Retail concentration refers to the

market-share Market share is the percentage of the total revenue or sales in a market that a company's business makes up. For example, if there are 50,000 units sold per year in a given industry, a company whose sales were 5,000 of those units would have a ...

generally belonging to the top 4 or 5 mass distribution firms present in a regional market, as a percentage of the total. Retail concentration is not simply a

concentration ratio In economics, concentration ratios are used to quantify market concentration and are based on companies' market shares in a given industry. Market share can be defined as a firm's proportion of total sales in an industry, a firm's market capita ...

as is 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 of the food supply chain. In recent years, Retail Concentration moved ahead with fusions and acquisitions along the entire food supply chain. We can assume with Grievink (2003) that in a few years there will be only 5 dominant actors in the globalised food chain. The same researcher states that in the 90's the top-5 food manufacturers could count on twice the

cash flow A cash flow is a real or virtual movement of money: *a cash flow in its narrow sense is a payment (in a currency), especially from one central bank account to another; the term 'cash flow' is mostly used to describe payments that are expected ...

of the top-5 retailers. Nowadays the relation is inverted: the top 5 retailers can count on twice that of the top-5 manufacturers. Thus, the food chain has become increasingly

vertically integrated In microeconomics, management and international political economy, vertical integration is a term that describes the arrangement in which the supply chain of a company is integrated and owned by that company. Usually each member of the supply ...

, 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. Recently the

European Commission The European Commission (EC) is the executive of the European Union (EU). It operates as a cabinet government, with 27 members of the Commission (informally known as "Commissioners") headed by a President. It includes an administrative body o ...

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 The Better Regulation Commission was a non-departmental public body of the British government, independent of any government department but under the oversight of Department for Business, Enterprise and Regulatory Reform. Its role, according to i ...

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. 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. 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" ( . 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 venture A joint venture (JV) is a business entity created by two or more parties, generally characterized by shared ownership, shared returns and risks, and shared governance. Companies typically pursue joint ventures for one of four reasons: to acces ...

s, partnerships and more not formalised contracts/ agreements. Note that the "hypermarketization" is not limited to the

Western World The Western world, also known as the West, primarily refers to the various nations and state (polity), states in the regions of Europe, North America, and Oceania.

, but supermarkets rise fast also in the

less developed countries A developing country is a sovereign state with a lesser developed industrial base and a lower Human Development Index (HDI) relative to other countries. However, this definition is not universally agreed upon. There is also no clear agreem ...

and in the East and in the South of the World. . 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).http://www.agobservatory.org/library.cfm?RefID=46604 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 In economics, a market is a composition of systems, institutions, procedures, social relations or infrastructures whereby parties engage in exchange. While parties may exchange goods and services by barter, most markets rely on sellers offering ...

it is more important the precise moment in which

supply and demand In microeconomics, supply and demand is an economic model of price determination in a Market (economics), market. It postulates that, Ceteris paribus, holding all else equal, in a perfect competition, competitive market, the unit price for a ...

match).

References

{{reflist Food industry

See also

References