Do exporting firms benefit from retail internationalization? Evidence from France

This paper questions the impact of the globalization of the retail sector on the export activity of origin country agrifood firms. In a previous paper (Cheptea et al. 2015), we showed that the overseas expansion of a country's retailers fostered its exports to foreign markets. This effect can be explained by a reduction in trade costs for retailers' supplying firms in the origin country, or to a change in consumer preferences in the host country that benefits all origin country firms. In this paper, we evaluate which of the two mechanisms dominates. For that, we use an original firm-level database of French agri-food exports, identifying the domestic suppliers of French retailers through certification with the private IFS standard. We find that IFS certified French firms are more likely to export and export larger volumes than non-certified firms to markets where French retailers established outlets. We also show that when French retailers close down their activities in a market, IFS firms face a drop in exports to this market in the subsequent years. The results are robust to the use of different sets of firm- and country-specific fixed effects, are unaffected by possible selection and endogeneity biases, and by the presence in export markets of other retailers. The difference in behavior for certified and non-certified exporting firms on markets where French retailers operate confirms the trade cost advantage of retailers' suppliers, which is lost when French retailers exit from the destination country.