Global grocery giants Tesco and Carrefour have decided to end their buying partnership, that was meant to lower prices and offer greater product choice for consumers, after just three years.
The two grocery powerhouses struck a purchasing agreement in 2018, which was expected to strengthen both retailer’s supplier partnerships, extend the reach of own-brand products and slash prices on other products due to combined buying power.
However, in a joint statement issued on Monday (7 June), Tesco and Carrefour said “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,” despite adding the agreement had yielded “a number of joint buying opportunities”.
Brexit not to blame
Despite concerns of rising cost of food imports into the UK, Tesco denied that Brexit had rendered the partnership unworkable.
Shore Capital grocery analyst Clive Black said “for whatever reason, regulatory, cultural, and operational, there would appear to be little notable benefit from the alliance on an ongoing basis”.
Black noted that international partnerships had not been particularly beneficial for UK grocers for a number of years. “Such a view does not come as a great surprise to us, having observed many attempts by major grocery chains to explore economies of scale through amalgamated buying.
“In truth, the outcome is far from clear or impressive for major players; apart from bananas, it was not especially evident in food for Asda in the UK being part of Wal-Mart, never mind other buying groups”.