Carrefour, Tesco alliance to become operational in October

The partnership is designed to secure a better deal from suppliers such as Nestle

The Carrefour and Tesco companies first announced the tie-up in July

The Carrefour and Tesco companies first announced the tie-up in July

 

Tesco has said its strategic partnership with France’s Carrefour will become operational in October.

The UK supermarket has now formally entered into its strategic alliance with Carrefour, under an arrangement that has been set out for a three-year period.

In a statement, Tesco said the relationship would cover global suppliers, and would allow for the joint purchasing of own-brand goods and store equipment such as trolleys, fixtures and cleaning supplies.

Tesco first announced the deal in July, saying it would improve the quality and choice of products available to its customers.

The supermarket is also aiming to lower prices on the back of the deal as it fends off competition from the likes of Aldi and Lidl.

The move came after Sainsbury’s promised lower prices on a range of everyday items as part of its planned merger with rival Asda.

However, French regulators are probing the Tesco-Carrefour relationship to understand what impact it could have on suppliers.

Competitive impact

The Autorite de la Concurrence said it was looking into the competitive impact of the purchasing agreement to assess its effect on the food sector, both for suppliers and consumers.

The regulator is also investigating similar alliances between France’s Auchan, Casino, Schiever, and Germany’s Metro, and Carrefour and Systeme U.

The probe has been set up because a new wave of agreements between grocers are larger in scale than the deals signed previously.

Moody’s credit ratings agency has also said that grocery tie-ups will squeeze suppliers.

Lower revenue

The agency said lower purchasing costs would ultimately lead to lower revenue for suppliers across the board, even if the supermarkets offer to buy in larger volumes as part of new agreements.

With combined annual sales of $170 billion, the partnership is designed to secure a better deal from the likes of Nestle, Procter & Gamble, Unilever, Danone and others to help the French and British groups to compete hard on price.

– PA and Reuters