August 30, 2018 / 8:59 AM / in 8 months

Spanish discount supermarket DIA joins purchasing alliance

MADRID, Aug 30 (Reuters) - Spanish discount supermarket group DIA has joined a global purchasing alliance formed by three European rivals aimed at helping the retailers cut prices and expand own-label ranges.

Supermarket groups are increasingly joining forces to try to strengthen their hands in negotiations with big brand suppliers such as Nestle and Kraft Heinz, at a time when they are also battling sluggish demand and online competition.

Carrefour and Tesco set up a similar alliance in July.

DIA Group said on Thursday it had joined the Horizon International Services negotiation platform formed in June by French companies Auchan Retail and Casino Group along with Germany’s Metro.

The Spanish group said the alliance would become operational once approval had been granted by competition authorities.

Sales growth at Nestle, Procter & Gamble and Unilever has been driven almost entirely by shifting more goods this year, rather than price rises, given a tough retail environment.

The major brand producers are trying to boost margins by selling more premium, higher-priced items, but retailers are reluctant to put up prices as they compete with discount groups like Aldi and Lidl and online players like Amazon.

DIA is attempting to restore credibility after a string of poor results and a share price slump in recent quarters. It is due to present a new strategic plan in October and appointed a new chief executive officer last week. (Reporting by Sonya Dowsett; Editing by Mark Potter)

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