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Could the Amazon-Casino Relationship Develop Even Further?

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French retailers take to strategic partnerships

Amazon (AMZN) recently expanded its partnership with French retail chain Casino Group (CGUSY). The expanded cooperation will see Amazon set up 1,000 lockers at Casino outlets from which Amazon shoppers can pick up their orders. On its part, Casino will be able to sell more of its items on Amazon’s marketplace. Last year, Amazon reached an agreement with Casino through which it would fill grocery orders for its Prime customers through the Monoprix brand. The latest move to expand the partnership signals that the earlier deal has been working well for the companies.

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Strategic partnerships are becoming a popular way for traditional French retailers to cope in the changing retail industry. French retail giant Carrefour (CRRFY) teamed up with Google last year to help extend its online reach. Carrefour also formed a strategic alliance on product procurement with its British counterpart, Tesco (TSCDY).

Casino is selling its assets to repay debt

In the case of Amazon and Casino, the relationship could develop into something bigger than we’ve seen so far. Last month, Casino announced that it was selling 32 of its store properties to Apollo Global Management for ~$530 million. The proceeds from that transaction will help Casino cut its debt.

With Amazon and Casino extending their partnership at a time when the latter is selling assets to deal with its debt, there’s speculation that Amazon could actually acquire Casino down the road. Online retailers have taken to purchasing or pursuing partnerships with traditional stores with physical store networks as they seek to capture more grocery expenditures. Amazon bought organic food retailer Whole Foods for more than $13 billion in 2017, and Chinese e-commerce giants Alibaba (BABA) and JD.com (JD) are opening physical outlets through which they sell groceries and where customers can pick up purchases they’ve made online.

Amazon’s physical store business generated $4.3 billion in revenue in the first quarter.

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