Tesco and Carrefour Buying Alliance is Over

The UK’s biggest retailer and Europe’s biggest retailer have called time on a buying alliance they first announced in 2018.  At the time Tesco’s then CEO David Lewis hailed the ‘collective product expertise and sourcing capability’ the alliance with Carrefour would bring, and said this would ‘improve choice, quality and value’ for consumers.

The deal looked strategically attractive 3 years ago.  The rise of discounters Aldi and Lidl were putting increased pressure on the attractiveness of own label ranges and an alliance was seen as a way to pool expertise and buying power, to be able to offer better deals to shoppers and make the supermarkets look more attractive vs their price-based rivals.

But it seems clear that the benefits of the alliance over the last period of time have not been compelling enough in practice to justify extending the arrangement.  And, of course, the environment has changed too. The pandemic has shifted the focus onto other priorities, not least online, Tesco has a new CEO and Carrefour have themselves been embroiled in a potential takeover by Canadian group Couche-Tard.

The UK has also left the EU (a decision known at the time of the alliance), although Tesco deny that Brexit is the reason for the decision taken.

It still remains the case that Tesco and Carrefour are very complementary businesses in terms of categories and geographies – and some commentators would argue that the merits of a merger perhaps might one day not be unthinkable.  But for now each retailer will focus on its own business.