Reference no: EM132388121
Tesco and Carrefour plan 'strategic alliance' to buy products
Tesco and Carrefour, Britain's biggest grocer and Europe's largest retailer, have increased the pressure on supermarket suppliers by teaming up to buy products for more than 19,000 stores - a move they claim will lead to greater choice and lower prices for customers.
Analysts said the planned three-year strategic alliance between two retail powerhouses would squeeze suppliers further as the supermarket industry fights back against the rise of Amazon and discounters such as Aldi and Lidl.
Tesco and its French peer Carrefour will buy own-brand products together and attempt to secure better deals from multinationals such as the Nescafé maker Nestlé and Unilever, which makes Persil and Marmite. Tesco and Carrefour said they aim to improve the quality and choice of products in their supermarkets and sell them at cheaper prices. Each company will continue to work with their suppliers at a local and national level.
The Tesco chief executive and former Unilever executive, Dave Lewis, said: "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."
The strategy could lead to more camembert, wine and other French products being sold in Tesco stores and more British products in Carrefour supermarkets, although details have yet to be finalized, according to a Tesco spokeswoman.
Both retailers are under pressure because Amazon has moved into traditional grocery retailing with the acquisition of Whole Foods and launched an online delivery service, Fresh, in the UK last year.
Analysts at Jefferies estimate the combined buying power of Tesco and Carrefour at more than £80bn annually. They believe the groups could reap total savings of £400m from the alliance.
Philip Benton, a research consultant at Euromonitor International, added: "Tesco may also see this as a safeguarding of risk against possible supplier price rises in the event of a hard Brexit."
According to Euromonitor International, a combined Carrefour and Tesco will hold an 8% of the western European grocery market, ahead of Lidl's owner on 6% and Aldi Group on 5%. Carrefour makes the bulk of its €79bn (£70bn) worth of sales in Europe and Brazil while Tesco operates in Britain, Ireland, Eastern Europe, Malaysia and Thailand, and has a wholesale presence in India.
Question:
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