Blog: Dean BestInternational brands face stronger customer after Auchan, Systeme-U deal

Dean Best | 15 September 2014

France's fifth- and sixth-largest retailers, Auchan and Système U, are to team up on buying - with the companies to work together when dealing with international brands.

Auchan and Système U said the agreement would not cover fresh produce, some cheese products, bakery lines, meat and seafood.

The deal will also exclude private label, which accounts for 25% of the two retailers' sales on average.

The grocers sought to further emphasise their independence with the insistence that they would continue to operate independently on setting the product ranges available in their stores and on setting price and promotion policy.

However, the fact Auchan and Système U are to work together on some buying is likely to cause some furrowed brows at manufacturers.

And not just about the prospect of negotiating buying terms with - on paper - a stronger entity.

By working together on buying, Auchan and Système U could divert the savings they make into pricing and promotions as they look to trade more effectively in some tough trading conditions in France.

Announcing the deal, Auchan said the agreement came amid "a difficult economic context of value-destroying deflation, with no prospect that would change in the medium term".

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