between the representatives of the company in Argentina and the Ministry of Labor, but officials from the chain already denied any intentions of leaving the country.
The French company is experimenting recent troubles, due in part to emerging technologies and e-commerce platforms such as Amazon. In Brazil, the sharp food deflation slowed sales, and in France the balance is negative again, after many strikes and the concurrence of discount-rates chains. France is the first market for the company, which makes 47 percen of its income in the country, with Brazil coming second. Partnerships in China, where some closure plans are expected, and a boost of the e-commerce branches are planned to grow in diverse sectors.
Carrefour has 12,300 stores globally; 7,000 of them are local shops, measuring less than 500 square meters. More than 3,000 are supermarkets; 1,500 of them are hypermarkets and the rest are wholesale operations that deal directly with restaurants, coffeehouses, and grocery shops.
Argentina represented 4 percent of the global income in 2017, or US$ 3.5 billion of the overall total US$ 88 billion. Carrefour opened in Argentina in 1982 and now employs 19,000 people, and is present in 22 of the 24 provinces. In Argentina, there are 605 shops (4.9 percent of the total): 402 local shops, 106 supermarkets, and 97 hypermarkets. The strategy is to transform in the short-term 16 hypermarkets into the wholesale format, which is working well in Brazil.
In the annual balance presented at the press on the 28th of February in France, Carrefour had already announced that operational measures were at the corner for its Argentine branch due to double-digit inflation and the “economical context which continues to be difficult.” The peso, for example, experienced a devaluation of 12.1 percent last year.
Mauricio Macri expressed his view on the subject from Spain, where he was interviewed by ABC. According to him the main issue is the concurrence of Chinese supermarkets in Argentina which form an “unfair competition” to the bigger brands such as Carrefour, which have higher costs. Accusing the smaller shops of tax evasion, the President promised a fight against those who are “not contributing or paying taxes, thus not supporting education, healthcare, and security.” He then added that “The Argentine people need to learn that those who work and act within the law are going to be alright, and not those who are away from it. When people decided to elect me as their president, they chose the path of honesty, sincerity, and fulfillment. They don’t want anymore traps.”
The issue became a political one in Argentina when the opposition answered Macri’s remarks. His comments about Chinese supermarkets offended a part of the Chinese community, as well as the Kirchnerist opposition. Led by Fernanda Vallejos (a deputy from the Frente para la Victoria, Cristina Fernández de Kirchner’s collation), the opposition asked Minister of Labor Jorge Triaco to visit Congress to explain the process of restructuring planned by Carrefour. They are also hoping to get Alexandre Bompard, Carrefour’s CEO, to come to Argentina to meet with the officials.
Although it is unlikely that the Frenchman will travel to Latin America, one future deal could actually help Carrefour grow in Argentina: the treaty between Mercosur and the European Union, which the European Commission hopes to sign before the end of the year.