German giant Metro and French powerhouse Auchan have struck a joint purchasing partnership designed to make the most of their strength when negotiating with suppliers.
The co-operation arrangement covers joint purchasing of non-food products, with the exception of electrical goods, which will be retailed as own-brand or unbranded product.
The tie-up will also mean the pair will jointly negotiate on particular deals with big branded goods suppliers in certain markets.
Analysts at grocery industry body IGD observed: “Although this type of sourcing partnership is not new, the difference here is that it combines the buying power of retailer Auchan with that of the predominantly wholesaling Metro.
“Auchan and Metro overlap in China and 10 European markets – France, Italy, Portugal, Spain, Luxembourg, Poland, Romania, Hungary, Ukraine and Russia.
“In terms of non-food private label development, synergies can be created in countries where Metro Cash & Carry is still targeting ordinary shoppers, such as Russia, Ukraine and China.
“However, we see less potential for this partnership in Western and Central Europe, where Metro Cash & Carry is targeting food service companies and independent retailers, cutting down on non-food ranges and offering only non-food ranges which complement food ranges.”
Analysts at Barclays wondered how much of an impact the deal would have.
They said: “There is no downside to this news, but we are generally sceptical of sourcing arrangements, especially when the geographies do not overlap a great deal.”
Auchan has also recently struck joint buying arrangements in France and Italy.