Tesco and Carrefour to split after three-year purchasing alliance comes to end, extension ruled out

08 Jun 2021 --- Tesco and French retailer Carrefour have split after terminating a three-year alliance initially designed to trim costs. The collaboration will formally end at the end of this year.

The retailers linked up in July 2018 amid fanfare from the two supermarket giants claiming that a “long-term strategic alliance” would boost their competitiveness and improve the quality and choice of products for customers.

At the time, both supermarkets said the alliance will cover the strategic relationship with global suppliers and will relate to the joint purchasing of own-brand products and goods, not for resale.

It was thought that the purchasing alliance would allow the retailers to demand better terms from suppliers, including the likes of Nestlé, Procter & Gamble and Unilever.

Pooling buying power 
However, now the initial three-year collaboration has come to an end, and there are no plans for renewal, with both retailers confirming it has effectively been scrapped.

“Tesco and Carrefour have confirmed that they have decided not to extend their Purchasing Alliance beyond the three-year operational framework agreed in 2018, and the Alliance will formally end on 31 December 2021,” says a Tesco statement.

Besides the joint statement both retailers are remaining tight-lipped about why the alliance has not been extended.

The statement goes on to say that since 2018, Tesco and Carrefour have benefited from several joint buying opportunities across food and general merchandise categories, enabling access to new suppliers, new sources and new products.

“Moving forward, both companies have agreed that they will continue this work independently and focus on their own opportunities, building on the experience and the progress made during the Alliance period,” it says.

Besides the joint statement, both retailers are remaining tight-lipped about why the alliance hasn’t been extended.

Tesco is the market leader of groceries in the UK, and Carrefour is one of the largest hypermarket chains globally and a key supermarket chain in Europe.

Retailers U-turning 
When the alliance was first agreed, Alexandre Bompard, chairman and CEO of the Carrefour Group, outlined the synergies between the two retail giants.

“This strategic alliance between Carrefour and Tesco is a major agreement as it combines the purchasing expertise of two world leaders, complementary in their geographies, with common strategies,” he said at the time.

“This agreement is 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.”

However, the fact the alliance has not been renewed past its initial three-year framework suggests that it didn’t offer strong enough savings.

Speculation has also been mounting that Brexit has played a part in the decision. However, neither retailer has confirmed this.

Edited by Gaynor Selby