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Adolescence and the Path to Maturity in Global Retail

Author

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  • Bart J. Bronnenberg
  • Paul B. Ellickson

Abstract

We argue that, over the past several decades, the adoption and diffusion of "modern retailing technology" represents a substantial advance in productivity, providing greater product variety, enhanced convenience, and lower prices. We first describe modern retailing, highlighting the role of modern formats, scale (often transcending national boundaries), and increased coordination with upstream and downstream partners in production and distribution. In developed markets, the transition to modern retailing is nearly complete. In contrast, many low-income and emerging markets continue to rely on traditional retail formats, that is, a collection of independent stores and open air markets supplied by small-scale wholesalers, although modern retail has begun to spread to these markets as well. E-commerce is a notable exception: the penetration of e-commerce in China and several developing nations in Asia has already surpassed that of high-income countries for some types of consumer goods. To understand the forces governing the adoption of modern technology and the unique role of e-commerce, we propose a framework that emphasizes the importance of scale and coordination in facilitating the transition from traditional to modern retailing. We conclude with some conjectures regarding the likely impact of increased retail modernization for the developing world.

Suggested Citation

  • Bart J. Bronnenberg & Paul B. Ellickson, 2015. "Adolescence and the Path to Maturity in Global Retail," Journal of Economic Perspectives, American Economic Association, vol. 29(4), pages 113-134, Fall.
  • Handle: RePEc:aea:jecper:v:29:y:2015:i:4:p:113-34
    Note: DOI: 10.1257/jep.29.4.113
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    Citations

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    Cited by:

    1. Elena Argentesi & Paolo Buccirossi & Roberto Cervone & Tomaso Duso & Alessia Marrazzo, 2018. "Price or Variety? An Evaluation of Mergers Effects in Grocery Retailing," Discussion Papers of DIW Berlin 1734, DIW Berlin, German Institute for Economic Research.
    2. Elena Argentesi & Paolo Buccirossi & Roberto Cervone & Tomaso Duso & Alessia Marrazzo, 2018. "Price or Variety? An Evaluation of Mergers Effects in Grocery Retailing," CESifo Working Paper Series 7035, CESifo Group Munich.
    3. Ali Horta├žsu & Chad Syverson, 2015. "The Ongoing Evolution of US Retail: A Format Tug-of-War," Journal of Economic Perspectives, American Economic Association, vol. 29(4), pages 89-112, Fall.
    4. repec:krk:eberjl:v:5:y:2017:i:1:p:11-26 is not listed on IDEAS

    More about this item

    JEL classification:

    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation
    • L81 - Industrial Organization - - Industry Studies: Services - - - Retail and Wholesale Trade; e-Commerce
    • M31 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Marketing and Advertising - - - Marketing
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • P23 - Economic Systems - - Socialist Systems and Transition Economies - - - Factor and Product Markets; Industry Studies; Population

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