French retailers Groupe Casino and Auchan Retail have announced plans to develop a 'global strategic partnership' for food and non-food purchasing.
The agreement, which is subject to competition approval, will enable the two businesses to 'jointly negotiate their purchases in France and abroad with their main multi-national food and non-food suppliers', Groupe Casino said in a statement this morning (3 April).
'This ambitious partnership will give precedence to subsidiary contracts (suppliers/producers/distributors), while fuelling the development of certain French suppliers in countries covered by both retailers (Western Europe, Eastern Europe, Latin America, Asia)'.
The partnership has been developed in line with the recently announced 'les Etats Généraux de l’Alimentation', which dictate that producers and retailers must develop supply chains that take into account both economic and ecological health.
The agreement also replaces a similar alignment between Casino Group and Intermarché in France, which has now been terminated by mutual agreement.
‘Strategic Move’
'In today's environment, with central purchasing divisions being restructured and new players emerging on the retail market, this strategic partnership would exclusively cover major national or international manufacturers in the food and non-food industries,' Casino's statement read.
'Furthermore, Auchan Retail and Casino Group will offer their current partners in procurement to join this new dynamic.'
Analyst Comments
Commenting on the agreement, Bruno Monteyne of Bernstein Research said, "The deal is focussed on the large national and international brands. This is trying to thread a fine line by being ‘friendly’ to the French sensitivities of farmers, but at the same time being able to compete on the price competition on the large brands."
Monteyne added that Casino may have looked to develop a new agreement with Auchan, instead of Intermarché, as " Intermarché are currently the strongest performance in the Kantar data after heavy investments in price. Casino may feel that they have been enabling the recent growth of Intermarché by giving them access to the buying advantage of the Casino volumes.
"Dropping the deal with Casino should worsen Intermarché’s buying terms and weaken their competitive position if they don't find a replacement partner."
He added, however, that there appear to be "no financial benefits [for Casino] from this change in buying partner."
Elsewhere, Barclays European Food Retail Equity Research said that it considers that "Intermarché is a more dynamic operator in France than Auchan, which is struggling to improve the performance of its hypermarkets. Besides, the geographic overlap between Casino and Auchan is very limited, since the latter is not present in Latam at all."
© 2018 European Supermarket Magazine – your source for the latest retail news. Article by Stephen Wynne-Jones. Click subscribe to sign up to ESM: The European Supermarket Magazine.
