Germany's Metro Group and France-based Groupe Auchan have revealed that they have agreed an international purchasing partnership, in a bid to create synergies with suppliers and ultimately generate cost savings which can be passed on to consumers.
According to the retailers, the cooperation is clustered in two agreements that will combine the strengths of Auchan and the wholesale and food retail divisions of Metro.
In the first place, the international cooperation agreement enables joint negotiations on specific international services and conditions for the most important international suppliers of branded consumer products on global level.
Secondly, the groups noted, an international sourcing agreement will be put in place enabling joint worldwide purchasing of non-food products that each company will resell individually under its own brand labels or as no-name labels – although electronic consumer products are excluded from these two agreements.
'We are convinced that both of our companies will benefit from the upcoming cooperation and the combination of expertise,' explained Olaf Koch, CEO of Metro Group. 'We want to use the strengths of both organisations to capture maximum synergies towards our common suppliers and generate cost savings, which we can then pass on to our customers.'
Vianney Mulliez, chairman of the board of directors at Groupe Auchan, added: 'This strategic buying partnership allows us to face the challenges of trade globalisation and the changing procurement markets. This agreement between two major actors of the sector is a great opportunity to develop business and to strengthen our relationship with our main suppliers.'
Through the strategic purchasing partnership in the mid- to long-term, 'significant efficiency gains' are expected, the retailers outlined.
Suppliers concerned by the international cooperation agreement would be large and strong multi-national manufacturers who operate in highly concentrated markets, the groups explained, outlining that Metro and Auchan were aiming to gain a balanced bargaining position towards those players, offering them international services, benefiting the two companies’ customers. The international cooperation agreement will be effective from November 2014 for negotiations related to 2015.
The second part of the partnership is the international sourcing agreement, focusing on the joint international purchasing of non-branded goods. Each party will resell them under its no-name or own brand labels, with the agreement effectively allowing the two groups to offer their customers innovative and improved products. Through this agreement, the retailers also plan to realise efficiency gains from which customers will ultimately benefit through better prices.
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