LONDON: Two of Europe’s biggest supermarket chains have announced a strategic alliance for the sourcing of private label goods that will help both brands fight in an increasingly competitive market.

UK-based Tesco and French multinational Carrefour – both mid-priced retailers challenged by the continued rise of discount supermarkets – said the deal would enable both businesses to offer customers better quality and choice, at lower prices.

The three-year alliance is due to be formally agreed in the next two months. It will cover the chains’ strategic relationship with global suppliers, and the joint purchasing of own-brand products.

Tesco CEO Dave Lewis, brought in from Unilever four years ago to revive what was a struggling if vast business, said the alliance would enable Tesco “to serve our customers even better, further improving choice, quality and value”.

Alexandre Bompard, Chairman and CEO of Carrefour Group, said the two businesses had complementary buying expertise and a common strategy. He described the tie-up as “a great opportunity”.

The announcement comes as Amazon continues to expand into grocery, having bought the Whole Foods chain less than a year ago. The grocery delivery service Amazon Fresh has been operating in the UK since 2016, with supermarket partner Morrisons, and has gradually been expanding the geographical footprint it serves. Fresh launched in Germany last year, and the head of Amazon France said earlier this year that the company intends to launch Fresh in France, though did not suggest how imminent this was.

Tesco remains the UK leader in the supermarket sector, despite losing some ground to discounters Aldi and Lidl in recent years. Just two months ago, however, two other major UK supermarket chains, Sainsburys and the Walmart-owned ASDA, confirmed their intention in to merge. If that deal gets the go-ahead from regulators, the merged chain would eclipse Tesco as the UK’s biggest supermarket.

In their joint statement, Tesco and Carrefour said the new buying alliance would 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.

Sourced from the Financial Times