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Scale, Scope, and Specialization Effects on Retailers’ Procurement Strategies: Evidence from the Fresh Produce Markets of São Paulo

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  • Mainville, Denise Y.
  • Reardon, Thomas
  • Farina, Elizabeth Maria Mercier Querido

Abstract

Worldwide, the emergence of large supermarket chains in food retail markets is often associated with the marginalization of smaller retailers. A notable exception exists in Brazil, however, where small retailers have held their place in the market and recently even gained ground. The literature investigating how retail concentration has affected agrifood chains has focused activities of the largest retail chains, implicitly holding the scale, scope and specialization of retailers’ input needs constant, and overlooking the influence of these factors on retailers’ procurement strategies. This paper tests hypotheses regarding these variables’ effects on retailers’ fresh produce procurement strategies. Data is drawn from a survey of retailers in metropolitan São Paulo. The research results provide insight into factors underlying retailers’ procurement strategy choices and tradeoffs among options. The results support the fundamental hypothesis of the paper that research on the competitive strategies of smaller retailers in a context of market domination by large retailers should not focus exclusively on the degree to which the smaller retailers imitate the larger retailers rather it should account for the possibility that the underlying characteristics of the retailers may make diverse competitive strategies appropriate.

Suggested Citation

  • Mainville, Denise Y. & Reardon, Thomas & Farina, Elizabeth Maria Mercier Querido, 2008. "Scale, Scope, and Specialization Effects on Retailers’ Procurement Strategies: Evidence from the Fresh Produce Markets of São Paulo," Brazilian Journal of Rural Economy and Sociology (RESR), Sociedade Brasileira de Economia e Sociologia Rural, vol. 46(1), March.
  • Handle: RePEc:ags:rdecag:61282
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    References listed on IDEAS

    as
    1. Berdegue, Julio A. & Balsevich, Fernando & Flores, Luis & Reardon, Thomas, 2005. "Central American supermarkets' private standards of quality and safety in procurement of fresh fruits and vegetables," Food Policy, Elsevier, vol. 30(3), pages 254-269, June.
    2. Hueth, Brent & Ligon, Ethan & Wolf, Stephen & Wu, Steven, 1999. "Incentive Instruments in Agricultural Contracts: Input Control, Monitoring, Quality Measurement, and Price Risk," Staff General Research Papers Archive 5237, Iowa State University, Department of Economics.
    3. George A. Akerlof, 1970. "The Market for "Lemons": Quality Uncertainty and the Market Mechanism," The Quarterly Journal of Economics, Oxford University Press, vol. 84(3), pages 488-500.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    scale; scope; specialization; procurement strategy; fresh produce; retail; Political Economy; L22;

    JEL classification:

    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure

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