Managing Across Culture - Cora Goes to Hungary

Hungary appealed to hypermarket chain Cora. But trying to enter Central and Eastern Europe with a Western retailing format had proven very tricky in the past for many companies. Cora Chaired Professor of Organisation Behaviour, Charles Galunic, and co-author Erin Meyer describe Cora's happy experiences with their first hypermarket in a non-francophone nation, and consider whether the lessons learned could be transferred to other markets in the region.

by Charles Galunic, Erin Meyer
Last Updated: 23 Jul 2013

The opening up of markets in the former Soviet bloc had obvious and enormous appeal for Western European retailers. But one of many potential stumbling blocks was the difficulty of attempting to transpose a retail concept that had succeeded in a mature market or markets to profoundly different consumer cultures.

The Cora Chaired Professor of Organisation Behaviour Charles Galunic and Erin Meyer of the Eaton Consulting Group consider the case of super- and hypermarket chain Cora, the largest component of the Brussels-based Louis Delhaize retail conglomerate, as it took a major leap into the unknown.

Cora had several successful outlets in Belgium, Luxembourg and the French Antilles, but was eager to tap into the Central and Eastern European (CEE) market, which had changed very little in its food retailing structure, and was being eyed hungrily by Cora's main European competitors.

Hungary appealed for several reasons. Cora had already bought out a local wholesaler in 1989, and by the mid-90s, felt it had gathered enough intelligence on the rapidly maturing Hungarian market to make an intelligent strategic entry. This could hopefully allow them to avoid many of the costly blunders suffered by a host of other foreign MNCs who were also established presences in what were quickly proving to be very challenging and unpredictable markets.

There were several key demographic similarities between the Central European state and Cora's main market of France, particularly in terms of size and population densities of the urban areas of both national capitals. While the Hungarian middle class was still small relative to Western countries, economic growth was generally robust. It was decided to make a foray, starting with one hypermarket in an affluent Budapest suburb.

As Galunic discusses, however, trying to cross cultures with a particular retailing format had its share of risks. Any overly established Western European assumptions about what a "shopping experience" should be may not be matched by reality for too many CEE customers. Galunic describes the negative experiences suffered by major European retail group Carrefour - then a major shareholder in Cora - when it attempted the hypermarket format in Philadelphia in the early 90s.

Nevertheless, as the (B) case details, in 1997 Cora launched of its hypermarket its first hypermarket in a non-French speaking nation. In many ways, this was identical -or perhaps even more customer-friendly - than most of Cora's French outlets. Galunic describes the type of selective market appeal the corporation decided to go for, in the face of a sudden wave of hypermarket rivals entering in force at roughly the same period. (Even more were to arrive a few years later, spurred on by the overall success of the first wave of entrants.)

The author examines the unexpected twists of fortune endured by Cora and director of Hungarian operations Phillipe Lejeune. The Frenchman had developed a theory of "northern" and "southern" minded consumers, explaining how it was hoped that Hungarians had "enough of the south" to make Cora's national strategy viable.

Galunic continues with a series of telling and often amusing descriptions of the clash of cultures Cora's French executives and staffers experienced while surveying the property for the first Hungarian outlet, and when trying to get the necessities together once building began. While the initial surprises soon gave way to something like an operational routine, Lejeune relates how the clash of cultures was eventually resolved to the satisfaction of most French senior managers. The (B) case concludes with a description of Cora's expansion plans for the near future. But questions clearly remain as to whether the firm's first major expansion has taught it lessons that may be easily transferable to other nearby markets.

INSEAD 2005

Find this article useful?

Get more great articles like this in your inbox every lunchtime

Subscribe

Get your essential reading delivered. Subscribe to Management Today