Tesco signs Carrefour deal to target supply costs

TESCO has sealed a buying alliance with French rival Carrefour to pursue better terms with suppliers as the retailers face tough competition in the grocery sector.

Britain’s biggest supermarket chain said the longterm partnership with Carrefour would come into force in October, helping the pair to reduce the cost of their supply. They aim to cut prices for customers by joining forces to buy branded and own-brand products, and other supplies such as trolleys and shop fittings.

The three-year deal has been prompted by increased competition in Britain’s £200bn-a-year food market.

Amazon is threatening to expand its food business after buying Whole Foods last year, while German discounters Aldi and Lidl continue to snap up market share from major players.

Tesco has already sought to strengthen its supply chain through a £3.7bn takeover of wholesaler Booker and is said to be exploring the launch of a budget supermarket chain called Jack’s. It is reportedly looking at launching between 30 and 60 discount stores by as early as September this year.

Meanwhile, Sainsbury’s and Asda are looking to push through a £15bn merger, in a move that would push Tesco out of the top spot as the largest player in the UK grocery market. The deal aims to offer customers a 10pc price cut on everyday items by targeting improved terms with multinational suppliers such as Unilever.

Tesco shares slipped 0.1p to 259.4p yesterday.