'Proactive fast-tracking' diffusion of supermarkets in developing countries: implications for market institutions and trade |
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Authors: | Reardon, Thomas Henson, Spencer Berdegue, Julio |
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Abstract: | Supermarkets have spread extremely rapidly in developing countriesafter the take-off in the early to mid-1990s.Former analyses of supermarket diffusion have not adequatelyexplained the sudden burst and then exponential diffusion ofsupermarkets in the late 1990s and early 2000s. We argue thatrather than taking demand and market institutional and organizationalconditions as exogenous, as former analyses havetended to do, modern food retailers instead have treated localconditions as substantially endogenous. To enabletheir rapid growth, supermarkets undertake proactivefast-tracking strategies to alter the enablingconditions of entry and growth. Beside the retail investmentsthat have been extensively treated in recent literature, theseproactive strategies focus on improving the enablingconditions via (i) procurement system modernization and(ii) local supply chain development. One important strategyretailers have used to facilitate (i) and (ii) is to form symbioticrelationships with modern wholesale, logistics and processingfirms. An example we address is follow sourcing,where a transnational retailer encourages transnational logisticsand wholesale firms with whom the retailer is working in homemarkets, to locate to the developing country. This is a spurto globalization of services in support of retail. Follow-sourcinghas been treated for example in the automobile manufacturessector (follow-sourcing from spare parts manufacturers)butnot in the food sector. A second important strategy is thatof multi-network-sourcing, in which supermarkets source fromnational, regional and global networks. We analyze that strategyhere, adding to the literature which to date has touched onthis theme only scantly, and for the first time identify typicalpaths, present preliminary evidence (from Central America andIndonesia) concerning this multi-sourcing-network strategy anddiscuss trade implications. One of these is the move to primacyof SouthSouth trade in supermarket sourcinga newdimension of globalization. By introducing this link of retailertransformation and trade into the literature, we hope to spura new line of research that is timely in light of the trade,development and globalization debates in developing countries. |
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Keywords: | retail, supermarkets, globalization, developing countries, trade, market institutions Date submitted: 17 January 2007        Date accepted: 1 March 2007 |
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