Tesco and Carrefour alliance to begin operations in October

UK and French grocery titans Tesco and Carrefour confirmed today (6 August) that their previously announced plans for a strategic alliance will go ahead later this year.

They said the arrangement – which will involve “a long-term, strategic alliance” covering relationships with global suppliers, the joint purchasing of own products and goods not for resale – is set to become operational from October.

It will be governed by a three-year operational framework, and is expected to help both companies drive better deals from international suppliers such as Unilever and Procter & Gamble.

The two companies have said the alliance will enable them to improve the quality and choice of products available to their customers, at lower prices. When the alliance was originally announced in July, they argued that supplier relationships will improve as a result, and that both retailers will continue to work with partners at a local and national level.

Speaking in July, Patrick O’Brien, UK retail research director at business intelligence group GlobalData, said: “Tesco is obviously concerned by the increased potential buying scale of a combined Sainsbury’s and Asda [currently being assessed by the competition authoritie], and both it and Carrefour are worried by the idea of Amazon making more ambitious moves in European grocery retail.

“However, it should be noted that a key focus of the tie-up is to reduce prices on own-brand products, and this is more of a direct response to Aldi and Lidl, whose offers are heavily weighted towards own-brand. Tesco and Carrefour have both struggled to match the discounters on quality and price, and the alliance should help it compete.”