Segment Reporting – Carrefour and Safeway Inc.

For the sole purpose of this analysis, I selected two grocery companies from two different countries – Carrefour and Safeway Inc. Carrefour was founded in France and operates nearly 12,000 stores in 30 countries. As of 2016 fiscal year, the company generated a sales revenue of 103.7 billion euros. In addition to brick and mortar stores, it also operates e-commerce sites. On the other hand, Safeway is one of the largest drugs and food retailers in North America with a total of 1,326 stores as of 2014 fiscal year. Like Carrefour, Safeway also operates an online grocery channel under the name Safeway.com.  Both companies are similar in the sense that they operate in the same industry.

Based on my analysis using the annual financial report of each company, it can be concluded that Carrefour’s competitive strategy focuses on a combination of differentiation and cost leadership. Carrefour sells many of its own products, which coupled with its presence in many European and Asian markets, allows it to achieve economies of scale. This also allows Carrefour an opportunity to negotiate more favorable prices with its major brands, thus making its own products more affordable. In addition to providing customers with a wide range of grocery items, Carrefour has diversified its product offerings to include its own textiles line.

In contrast, Safeway focuses on providing value to customers through high quality grocery products. Like Carrefour, Safeway includes in its portfolio private-label merchandise that it buys from third parties or manufactures on its own.

Regarding the segment reporting, both entities use geographical segments as their primary reporting format. Carrefour identifies four distinctive segments: Asia, Europe, France, and Latin America. Safeway identifies seven distinctive geographical segments: Eastern US, Northwester US, Northern California, Southern California, Denver, Phoenix, and Texas. The biggest difference between the two companies is that Safeway decided to consolidate all segments into one and forego separate reporting since it believes that disaggregating its segments would not provide any additional meaningful information. Whereas, Carrefour opted to provide pertinent financial information (revenues, expenses, assets and liabilities) for the four segments it identifies.