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In last years Retail Concentration moved ahead with fusions and acquisitions([http://www.capgemini.com/resources/news/consumers_drive_food_industry_transformation__global_brands_retail_formats_consolidation__says_new_report/]) along the entire food chain([http://www.ingentaconnect.com/content/mcb/070/2004/00000106/00000008/art00004]. We can assume with Grievink (2003) that in few years there will be only 5 dominant actors in the globalised food chain([http://www.foodinternational.net/articles/efi-special/1249/state-of-the-art-in-food.html]). |
In last years Retail Concentration moved ahead with fusions and acquisitions([http://www.capgemini.com/resources/news/consumers_drive_food_industry_transformation__global_brands_retail_formats_consolidation__says_new_report/]) along the entire food chain([http://www.ingentaconnect.com/content/mcb/070/2004/00000106/00000008/art00004]. We can assume with Grievink (2003) that in few years there will be only 5 dominant actors in the globalised food chain([http://www.foodinternational.net/articles/efi-special/1249/state-of-the-art-in-food.html]). |
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The same researcher states that in the |
The same researcher states that in the 90's the top-5 food manufacturers counted with the double [[cash flow]] of the top-5 retailers. Nowadays the relation is inverted: the top 5 retailers count with the double of top-5 manufacturers. |
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This way, the food chain become more and more [[Vertical integration|vertically integrated]], with global corporations able to coordinate inputs from the seed to the field, from the stable to the table. Retail concentration by one hand is the answer that retail is giving to compete with the giants of agrofood industry. By the other hand, is the agrofood industry in itself searching to arrive directly to the consumers, through a refined relations system. In this process, private labels are increasingly attracting consumers, and are expected to grow more and more on their fidelisation strategy, beating on quality, safety and also ethical values ([http://www.foodinternational.net/articles/efi-special/583/private-labels-why-europe-is-leading-the-pack.html]. |
This way, the food chain become more and more [[Vertical integration|vertically integrated]], with global corporations able to coordinate inputs from the seed to the field, from the stable to the table. Retail concentration by one hand is the answer that retail is giving to compete with the giants of agrofood industry. By the other hand, is the agrofood industry in itself searching to arrive directly to the consumers, through a refined relations system. In this process, private labels are increasingly attracting consumers, and are expected to grow more and more on their fidelisation strategy, beating on quality, safety and also ethical values ([http://www.foodinternational.net/articles/efi-special/583/private-labels-why-europe-is-leading-the-pack.html]. |
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Revision as of 21:48, 5 November 2009
Retail concentration refers to the market-share belonging to generally the top 4 or 5 firms of the Great distribution present in a regional market, as a percentage on the total.
Retail concentration is not simply a concentration ratio as emerging in the food sector. This is due to two factors: the particular relevance retail is gaining on a global scale, and the particular shape the food chain has.
In last years Retail Concentration moved ahead with fusions and acquisitions([1]) along the entire food chain([2]. We can assume with Grievink (2003) that in few years there will be only 5 dominant actors in the globalised food chain([3]). The same researcher states that in the 90's the top-5 food manufacturers counted with the double cash flow of the top-5 retailers. Nowadays the relation is inverted: the top 5 retailers count with the double of top-5 manufacturers. This way, the food chain become more and more vertically integrated, with global corporations able to coordinate inputs from the seed to the field, from the stable to the table. Retail concentration by one hand is the answer that retail is giving to compete with the giants of agrofood industry. By the other hand, is the agrofood industry in itself searching to arrive directly to the consumers, through a refined relations system. In this process, private labels are increasingly attracting consumers, and are expected to grow more and more on their fidelisation strategy, beating on quality, safety and also ethical values ([4].
Recently the European Commission([5]) proposed solutions to face with overall price increase about foodstuff. Among the measures proposed, several relate to the retail power recently acquired.
In particular, the payments delay to the producers; the additional fees asked to the producers to place on the shelves branded products; price transparency; better regulation on promotional activities and openings/closing time are all issues on the agenda.
For supporters, retail concentration means more chances for consumers, lower prices, better quality. For opponents, by the contrary, the disappearing of traditional shops, of food culture, of neighborhood life in general[1]. Furthermore, too much concentration means squeezing the price of industry and of agriculture, which can lead to outsourcing food from anywhere it can cost less, without a truly long term impact assessment.
RANKING 2000 Cash flow(mln $) 1. Wal-Mart Stores, Inc. 163.532 2. Carrefour Group 52.196 3. The Kroger Co. 45.352 4. Metro AG 44.163 5. The Home Depot, Inc. 38.434 6. Albertson's, Inc. 37.478 7. ITM Enterprises SA 36.762 8. Sears, Roebuck and Co. 36.728 9. Kmart Corporation 35.925 10. Target Corporation 33.702 11. J. C. Penney Company, Inc. 31.503 12. Royal Ahold 31.222 13. Safeway Inc. 30.801 14. Rewe-Gruppe 30.578 15. Tesco PLC 30.404 16. Ito-Yokado Co., Ltd. 30.237 17. Edeka-Gruppe 30.002 18. Costco Companies, Inc. 26.976 19. Tengelmann W. 26.509 20. The Daiei, Inc. 26.486
RANKING 2005 Cash flow(mln $)
1. Wal-Mart Stores, Inc. 285.222
2. Carrefour Group 90.297
3. Home Depot 73.094
4. Metro 70.093
5. Royal Ahold NV 64.615
6. Tesco PLC 62.284
7. Kroger Co. 56.434
8. Sears Holdings Corp 55.800
9. Rewe Handelsgruppe 50.698
10. Costco Wholesale Corp. 48.107
11. ITM Enterprises SA 47.218
12. Target Corp 45.682
13. Groupe Casino 45.155
14. Aldi Einkauf GmbH & Co OHG 42.981
15. Scwarz Group
(Lidl & Schwarz) 42.571
16. Albertson's Inc. 39.897
17. Edeka Gruppe 39.227
18. Walgreen Co. 37.508
19. Groupe Auchan SA 37.335
20. Lowe's Cos. Inc. 36.464
(Data elaborated from PriceWaterHouse Cooper LLP and Ernst & Young)
Tim Lang (Food Wars, Earthscan London 2004) described the retail concentration phenomenon such as a "food war", in which winners and losers take place. Tim Lang talks about "food clusters" ([p.84]) to better handle the idea of concentration along the entire food chain. There are a lot of legal instruments which allow to get more and more concentrated. Acquisition being the first one, follow mergers, joint ventures, partnerships and more not formalised contracts/ agreements. Note that the "hypermarketization" is not limited to the Western World, but supermarkets rise fast also in the less developed countries and in the East and in the South of the World. ([6]. Regarding that, there are a lot of concerns, pretending that the overwhelming power of retailing is making poorer and poorer farmers, in particular in the LDC (Less Developed Countries)([7]). The "crowding out" effect on local agricultures it is basically due to the global sourcing of the produces, wherever they cost less and offer more. To say it with the words of the Italian food-thinker Corrado Finardi to fairly function, the agricultural system has a different, slower timeline than the market (in agriculture counts the long term investment, while on the global market it is more important the precise moment in which supply and demand match).\
References
- ^ International Journal of Behavioral Nutrition and Physical Activity, 2006 3: 33 “Understanding environmental influences on nutrition and physical activity behaviors: where should we look and what should we count?”, Kylie Ball, Anna F Timperio and David A Crawford