European retail giants Tesco and Carrefour have announced a plan to form a joint purchasing alliance. The move is to increase their leverage with suppliers in a fiercely competitive supermarket sector.France’s Carrefour and Britain’s Tesco on Monday announced plans to form a global, long-term purchasing alliance in a bid to drastically reduce costs.
The cooperation will be formerly agreed in the next two months, with the financial terms of the accord not yet disclosed.
The two supermarket retailers said the planned alliance would cover the strategic relations with global suppliers in areas such as marketing services and data collection as well as the joint purchasing of own-brand products.
“This alliance is a major agreement as it combines the purchasing expertise of two world leaders, complementary in their geographies, with common strategies,” Carrefour CEO Alexandre Bompard said in a statement.
Synergy effects
Tesco is the UK’s biggest supermarket with annual sales of 51 billion pounds ($67.2 billion, €57.7 billion). It has been rebuilt after a 2014 accounting scandal that accelerated a sharp downturn in trading.
As part of the recovery, the group has improved its relations with suppliers, while raising pressure on its domestic rivals such as Sainsbury, Morrison or Marks & Spencer.
Carrefour is Europe’s biggest retailer and makes the bulk of its €88 billion worth of sales on the Continent. However, Brazil is its second-largest market after France.
hg/jd (Reuters, AFP)
