Food Retailing Consolidation: Implications for Supply Chain Management Practices
Year: 1999
Type: article
Abstract: In recent years, the food retailing industry has of the top four and eight retailers remained fairly undergone unprecedented reorganization through stable through 1996. There was little change in the mergers and acquisitions among its largest firms. top four, eight, and 20 firms' share of sales, which These actions have raised concerns about the deaveraged 17.4, 27.3, and 41.8 percent, respectively, gree of competition and the ability of large retailover the three years. Between 1996 and 1997, the ers to gain market power. Merging retailers often leading 20 retailers' share rose four percentage cite potential cost savings through consolidation points, reaching 47 percent of grocery store sales of purchases from food and non-food suppliers. while the top four and eight firm shares rose Because supply chain management practices ensomewhat less. Aggregate concentration is esticompass these objectives, it is likely that retailers mated to reach new heights in 1998, with the top will employ such methods to successfully achieve four shares jumping nine percentage points to 29 stated efficiency and cost reduction goals. percent, and the top eight firms' share rising by I first present three measures of consolidaeight percentage points to 39 percent. The top 20 tion, then discuss major mergers and acquisitions firms' share increased less dramatically, reaching in recent years. I next identify the likely driving an estimated 51.5 percent (Figure 2). forces of retailer consolidation, after which folAggregate concentration measures in food relows specific supply chain management objectives tailing are less comparable with other industriesand the practices that retailers are likely to adopt such as food manufacturing, for example, whose largunder each objective. est firms typically serve national markets. Food retailers compete within specific geographic locations, Aggregate Concentration such as cities or towns. With the possible exception of the resulting Albertson' s/American Stores merger The impact of consolidation in recent years is announced in 1998, no food retailers operate in all evident when comparing changes in concentration regions of the United States. Nevertheless, aggregate from 1994 through 1998. The share of total U.S. concentration provides an indicator of the net effect grocery store sales by the top four, eight, and 20 of internal growth, firm consolidation, and divestilargest food retailers is traced in Figure 1. Shares tures among the largest food retailers.
Authors: Kaufman, Phillip R., Kaufman, Phillip R.
Language: English
Subfield: Management Information Systems
Domain: Social Sciences
Open Access status: green
OpenAlex ID: W1537019692