// Tesco to end buying partnership with French retail giant Carrefour on December 31
// The deal was first struck in 2018
// Tesco denies that the decision to end it had anything to do with Brexit
Tesco has said it will end its buying partnership with French supermarket giant Carrefour after three years.
The UK’s biggest grocer told investors this morning that it would end the alliance – which was intending to improve product choice and lower prices – on December 31.
The two retail giants said they would continue their efforts to improve purchasing deals “independently” and will focus on their own opportunities.
- Tesco-Carrefour alliance operational from October 2018
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In 2018, Tesco and Carrefour struck the deal in order to strengthen relationships with grocery suppliers, reduce prices through their greater collective buying power and expand their own-label ranges.
“Over the last three years, Tesco and Carrefour have benefited from a number of joint buying opportunities across food and general merchandise categories, enabling access to new suppliers, new sources and new products,” they said in a joint statement.
“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.”
A Tesco spokesperson told The Guardian that the UK’s departure from EU did not influence the decision to end the partnership, especially in the wake of concerns about the rising cost of food imports due to Brexit.
Shore Capital analyst Clive Black said the decision to end the partnership “does not come as a great surprise”.
“For whatever reason, regulatory, cultural and operational, there would appear to be little notable benefit from the alliance on an ongoing basis,” he said.
“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 Walmart, never mind other buying groups.”
with PA Wires