In 2025, Carrefour ceased operations in Italy. This was, in part, due to transactional relationships with suppliers that undermined its competitiveness in the market. Vicente Foggia argues that retailers capture disproportionate value from collaboration, yet many continental European retailers remain reluctant to invest in partnership structures.
In July 2025, Carrefour sold its Italian operations for €1 billion. Sales were shrinking, costs were high, and the retailer couldn’t stay competitive in Italy’s unique landscape. Responsibility for the losses lay, at least in part, in the transactional relationships Carrefour had with its suppliers.
On the other end of the spectrum, successful competitors like Esselunga build deep partnerships with local suppliers beyond price negotiation, co-developing products and joint marketing campaigns. These ties enhance consumer trust and differentiation—precisely what Carrefour struggled to achieve.
In the summer of 2025, I spoke with senior leaders across suppliers, retailers, and data analysis firms to understand the multiple perspectives towards collaboration. They challenged the deeply held belief in continental Europe that collaboration means giving ground.
The power dynamics myth
There’s a stark difference between retailer-supplier relationships in the Anglo-Saxon model and the continental European one. In Britain and America, retailers generally believe value creation comes from growing consumption and categories. In Europe, the focus is procurement benefits — cost savings through better negotiating terms.
Many European retailers see collaboration as weakness, creating a disconnect between price negotiation and the investment needed for value creation; however, this perception fundamentally misreads the power dynamics.
Retailers capture disproportionate value from collaboration, seeing cost reductions of 8% compared to suppliers’ 2%. This asymmetry persists because suppliers depend more heavily on retail relationships for market access than vice versa. Retailers gain immediate cost benefits whilst suppliers gain capability development and market access. The question facing hesitant retailers isn’t whether collaboration dilutes negotiating power, but whether refusing to collaborate cedes competitive advantage to rivals who’ve already embraced partnership models.
The financial case is compelling
When I analysed retailers across the UK, USA, and Europe, I observed a statistically significant positive correlation between collaboration and operating profit margin, net profit margin, and especially revenue growth. I quantified collaboration by asking executives at a supplier firm to rank retailers, and the relationship held across regions. Whilst not causal, the best performing retailers financially engage in collaborative partnerships with key suppliers.
Research from Advantage (*) shows companies in the top collaborative tier see revenues increase 3.7% faster than average. Their data demonstrates that stronger retailer-supplier relationships lead to fewer disruptions, faster innovation, and up to 10% higher profitability.
The mechanisms are straightforward. Kellogg analysed point-of-sale data at Tesco and discovered most out-of-stocks happened midweek afternoons. Adjusting shipping schedules helped Tesco recapture more than £2 million in lost sales. Similarly, Walmart’s automated inventory systems enable collaborative planning and forecasting, resulting in 16% inventory reduction whilst improving in-stock rates by up to 8%.
The competitive urgency
As routine transactional processes become automated through AI-driven promotion planning and pricing algorithms, differentiation will increasingly stem from strategic collaboration on innovation, consumer insight, and purpose-driven initiatives. Retailers who postpone investment in collaborative capabilities are forfeiting the relationships that will determine future competitive advantage.
Recent research from McKinsey found Europe’s fragmented consumer industry could see cost savings of over $10 billion from supply chain collaboration. Successful collaborations averaged a 5.4% cost reduction for both retailers and suppliers.
The risks of purely transactional relationships became especially evident during COVID-19. The 2024 Advantage report states that transactional relationships result in fragile supply chains, with 28% less satisfaction in collaborative forecasting compared to highly engaged partnerships. It’s 32% more difficult to do business, and retailers see suppliers as 27% less innovative. Relationships become fragile across the supply chain when parties don’t work closely together.
What actually drives success
Retailers’ and suppliers’ perspectives, as well as their priorities, differ significantly; however, trust consistently emerges as the strongest predictor of collaborative success. In a comprehensive analysis of 92 best-in-class retailer-supplier alliances, both parties independently identified trust as their top success factor, with mean trust scores exceeding 6.2 out of 7 for the most successful partnerships. Over 90% of participants strongly agreed their partners exhibited character- and competence-based trust.
Yet building trust beyond informal relationships requires mechanisms like supplier satisfaction surveys and regular review dialogues. Collaborative decision-making proves the most impactful operationally, encompassing joint pricing decisions, shared forecasting, and coordinated planning changes.
Half of customisation programmes fail to meet either party’s objectives. Inadequate joint planning is the primary cause, leading to increased costs without corresponding sales growth. When collaboration lacks proper coordination, suppliers experience proliferation of product variants and higher logistics costs whilst retailers struggle with unsold inventory and poor in-store execution.
The mutual gains reality
Retailers see tangible benefits in successful partnerships. Operational improvements include reduced order cycle times, improved accuracy, and enhanced forecast precision. Strong supplier commitment means retailers experience performance, gains including improvements in profitability, sales growth, and market share. A British retailer executive I spoke with framed collaboration outcomes as “growth on growth”, referring to volume expansion accompanied by improving margin rates.
The data analytics dimension provides additional benefits. Big data analytics capabilities, when enhanced through collaboration, show a direct effect on financial performance, typically improving company productivity by 3-7%.
Suppliers gain less in immediate cost savings but achieve significant strategic advantages. Collaborative approaches demonstrate clear supplier benefits: economic performance improvements and substantial capability development. Information sharing impacts supplier commitment most—joint efforts in planning and problem-solving enhance trust, which suppliers prize more highly than buyers do.
The path forward
Success requires accepting that mutual benefits don’t mean identical benefits. Suppliers prioritise market survival and learning opportunities, whilst retailers focus on operational performance improvements. Both report satisfaction when trust serves as the foundation, when some inequity from asymmetrical gains is accepted as the cost of collaboration, and when partnerships maximise learning despite economic trade-offs.
The most successful collaborations feature regular goal review meetings despite relatively weak formal procedures, suggesting ongoing dialogue matters more than rigid frameworks. For retailers, the challenge lies in moving beyond procurement-focused mindsets that treat supplier negotiations as purely zero-sum exchanges. The data reveals retailers capture disproportionate value from collaboration, yet many continental European retailers remain reluctant to invest in partnership structures.
Retailers should establish tiered partnership frameworks that distinguish strategic suppliers from transactional ones, with clear expectations around data engagement, joint planning, and multi-year commitments. The evidence shows retailers prioritise partners who engage with all parts of their strategy, rather than cherry-picking favourable opportunities.
Carrefour’s Italian exit demonstrates the competitive vulnerability of transactional approaches. As automation reshapes retail operations, the retailers who thrive will be those who’ve built the collaborative relationships that deliver sustained competitive advantage. The question isn’t whether European retailers can afford to collaborate, it’s whether they can afford not to.
- This blog post represents the views of its author(s), not the position of the London School of Economics and Political Science Department of Management.
- (*) Advantage Group International. (2024). Advantage 2024 voice of retailers/customers – Core total manufacturer benchmark (38 markets).
- Photo by SHOX art on Pexels.
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