- Joint negotiations with multinational suppliers on global level
- Combined sourcing of non-food private label products
- Partnership brings benefits for customers
- Agreement effective from November 2014
Within the framework of the changing global retail environment METRO GROUP and French Groupe Auchan today announced their agreement to enter into an international purchasing partnership. The cooperation is clustered in two agreements that will combine the complementary strengths of the retailer Auchan and the wholesale and food retail divisions of METRO GROUP: In the first place, an international cooperation agreement enabling joint negotiations on specific international services and conditions for the most important international suppliers of branded consumer products on global level. Secondly, 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. Electronic consumer products are excluded from these two agreements.
The agreed partnership combines for the first time the bargaining power of two leading companies, which operate two different business models with an ideal geographical fit. "We are convinced that both of our companies will benefit from the upcoming cooperation and the combination of expertise," says Olaf Koch, CEO of German based METRO GROUP. "We want to use the strengths of both organizations to capture maximum synergies towards our common suppliers and generate cost savings, which we can then pass on to our customers.
"This strategic buying partnership allows us to face the challenges of trade globalisation and the changing procurement markets," explains Vianney Mulliez, Chairman of the Board of Directors of Groupe Auchan. "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.
Suppliers concerned by the international cooperation agreement will be large and strong multi-national manufacturers who operate in highly concentrated markets. METRO GROUP and Groupe Auchan aim to gain a balanced bargaining position towards those players, offering them international services. This cooperation will benefit 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 an 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. Those products are predominantly sourced through centralized purchasing entities based in Hong Kong and Shanghai from large suppliers located in Asia or Eastern Europe. In the future, both parties intend to jointly source a number of non-food products. The international sourcing agreement enables the two groups to offer their customers innovative and improved products. Through this agreement, METRO GROUP and Groupe Auchan also plan to realize efficiency gains from which customers shall benefit by better prices.
The partnership is new in the worldwide retail environment, as it is combining the bargaining powers of a predominantly wholesaling company with those of one of the leading retailers. For the partnership, there is no overlap between Auchan and METRO GROUP in terms of sales activities. Groupe Auchan's core business is in the retail market for sale of daily goods to consumers. METRO GROUP is active in the wholesale sector for business customers and food retail activities in countries where Groupe Auchan is not present. This led the two groups to consider the development of a partnership that will bring business growth and benefits for costumers.