Tesco plans “strategic alliance” with Carrefour to cut costs to customers

UK – Tesco, UK’s largest retailer says it is planning a “strategic alliance” with French retail giant Carrefour, as the two try to use their joint buying power to cut costs and offer lower prices to customers.

According to BBC, the two plan a “strategic relationship” when dealing with global suppliers, and the tie-up will also mean sharing their own-brand products, a move that comes as retailers face an increasingly competitive environment.

Last year, Tesco – which employs 440,000 people – reported profits of US$1.7 billion with sales of US$75.39.

Carrefour operates 12,300 stores across more than 30 countries, employing about 375,000 people worldwide, to which last year, it had sales of US$102 billion.

The two have been talking for two years and, although no formal agreement has yet been signed, they said they were hoping to confirm a deal in the next two months.

“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, further improving choice, quality and value,” said Tesco chief executive Dave Lewis.

BBC added that the grocery sector is currently going through a period of rapid change.

Tesco itself recently completed the purchase of wholesaler Booker, and in April, Sainsbury’s said that it was in advanced talks to buy Asda from US retail giant Walmart.

The traditional big four UK supermarket chains – Tesco, Sainsbury’s, Asda and Morrisons – have faced increasing competition from the rapidly-expanding budget chains Lidl and Aldi over the past few years, and there is now the added threat of internet giant Amazon moving into the sector.

Last year, Amazon bought upmarket grocer Whole Foods. In the UK, Amazon offers food sales through its Amazon Fresh service, although currently that is still focused on Greater London and parts of the South East.

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