Farming News - Tesco and Carrefour says 'strategic alliance' will cut prices

Tesco and Carrefour says 'strategic alliance' will cut prices

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Tesco and Carrefour are announcing their intention to enter into a long-term, strategic alliance.

The Alliance will cover the strategic relationship with global suppliers, the joint purchasing of own brand products and goods not for resale. It will be governed by a three-year operational framework.

The Alliance will cover the strategic relationship with global suppliers, the joint purchasing of own brand products and goods not for resale. It will be governed by a three-year operational framework.

The Alliance will enable both companies to improve the quality and choice of products available to their customers, at even lower prices thereby enhancing their competitiveness. This agreement will also allow both companies to strengthen their relationships with their suppliers and create significant opportunities for those suppliers. Each company will continue to work with supplier partners at a local and national level.

It is anticipated that the Alliance will be formally agreed within the next two months. Following formal agreement, both parties will start to work towards realising the benefits outlined above.

Tesco chief 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, further improving choice, quality and value."

Tesco's performance has gradually improved since 2014, when it reported the worst results in its history with a record pre-tax loss of £6.4bn. However, it recently recorded its 10th consecutive quarter of rising sales and said its growth plans were on track.

In January, Carrefour announced a major transformation plan that involved making cost cuts of €2bn by 2020, and investing €2.8bn in e-commerce by 2022.

Announcing the planned tie-up with Tesco, Carrefour Group chief executive Alexandre Bompard said the agreement was, "a great opportunity to develop our two brands at the service of our customers".

"This international alliance further strengthens Carrefour allowing it to reach a key milestone in the implementation of its strategy."

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.

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.