Tesco and Carrefour Agree Strategic Alliance

Tesco and Carrefour Agree Strategic Alliance


Shop Food/Health

Retail giants Tesco and Carrefour have announced a strategic alliance aimed at reducing costs and lowering prices to their customers.

From October the two companies will look to use their combined purchasing power with global suppliers to drive down buying costs. The alliance also covers sharing their joint-brand products, giving Tesco and Carrefour more control and the likelihood of higher price margins. It is another response to the changes in the grocery retail market, particularly the pressure from budget retailers such as Aldi and Lidl, one in which Tesco recently purchased the wholesaler Bookers for £3.7bn. 

Two Years in the Making

The strategic alliance has been under discussion for two years and will combine the purchasing power of both the UK’s and Europe’s largest retailers. With combined sales of £127bn and a combined workforce of over 800,000 the alliance is also a direct response to the proposed merger between Sainsburys and Asda. Tesco have improved performance after recent setbacks and recently posted their 10th consecutive quarter of increased sales. French giant Carrefour are implementing their own reforms which aims to reduce costs by €2bn by 2020 while investing €2.8bn in to e-commerce. 

Winners and Losers?

Tesco and Carrefour say the alliance will be good for their customers as they will not only see cheaper prices but improved quality and choice. Yet the increased buying power of alliances may not be such good news for the suppliers to the food retail industry, who will come under increased pressure on pricing. The vast global suppliers such as Unilever and Nestle may be able to withstand these pressures to a large degree, but smaller, local producers who have products stocked in the major national chains may have concerns. However Tesco have tried to reassure local suppliers they should not be concerned about this alliance and they are not in their sights as part of the drive for efficiency savings. Instead local suppliers should remain excited about getting their product into a national retailer such as Tesco. 

The budget supermarkets have made it tough of late for the established players like Tesco and Carrefour. Their model of basic stores stocking largely own-brand ranges has made it difficult for the traditional food retailers to match them on price. With this strategic alliance, Tesco and Carrefour, who only compete directly in the Eastern European market, hope to create the buying power to challenge.

News written by the team of The-shops.co.uk The-Shops.co.uk

News in the same category

Mall of The World: Dubai's oversized shopping centre

Mall of The World: Dubai's oversized shopping centre

Announced as the largest shopping centre in the world, Dubai Holding's "Mall of the World" should extend over more than 14 million m². It will include a 7 km long shopping street, a theme park and 20,000 hotel rooms.

  • Shop
The best 15 fish and chip shops in Scotland

The best 15 fish and chip shops in Scotland

The dish, commonly called "fish & chips", can be enjoyed in the pub or on the go and consists of a large piece of fish fillet, cod or haddock, - covered with a thick layer of dough, before serving. to be immersed in boiling oil.

  • Food/Health
The Reasons Behind the Multiple M&S Store Closings Throughout the UK

The Reasons Behind the Multiple M&S Store Closings Throughout the UK

As of April 2017, M&S had 979 stores throughout the UK. Considering the fact that this massive conglomerate was first established in 1884, many consumers will be surprised to learn that they are planning to close no fewer than 100 stores by the year 2022.

  • Shop
Bridge St. Roastery Opens in Chester

Bridge St. Roastery Opens in Chester

Boasting a population of just under 200,000 residents, Chester has remained a rather quaint city although its popularity has certainly grown over the years.

  • Shop
  • Food/Health
Tesco and Carrefour Agree Strategic Alliance
Chain stores related to the news
Tesco
  • 2196 store Tesco listed
> All news Tesco