Tesco and Carrefour have joined forces to buy products over the next three years in an effort to boost profitability in the face of heightened competition.
The alliance will cover the strategic relationship with global suppliers, the joint purchasing of own-brand products and goods not for resale.
The retailers said that the partnership will enable both companies to improve the quality and choice of products available to their customers, at even lower prices, thereby enhancing their competitiveness.
Carrefour, Europe’s largest retailer, and Tesco will continue to work with supplier partners at a local and national level. It is anticipated that the alliance will be formally agreed within the next two months.
Tesco CEO Dave Lewis said: “I’m delighted to be entering into a strategic alliance with Carrefour. By working together and making the most of our collective product expertise and sourcing capability, we will be able to serve our customers even better, further improving choice, quality and value.”
Alexandre Bompard, CEO of Carrefour, added: “This strategic alliance between Carrefour and Tesco is a major agreement as it combines the purchasing expertise of two world leaders, complementary in their geographies, with common strategies.
“This agreement is a great opportunity to develop our two brands at the service of our customers. This international alliance further strengthens Carrefour, allowing it to reach a key milestone in the implementation of its strategy.”
Earlier this year Carrefour agreed an e-commerce partnership with Google, which will make groceries from Carrefour supermarkets available through Google’s French shopping website from 2019.
Reacting to the news, Frank Woods, a retail sector specialist for NFU Mutual, said: “The deal with Carrefour may be a result of having been caught on the hop by the proposed Sainsbury/Asda merger.
“Tesco has already made it clear they want to place more emphasis on own-brand goods, having recently announced the end of the branded goods price guarantee.
“Undoubtedly there will be some additional pressure on producers as a result. The larger buying group will seek to leverage its buying power, but some of the savings that consumers can expect to see will come from greater efficiency, as they will be able to de-duplicate buying processes.
“On the plus side, it may also provide additional distribution for existing Tesco suppliers, who will now see their products on the shelves in Europe, and for UK consumers, more European products in Tesco.”
© FoodBev Media Ltd 2019