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The rise of supermarkets and their development implications: International experience relevant for India


  • Reardon, Thomas
  • Gulati, Ashok


"The Indian Council for Research on International Economic Relations (ICRIER) was invited by the Indian Ministry of Commerce and Industry to conduct a study titled “The Impact of Organized Retailing on the Unorganized Retail Sector.” Because organized retail in India is still in its infancy, it was deemed critical to look at the experience of other countries, especially developing ones. Thus, ICRIER sought the assistance of Dr. Thomas Reardon and Dr. Ashok Gulati, co-directors of Markets in Asia, a joint program of the International Food Policy Research Institute (IFPRI) and Michigan State University. ICRIER asked Reardon and Gulati to help research and report on the international experiences in the growth and expansion of modern retailing in developed and developing countries and the implications for India. This report is a contribution to that effort. This paper focuses on the emergence of modern retailing with respect to food and what implications it can have for various stakeholders in the food supply chain. While we briefly review the US and European experience, we focus on the developing countries of Latin America and East Asia (including China), where the supermarket revolution started in the early to mid-1990s. We looked at the patterns of the diffusion process in modern retailing in terms of “waves” that go from country to country, and within a country from first-tier cities to second-tier and then third-tier cities, and from processed to semiprocessed to fresh products. We also treat the challenges and opportunities that modern retailing has posed for various stakeholders in the supply chains, especially for traditional retailers, farmers, and consumers. We also looked at several instances when governments helped small retailers or upgraded wetmarkets by (1) establishing affirmative action policies to strengthen their competitiveness so they could also participate effectively in the transition to modern retailing, and (2) providing compensation to help them change their lines. The paper concludes by surmising what lessons other countries' experiences in the supermarket revolution have for India which is on the threshold of a major structural change in retailing. The expectations and concerns are high. Accordingly, India must form its own model of retail development to meet its priorities, learn from challenges that others have faced, and successful examples of strategies for “competitiveness with inclusiveness” among traditional retailers, wholesaler, and farmers entering an era of rapid retail transformation and concomitant food system change." from Author's Abstract

Suggested Citation

  • Reardon, Thomas & Gulati, Ashok, 2008. "The rise of supermarkets and their development implications: International experience relevant for India," IFPRI discussion papers 752, International Food Policy Research Institute (IFPRI).
  • Handle: RePEc:fpr:ifprid:752

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    References listed on IDEAS

    1. Birthal, Pratap S. & Joshi, P. K. & Gulati, Ashok, 2005. "Vertical coordination in high-value commodities," MTID discussion papers 85, International Food Policy Research Institute (IFPRI).
    2. Thomas Reardon & C. Peter Timmer & Christopher B. Barrett & Julio Berdegué, 2003. "The Rise of Supermarkets in Africa, Asia, and Latin America," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 85(5), pages 1140-1146.
    3. 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.
    4. Dries, Liesbeth & Swinnen, Johan F. M., 2004. "Foreign Direct Investment, Vertical Integration, and Local Suppliers: Evidence from the Polish Dairy Sector," World Development, Elsevier, vol. 32(9), pages 1525-1544, September.
    5. Dinghuan Hu & Thomas Reardon & Scott Rozelle & Peter Timmer & Honglin Wang, 2004. "The Emergence of Supermarkets with Chinese Characteristics: Challenges and Opportunities for China's Agricultural Development," Development Policy Review, Overseas Development Institute, vol. 22, pages 557-586, September.
    6. Reardon, Thomas & Codron, Jean-Marie & Busch, Lawrence & Bingen, R. James & Harris, Craig, 1999. "Global Change In Agrifood Grades And Standards: Agribusiness Strategic Responses In Developing Countries," International Food and Agribusiness Management Review, International Food and Agribusiness Management Association (IFAMA), vol. 2(03/04).
    7. Wang, Honglin & Dong, Xiaoxia & Rozelle, Scott & Huang, Jikun & Reardon, Thomas, 2009. "Producing and Procuring Horticultural Crops with Chinese Characteristics: The Case of Northern China," World Development, Elsevier, vol. 37(11), pages 1791-1801, November.
    8. Reardon, Thomas & Timmer, C. Peter, 2007. "Transformation of Markets for Agricultural Output in Developing Countries Since 1950: How Has Thinking Changed?," Handbook of Agricultural Economics, Elsevier.
    9. Thomas Reardon & Spencer Henson & Julio Berdegué, 2007. "'Proactive fast-tracking' diffusion of supermarkets in developing countries: implications for market institutions and trade," Journal of Economic Geography, Oxford University Press, vol. 7(4), pages 399-431, July.
    10. Daniel Suryadarma & Adri Poesoro & Sri Budiyati & Akhmadi & Meuthia Rosfadhila, 2007. "Impact of Supermarkets on Traditional Markets and Retailers in Indonesia's Urban Centers," Development Economics Working Papers 22548, East Asian Bureau of Economic Research.
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    Cited by:

    1. Ashok Gulati & Kavery Ganguly, 2010. "The changing landscape of Indian agriculture," Agricultural Economics, International Association of Agricultural Economists, vol. 41(s1), pages 37-45, November.
    2. Smith, Lisa C., 2015. "The great Indian calorie debate: Explaining rising undernourishment during India’s rapid economic growth," Food Policy, Elsevier, vol. 50(C), pages 53-67.
    3. Minten, Bart & Reardon, Thomas & Sutradhar, Rajib, 2010. "Food Prices and Modern Retail: The Case of Delhi," World Development, Elsevier, vol. 38(12), pages 1775-1787, December.
    4. Reena das Nair & Shingie Chisoro, 2016. "The expansion of regional supermarket chains and implications for local suppliers: A comparison of findings from South Africa, Botswana, Zambia, and Zimbabwe," WIDER Working Paper Series 169, World Institute for Development Economic Research (UNU-WIDER).
    5. Joshi, P.K., 2015. "Has Indian Agriculture Become Crowded and Risky? Status, Implications and the Way Forward," Indian Journal of Agricultural Economics, Indian Society of Agricultural Economics, vol. 70(1).

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    Supermarkets; Wholesalers; Modern retail; Small farmers; Traditional retail; Supply chains; Competitiveness; Inclusiveness;

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