Tesco to end buying partnership with French supermarket Carrefour

Tesco has said it will end its buying partnership with French supermarket chain Carrefour after three years.

The UK’s biggest grocer told investors on Monday morning that it will end the alliance – which was intending to improve product choice and lower prices – on December 31.

The two retailers said they will continue their efforts to improve purchasing deals “independently” and will focus on their own opportunities.

In 2018, the companies 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.

In a statement, the two companies said: “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.

“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.”

Shore Capital analyst Clive Black said the decision to end the agreement “does not come as a great surprise”.

He said: “For whatever reason, regulatory, cultural and operational, there would appear to be little notable benefit from the alliance on an ongoing basis.

“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.”

Shares in Tesco were flat in early trading on Monday.