Market Power in Food Retailing
Food retailers may enjoy market power by way of selling power (ability to control competitors and consumers) and/or buying power (ability to control suppliers). Selling power is reflected in the market share gains achieved by some distribution channels and groups of enterprises. The double effect of structural factors (consumer behaviour) and economies of scale and scope in terms of logistics, merchandise management and distribution led to the rapid growth of super- and hypermarkets in the past decades and contributed to the emergence of major suburban shopping centres. Market leaders were able to boost their market shares significantly, and the concentration increased, which in turn improved efficiency and accelerated the erosion of the position of neighbourhood shops. High concentration rates in retailing, combined with the structural advantages enjoyed by the retail trade over much of the manufacturing, makes for a substantial potential buying power by the retailer. The extent to which buying power has implications in terms of welfare economics depends very much on the market structures in retailing and manufacturing, but also on the extent to which competition works at the retailing trade level. Confirmation that the retailing industry has in recent years gained in buying power comes, i.a., from the fact that the main buyers have increased their sales volumes. Their rising buying power is accompanied by a shift of functions from manufacturing industry to retailing industry, larger discounts, insistence on better terms and price and terms negotiations which are largely controlled by the retailing industry. The most efficient method of fighting buying power appears to be the development of strong brands. To a large extent, increasing buying power is also due to intensified competition in the wake of EU membership and structural problems suffered by the manufacturing industry: too small enterprises, excessive production costs, weak brands as a result of the lack of innovation and marketing competence. High concentration rates among food retailers and their resultant market and buying power may be countered only by competitive policy measures (preventive merger control, accompanying supervision to prevent abuse). Structural problems, especially those suffered by small businesses, need to be eliminated within the scope of a structural and industrial policy, with the initiative to be taken by the businesses themselves.
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Volume (Year): 72 (1999)
Issue (Month): 12 (December)
|Contact details of provider:|| Postal: Arsenal Object 20, A-1030 Wien|
Phone: (+43 1) 798 26 01-0
Fax: (+43 1) 798 93 86
Web page: http://www.wifo.ac.at/
More information through EDIRC
|Order Information:|| Postal: Austrian Institute of Economic Research Publikationsverkauf und Abonnentenbetreuung Arsenal, Objekt 20 A-1030 Vienna/Austria|
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Cotterill, Ronald W, 1986. "Market Power in the Retail Food Industry: Evidence from Vermont," The Review of Economics and Statistics, MIT Press, vol. 68(3), pages 379-386, August.
- Bresnahan, T.F & Reiss, P.C., 1989.
"Entry And Competition In Concentrated Markets,"
151, Stanford - Studies in Industry Economics.
When requesting a correction, please mention this item's handle: RePEc:wfo:monber:y:1999:i:12:p:797-809. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Ilse Schulz)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.