News that European grocery powerhouses Tesco and Carrefour are forming a strategic alliance has some observers wondering if a price war is about to break out in Europe.
The two companies announced a three-year alliance on July 1, saying they planned to leverage the relationship to improve product quality and lower prices to the consumer, taking advantage of the added clout it gives them in negotiating prices with suppliers.
The move comes after Sainsbury’s purchased Asda from Walmart in April. After that merger, Sainsbury’s said it planned to lower prices on many popular products by 10 per cent. Couple those reductions with planned Tesco-Carrefour price cuts – and the expansion across Europe of cut-rate competitors Lidl and Aldi – and industry observers say a price war could be about to break out.